The Truth about Insurance Credit Score

fico scoreThe recent wake of credit data computerization and the expansion of the internet made it possible for financial businesses to achieve more speed, efficiency and accuracy in their function. In the insurance business arena, underwriters have tapped into this credit resource to provide themselves basis to decide whether to accept or reject an application for insurance. And amidst all the wake of developments, critics and casualty alike are opposing these new reforms that are taking over so fast.

 

In essence, insurance credit score is an adaptation of a credit score report. Though the details considered on insurance credit scores are those that are directly helpful for underwriters to judge a certain application. In researches that have been made, the studies showed that a majority those who do poorly in credit scores are the ones that most likely to file an insurance claim. So how an applicant manages his or her financial affairs can be a good indicator for a commendable client.

 

What does credit scores have something to do with how insurance and premiums be awarded? National Association of Independent Insurers’ Donald Hanson statement to the CBS is the explanation:

 

“Research indicates that people who manage their personal finances responsibly tend to manage other important aspects of their life with that same level of responsibility and that would include being responsible behind the wheel of their car or being responsible in maintaining their home”.

 

There are several disputes of these though. Using insurance credit score have been cited by some critics as unfair. Low financial opportunities may make an average earning households miss a couple of payments which can hurt their score. The last thing these household needs is a mounting insurance bill. While those that can maintain a healthy credit score would have no problems with insurance credit score these people type are strictly restricted to the upper classes. The majority is the middle-class households; the hardest hit class who are even struggling to maintain an average credit.

 

Corrupt and opportunistic insurance companies maneuvered this new insurance policy deftly to meet their selfish needs. In fact, there have been already countless of accounts wherein insurance companies played this part to the extent of gratifying their coffers on someone else’s expense. 

 

The truth about insurance credit score is that it has given them more leverage than they already have, as credit scores have given banking companies. There had been accounts over the past that certain individuals did manipulate insurance to an extent but the policy they exacted today is a tad bit unfair to the majority of honest clients. Still the question remain: Is insurance credit score unfair or not?

No Fee Home Equity Loan

bless our home equityThere are many home equity lending companies. These home equity lending companies are constantly on the lookout for homeowners that want to acquire home equity loans, as most of the homeowners in the United States are now tapping on the equity of their homes by taking out home equity loans. 

 

Home equity loans are very much popular these days because not only it helps you in your financial problems it is also tax deductible and it has lower interest rates than any kind of loan. With a home equity loan, you can do whatever you want with the money unlike other types of loans wherein you are restricted to one area. The only setback with home equity loans is that the loan will held your property (your home) as collateral.  Home equity loans are great in financial tools for your home improvements, payments of debts, your child’s education expenses, emergency expenses and medical expenses.

 

If you are considering of having a home equity loan, shop around first for the ideal home equity lending company. You can find great home equity lending companies on the internet, yellow pages, or on the classified ads. Some home equity lending companies have lots of cost and fees on their home equity loan. On the other hand, there are also some home equity lending companies that offer a no fee home equity loans.

 

However, if you are getting a no fee home equity loan, make sure that the home equity lending company that offers you a no fee home equity loan has no bulky pre payment penalty phrase. This is very important if you are considering of selling your property or home or have a refinance within the next three to five years. The fees listed below are the fees that are included in the no fee home equity loans:

 

  • Application Fee – this fee is usually imposed by the home equity lender to cover the initial costs of the processing of the home equity loans.
  • Title Search and Title Insurance – covers the costs of the investigation of public records to prove the ownership of the real estate.
  • Lender’s Attorney’s review fees – some lenders charge the borrower for their attorney’s fees. The lawyer or firms conducts the closing for the lender.
  • Appraisal fee – fees for the appraisals which is the supportable and defensible estimate of the value of the property.

 

Some home equity lending company that offers no fee home equity loans have lots and lots of kinds of fees that are included in the package deal. Before signing any contract, always make sure that you fully understood all that is written on the contract. And be sure that you understand the terms of the deal. If you have are not sure, don’t hesitate to ask for questions.

Low Interest Home Equity Loan

homeInterest rates are the most important aspect on your contract that you should take notice. Why? Because this is how lenders make their profit aside from defaulting your property over them. Naturally, low interest rate would make the best deal; however financial experts would vouch against the idea. While some deals would feature a rather small interest starting rate, it could get increasingly higher as time goes by and you cannot withdraw from mortgage since a penalty is agreed upon until you will realize that the agreement went out as expensive as it can get. This had been a notorious bait and switch tactic that opportunistic equity lenders resort to.

