Good installment loan companies are those loan companies that require a higher credit score and ask for more information about you to determine if you are a good risk. This loan can be for an auto or mortgage, student loan or furniture, etc. It’s important to keep these loans in balance with revolving type loans as the balance will play a key part in a portion of your credit score. In other words, one installment loan for every revolving loan or credit card is the correct combination.

It is important to know that if you have even one late or negative on your secure credit reports, it will cause your interest rates to be much higher. If you have more than one, most will not even look at you or your request to take out a loan with them. It is better to get the negatives removed first than to try for a loan with a reputable lender.

Did you know that closing your credit card account affects your credit score? Your credit score will go down because you closed the account!  It’s  True!  I know it’s crazy but let me explain why; this is because it reduces the amount of available credit that you have which can reflect to a certain degree negatively on your ability to obtain credit from a financial institution.

Here is an example: let’s say that you have seven maxed out cards and one paid off card.  You decide to close the account that is paid off; this in turn affects your credit score because now all that your credit history repair services shows is that you have used up all of your available credit.  This in effect is why this can become a problem.

This tells the scoring models that you are a credit risk because none of your accounts are open and paid off but perhaps more importantly it reduces the overall amount of credit available to you which suggests that you are over extended.

There you have it…you get dinged for not having enough credit and for having too much!

As far as credit scores are concerned, if your balance is paid off then you should keep the credit card open because it improves your credit score. Even as it lies dormant for a couple of years it won’t hurt you. By closing the account you increase the difference between your card balances and your available credit.

If you have a significant amount of credit card debt then you should keep the paid off accounts open until you can pay off the majority of your open debts. If you want to avoid charging those cards then you should cut those credit cards in half and keep them so that you have the account numbers and put in a safe secure place, like a safe deposit box.

The bottom line…especially in today’s economic climate, think carefully before making any decision that could affect your ability to borrow in the future.

Be Bold!
Herschel

Secured loans are just what they suggest… loans that are secured by something of value that you own, such as a home, a car, a boat, accounts receivables, or some other item of value that you can convince your loan office is of worth and they will take the risk to loan against.

One of the reasons you would do this is you need the money… duh! Ok, of course you need the money, but the point is that you need the money for something… say, to get a business started, or because you don’t have enough of a down payment to satisfy the loan company who is giving you the loan. A secured loan helps you get the money or the item you want before the bank trusts you enough to do it without. Some loans never have enough trust to secure it with just your signature, such as a mortgage, or a car.

Ok, how does a secured loan work? When you go to sign your name on the signature line, the loan company is saying that you will need to put up the value of the property, item, and vehicle in case you default on the loan. If you stop making payments, they want to know that they can get their money out of the property even if it is a hassle to take possession, then sell it and perhaps lose some of the value. They will somehow get most of the money out of it, regardless. Now, you on the other hand have just tanked your credit score, because the loan company will report lates, then charge-offs, foreclosure, or repossession on your experian business credit file, thus your score has been devastated.

However, secured loans are a great way to get your credit established and get to the point of an unsecured loan that will show low risk and start your credit scores out right.

Starting September 2007, the newest version of the FICO scoring module will ignore all authorized user information when computing scores. The company that created FICO, Fair Isaac Corporation, changed the formula after learning that some credit repair companies were “buying” authorized user slots on the credit cards of people with good scores and “renting” those slots to strangers with bad credit to quickly boost their scores. This made it look like the bad credit person had a long history of build good credit and credit card balance with a high credit limit and very low balance, thus effectively lowering their debt to credit ratio and increasing their history. Credit scores would increase dramatically for them. Not a bad idea and since it still works for the older scoring modules of which most creditors still use, I would suggest not “buying” a slot but borrowing a family members slot on a good card to do the same thing. We call it “piggybacking”.