 

That’s the definitive reason why scouting for the best low interest home equity loan should be made in earnest, because interest pays in the long run be it bad or good. To this effect, try to find out the lowest interest rate in the long term. Beware however, some equity lenders will elegantly dub their low interest home equity loan plan as discounted only to find out that the interest is actually very high when the ‘discount time’ is over.

 

A conforming homeowner seeking for a low interest home equity loan should have no problem in getting a low interest home equity loan. Conforming loans must have an updated income statement, an updated debt and credit statement, and a proof of asset, all these adheres to the Federal National Mortgage Association’s (FNMA) strict lending guidelines.  In turn, since the homeowner sets his property as collateral (which is a risk), the lender is obligated to release a low interest home equity loan. So therefore, the more documents you provide the better chances you have on landing a low interest home equity loan plan.

 

There are two types of interest rates that are in use today, the fixed type rate and the variable interest rate. The fixed type is what the name suggests. You pay a fixed amount of interest every month regardless of the price fluctuation. Fixed rate types are popular among loan applicants since they offer stable monthly payments. Variable interest rate depends on the price fluctuation. It can be super low or can get ridiculously high depending on the economy. The best bet for variable is when you usually hit the low rate times at extended periods, therefore maximizing your benefit for the variable interest rate.

 

So what would constitute a high interest home equity loan? For an in-depth explanation of low interest home equity loan, we also need to discuss the variables that make interest high. High interest rate is caused by contract length. For the lenders to get a worthwhile amount they tend to get short term loans with higher interest rate or else everyone would abuse the lending power.  Also, high interest rates are given to consumers regarded as high risk borrowers, people who normally don’t have the complete documents (non FNMA conformity). Though normally avoided, some consumers have A rating in credit, therefore they are awarded a credit line though with high interest. But don’t be quick to belittle such individuals. Most ‘No-Doc’ customers have large sums paid to their bank accounts but doesn’t have constant salary. The examples of such are those Wallstreet Traders.

How to Read Credit Scores

helpSCENARIO #1: You went online and applied for a loan. Sixty seconds later, you realize you’ve been approved.

 

 

SCENARIO #2: You applied for a car loan and got pre-qualified.

 

SCENARIO #3: You and your neighbor applied for the same loan, but his loan rates are different from yours.

 

And all this without anyone even asking you how much money you make. How in the world did they know whether to approve you or not?

 

The answer lies in your credit score.

 

Credit scoring is a mathematical algorithm used by credit reporting agencies like Equifax, Experian, and Trans Union, in order to come up with a three-digit number, based on information found in your credit report as compared to information found in tens of millions of other people’s credit reports. Since your credit report contains factors that are predictive of future credit performance, the resulting number is a highly accurate prediction of how likely you are going to pay your bills.

 

Knowing how to read credit scores is important since these scores are used extensively by lenders when reviewing your application for a car loan, mortgage, credit card, or auto insurance. The rate you will receive from these credits will be directly related to your credit score.

 

Thus, if you have a high credit score, the better your application will look to your lenders. On the other hand, if your credit score is below average, lenders will give you higher loan rates.

 

What’s a Good Score?

 

How to read credit scores starts with knowing what are the scoring categories used. Fair Isaac Corp., a California-based company, is the developer of the most popular credit scoring system used by many of the country’s credit reporting agencies. Its score is called the FICO score and it runs in a scale of 300 to 850. In order to get the most favorable interest rates, your score must be 720 or higher.  

 

However, it should be noted that there is more than one credit score available. There are three major credit reporting agencies and several smaller independent companies that provide their own credit scores using their own credit scoring system, not just the FICO scoring system. This means that your credit scores may vary from credit reporting agency to another.

 

Knowing how to read credit scores comes in handy whenever you are faced with inconsistent credit scores. When you know how to read credit scores, you know what factors are involved in order to calculate the score.

 

Another reason why it is important to know how to read credit scores is that this three-digit number will determine if you will get credit at all. Ed Ojdana, president of the Experian Consumer Direct, part of Experian, the largest of the three major credit reporting agencies, says that your credit score will also determine the interest rate on your credit.

Envision a Better Life by Increasing Your Credit Score

Good credit score

Earn a good credit score!

Have you been deprived of getting a loan, mortgage or credit card?

Do you know how you can increase your credit score?

Your credit score can make or break your way of living or lifestyle in a lot of ways. Maintaining or keeping a good credit score, especially in times of economic hardships, is really quite extraordinary.

Most lenders looks into the credit score of those applying for loans, mortgage, or for credit cards. As it is part of the business, they want to know and double check the capability of the debtor to pay for the loan being applied for. The lenders are taking a lot of risk when they give somebody the use of their money.

Here are just some of the helpful guidelines in increasing one’s credit score:

1. Avoid applying for credit much too frequently. Numerous credit applications will mean inquiry of one’s file. A lot of new credit applications can greatly affect and lower the score.

2. Always pay all statement of accounts on time. Paying bills behind of schedule are always recorded in the credit report and can reflect a not so good paying habit. This will definitely lower the credit score.

3. Avoid high outstanding balance or debit in one’s credit card and other existing credit can drop off the credit score. As much as possible, keep those debts low.

4. Catch up on missed payments. It’s never too late to pay the bill.

5. Avoid closing unused accounts or credit cards. This will not help increase the score.

6. Avoid opening unnecessary accounts with the notion of increasing one’s credit score by having a brand new credit card. This strategy will actually lower the score.

7. Having too few or no loan and credit account in one’s name, is also measured as a credit risk to lenders. Maintaining a small number of credit cards showing a good credit standing, having a reasonable balances and limits, can help increase the credit score.

The rate of credit scores will be the deciding factor in the approval of a loan, the extent or amount of credit that will be offered, and the interest rate that will be added to the loan for the period or duration of the agreement.

Credit scores also significantly affect the rates or charges one will incur for the monthly payments. A low score will mean paying a higher interest rate on the borrowed money.

Also, if one wants to create a difference in applying for insurance premiums and employment, debtors must strive to increase their credit scores.

Some employment agencies, firms and industries check the credit scores of applicants and would-be employees before deciding on whether or not they would hire them. They would also look at credit activities, and employment and payment history.

Recently, most insurance companies do a background check especially on the credit scores of their clienteles. Through this, they will determine the cost of the insurance premiums, housing premiums, auto insurance, and others.

Credit reports can provide insights to employers and insurance agents a run-down summary about the attitude and behavior of a person.

Discipline is an important tool to maintain a good credit score. Increasing one’s credit score takes time. It can’t be quick and instant.

The better the person deals with his or her credit accounts to have a good and high credit score, the more assurance of saving more money in the bank there is.

Mortgage Loans with Low Credit Score

When something drastically happens to a loan agreement the usual consequence is that the injured party will shy away from loan and credit agreement, thinking that such incidence will result to a low credit score that would result in turn a ‘no-interested’ lending party.

 

A ‘no-interested’ lending party doesn’t exist in the financial business. In a world of shrewd and competing businessmen, a prospect for trade isn’t ignored however small the gold nugget is compared to the rest of the market. A small fish is still classified as fish especially in the presence of other several thousands of smaller fish. That’s an economist slogan.

 

Mortgage loans with low credit score are available to individuals with especially low credit score. In fact, as soon as the word reaches out to lenders about the news of your filed bankruptcy, many mortgage loans with low credit score lenders will be piling up your doorstep for various plans to recover your losses. Because as long as you still hold something that is prime to them, you’re still good business.

 

Equally aggressive would be the property predators, and they should be the ones you should look out after. Deals made by these creditor types will only make you lose your last possession or your only asset. Especially reverse mortgage, which is a destructive option if used by the wrong hands.

Improving your Credit Score is Just Three Steps Away

raise your credit rating

raise your credit rating

Credit score could be a dire stuff to talk about, especially if you are a “cold cash patriot” for quite some time now. Why talk about credit score, if you can afford to purchase a real estate property using thick bundles of 100 dollar bills. It is just a waste of time, and you would not be interested in dealing with credit scores or its attributes.

That is, if you have plenty of cold cash to spend. But what if time comes that you do not have even a single dime at all? Do you think a credit score is still a dire stuff to talk about? Think again: may be this is the right time that we talk about credit score not just by an “inch below the water” but by “at least six feet underground”.

Keep in mind that your credit score could be your “best of friend” or the “worst of your enemies”. The higher your credit score is the higher chance you have to qualify for loans and credit cards with lower interest rates and easier terms of payments. The lower the interest rate, the more savings you can generate in the long run.

And that is a good thing.

On the other hand, lower credit score will give you headaches, making it difficult for you to secure a loan or credit card, not to mention the higher interest rate applied in case you will be able to qualify for a loan or credit card. Thus, possessing lower credit score will really make your head ache and will make you dig in your pockets beyond the limits.

At this point, you should consider improving your lower credit score. There are several options that you can take, yet you are just three steps away from improving your credit score. How will you do it? Take a look on the following and make sure you will be able to follow them.

1. Inspect your credit reports for any inaccurate entries. Keep in mind that errors in credit reports are very common, thus it is recommended that you examine your credit reports at least twice a year. In this way, you will be able to pinpoint any mistakes and fix the problem before it can do serious damage to your credit performance. You can obtain your credit reports from the three major credit reporting agencies in the United States.

2. Always pay financial obligations on time. Do not underestimate the value of making payments on time. Keep in mind that one of the major factors that can affect your credit score is your habit in paying your financial obligations. If possible, pay your bills ahead of the scheduled due date. If you have problems in making payments on time, you may also consider automatic mode of payments.

3. Use credits on a minimum basis. If you are using credit cards, avoid making purchases beyond your credit limit and attempt to keep your balances at bay—let us say, around 25 percent below your credit limit. It will help you avoid accumulating huge debts that may come from unwanted purchases using credits.

Credit score is very vital, especially if you have plans of securing loans in the future. Thus, if you have a lower credit score, do not waste time and follow the aforementioned three steps to improve it. Make your credit score as an asset and not as a liability.

Mortgage Loans with Low Credit Score

Illustration by Robert Nuebecker

Illustration by Robert Nuebecker

When something drastically happens to a loan agreement the usual consequence is that the injured party will shy away from loan and credit agreement, thinking that such incidence will result to a low credit score that would result in a ‘no-interested’ lending party.

 

 

A ‘no-interested’ lending party doesn’t exist in the financial business. In a world of shrewd and competing businessmen, a prospect for trade isn’t ignored however small the gold nugget is compared to the rest of the market. A small fish is still classified as fish especially in the presence of other several thousands of smaller fish. That’s an economist slogan.

 

Mortgage loans with low credit score are available to individuals with especially low credit score. In fact, as soon as the word reaches out to lenders about the news of your filed bankruptcy, many mortgage loans with low credit score lenders will be piling up your doorstep for various plans to recover your losses. Because as long as you still hold something that is prime to them, you’re still good business.

 

Equally aggressive would be the property predators, and they should be the ones you should look out after. Deals made by these creditor types will only make you lose your last possession or your only asset. Especially Reverse Mortgage, which is a destructive option if used by the wrong hands.

 

The problem applying for mortgage with low credit score is that lenders know the meaning of your stats. Low credit score would signify a troubled financial issue and applying for mortgage only heightens the fact. Shrewd and opportunistic lenders will bait you with much needed money and since your willpower will be considerably lower at these stages, you might be compelled to sign. This practice is called Equity Stripping where the lender won’t care if you can’t keep up with the monthly payments.

 

That’s the only problem for low credit score. Because low credit score often associates with financial hard times, there are specific lenders that prey on these types. They are called equity sharks.

 

Low credit scores are not the end of the line though. Various equity lenders still offer mortgage loans with low credit score, though usually the deal is a far cry than applying for a mortgage deal with a perfect credit. Remember, however you acquired your low credit score is beyond the creditor, he won’t care whatever reasons you might have. So it’s up to you to make good on the mortgage loans with low credit score to eventually straighten things up.

When Is It a Mistake to refinance?

Many homeowners make the mistake of thinking refinancing is always a viable option. However, this is not true and homeowners can actually make a significant financial mistake by refinancing at an inopportune time. There a couple of classic example of when refinancing is a mistake. This occurs when the homeowner does not stay in the property long enough to recoup the cost of refinancing and when the homeowner has had a credit score which has dropped since the original mortgage loan. Other examples are when the interest rate has not dropped enough to offset the closing costs associated with refinancing.

Recouping the Closing Costs

In determining whether or not refinancing is worthwhile the homeowner should determine how long they would have to retain the property to recoup the closing costs. This is significant especially in the case where the homeowner intends to sell the property in the near future. There are refinancing calculators readily available which will provide homeowners with the amount of time they will have to retain the property to make refinancing worthwhile. These calculators require the user to enter input such as the balance of the existing mortgage, the existing interest rate and the new interest rate and the calculator return results comparing the monthly payments on the old mortgage and the new mortgage and also supplies information about the amount of time required for the homeowner to recoup the closing costs.

When Credit Scores Drop

Most homeowners believe a drop in interest rates should immediately signal that it is time to refinance the home. However, when these interest rates are combined with a drop in the credit score for the homeowner, the resulting refinanced mortgage may not be favorable to the homeowner. Therefore homeowners should carefully consider their credit score at the present time in comparison to the credit score at the time of the original mortgage. Depending on the amount interest rates have dropped, the homeowner may still benefit from refinancing even with a lower credit score but it is not likely. Homeowners may take advantage of free refinancing quotes to get an approximate understanding of whether or not they will benefit from refinancing.

Have the Interest Rates Dropped Enough?

Another common mistake homeowners often make in regard to refinancing is refinancing whenever there is a significant drop in interest rates. This can be a mistake because the homeowner must first carefully evaluate whether or not the interest rate has dropped enough to result in an overall cost savings for the homeowners. Homeowners often make this mistake because they neglect to consider the closing costs associated with refinancing the home. These costs may include application fees, origination fees, appraisal fees and a variety of other closing costs. These costs can add up quite quickly and may eat into the savings generated by the lower interest rate. In some cases the closing costs may even exceed the savings resulting from lower interest rates.

Refinancing Can Be Beneficial Even When It is a “Mistake”

In reality refinancing is not always the ideal solution, but some homeowners may still opt for refinancing even when it is technically a mistake to do so. This classic example of this type of situation is when a homeowner refinances to gain the benefit of lower interest rates even though the homeowner winds up paying more in the long run for this refinancing option. This may occur when either the interest rates drop slightly but not enough to result in an overall savings or when a homeowner consolidates a considerable amount of short term debt into a long term mortgage refinance. Although most financial advisors may warn against this type of financial approach to refinancing, homeowners sometimes go against conventional wisdom to make a change which may increase their monthly cash flow by reducing their mortgage payments. In this situation the homeowner is making the best possible decision for his personal needs.

AllState Property Casualty Insurance Company

safe bird nest            AllState Property Casualty Insurance Company is part of the AllState group of companies that are one of the leaders in the insurance market.

 

            When it comes to insurance, don’t scrimp. You have invested too much in your property to consider going for insurance coverage that are cheap but do not provide enough coverage. AllState Property Casualty Insurance Company provides you with any type of insurance you need. Whether it is for home insurance or auto insurance, AllState Property Casualty Insurance Company can give you that more.

 

            AllState Property Casualty Insurance Company also offers packages for life, health, and business insurance. The AllState Property Casualty Insurance Company packages can help protect you and your property. Buy yourself some peace of mind by getting coverage from AllState Property Casualty Insurance Company.

 

AllState Property Casualty Insurance Company’s Auto Insurance

 

            Whether it’s for you or for your teenager, AllState Property Casualty Insurance Company’s Auto Insurance can help you safeguard your investment in your automobile. AllState Property Casualty Insurance Company also pays for medical expenses in case of an accident. If you get sued, or your car gets damaged due to theft, vandalism, or natural disasters, AllState Property Casualty Insurance Company will provide you financial protection through their Auto Insurance.

 

AllState Property Casualty Insurance Company’s Home Insurance

 

            There are many things involved when you buy a home and at the top is a home insurance. The AllState Property Casualty Insurance Company’s Home Insurance offers you security and peace of mind when bad things happen to your home. AllState Property Casualty Insurance Company will safeguard you and your family from events like theft, fire, burglary, and vandalism. The AllState Property Casualty Insurance Company’s Home Insurance also pays for the cost it takes to rebuild or repair your home.

 

AllState Property Casualty Insurance Company’s Life Insurance

 

            Think monetary death benefits. And think about cash value accumulation. With a Life Insurance from AllState Property Casualty Insurance Company, you can have that sort of security and more.  The AllState Property Casualty Insurance Company’s Life Insurance helps provide your family with a stable financial future.

 

            Planning for one’s own mortality is never easy, but with AllState Property Casualty Insurance Company’s Life Insurance, you ease the burden of your loved ones in the future. By purchasing Life Insurance from AllState Property Casualty Insurance Company, you are providing your family a solution for problems such as unpaid medical bills, income replacement, final expenses like burial costs, and much more.

 

            The AllState Property Casualty Insurance Company offers other products aside from those mentioned above. Whether it is coverage you want for your business or auto repairs, boat, and motor home, the AllState Property Casualty Insurance Company provides the answers for you.