The Credit Crunch and how to survive it.
June 6, 2008 by moneypenny
Filed under Finance
If you’ve been tuned in over the last few months, you could not have escaped the reports of doom and gloom that spill out daily about the credit crunch.
But what can you do about it?
Do you know how credit worthy you are?
Do you know your credit rating?
If you have a bad credit rating what do you do about it?
What interest rate are you paying on credit cards, house, etc.?
I hope you can answer some of these questions, but sadly many can’t.
So lets answer some of these.
First of all, have you checked your credit rating?
If you apply for credit they will check for you, meaning you won’t have to pay for it, but you also won’t know all the details and you need to if you are applying for credit. Knowing your rating, is bargaining point that few use.
Let’s say you have bad credit, what can you do? Contact the agency that listed you, perhaps you have paid off an outstanding loan, got a new job, turned over a new leaf. So if they know about it they can take you off the black list. You may have to pay a fee to have this bad report removed, but it’s worth it.
So lets say you have a great credit record.
How much interest are you paying ? Don’t be afraid to ask your bank.
Most people pay around 18% or more. Did you know that if you have a good credit rating you can shop around and could pay as little as 10, 5 %. That’s a lot of money in your pocket.
Those who negotiated a fixed rate on their mortgage may be well pleased now. Banks don’t like this, and won’t offer it. They want you to take the chance, because they know the odds are stacked in their favor.
Ask for this, if that’s what you want. Shop around to find a better rate and ask your bank to meet this. If not, vote with your feet. They may give in, and if not, find a better deal.
Just make sure the better deal is not just an introductory offer, that will be hiked up after 6 months.
The best deals are those pre-approved loan offers from your own bank. It’s hard to beat those.
READ THE FINE PRINT!
Have a question? ask it under comments,
Have you had an experience that could help others caught in the squeeze, then share it here.
Yours in money,
Moneypenny.
Photocredit copyright Donna Jackson
Thank you for sharing these tips!
I would recommend, on top of checking your credit rating and fixing it, is to pay down some of your debt. This will help your credit rating, and put you in a better place financially — which is especially important with the economic slowdown.
I have awful credit from being married and poor for the first five years of our marriage. We both got rid of our credit cards when we got married, saying we would not live like that.
So we have been poor, and we have had terrible trouble when things happened and we had to make due with no microwave or other things that people may consider essential.
But now that we are coming out of it, now that my writing is starting to be very profitable and my husband has found a job that is also pretty darn spiffy in an area that is going to boom soon…well…we are coming out of it faster and without credit card debt.
There are debts, don’t get me wrong (school loans, that 1,500 personal loan we thought was such a good idea at the time LOL) but no credit cards.
So even though our credit is destroyed…what will we need it for when we are saving to buy our next car with cash and already have a home? (We found a car insurance company that doesn’t charge extra for credit problems as long as we pay the policy 6 months at a time.)
How else does a bad credit rating hurt you?
(p.s. I’m not trying to sound awesome for living the way I do, many people could not handle it. No microwave, air conditioning for only two hours a day, we live kind of miserly to reap the rewards we do. Heck, sometimes I think I can’t handle it!)
Thanks for sharing Jenn. I think you were both wise to take away the temptation of buying on credit. You can live simply, and if more people did then less would be bankrupt. Well done on improving your situation and good luck.
BTW I don’t have a microwave either, never have. My friend who had both breasts removed told me her specialist said keep away from them.
My mother had told me the same thing, and I like slow cooking. so never had one either. So you’re not missing out. I don’t have air conditioning either. I’m now expecting a flood of mail from microwave lovers !!!.You could do a post on that !
Oh! and bad credit rating can hurt you in a job application, mortgage, renting contracts etc. If you apply for a top level job they credit check, you. Also for some positions of authority etc. You can clear your bad credit though.
Miranda thanks for the advice on improving rating by paying off debt and consolodating too.
Moneypenny
Credit is a big issue for everyone. There are a few things that we all can do to get our credit scores up. For instance, request a copy of your credit report from all 3 agencies. If I am not mistaken some states will allow you to get a free copy of it once a year. If there is anything on there that you are unaware of, paid for, or it is old dispute it. The companies of 30 days to respond and if they don’t the agencies must take that debt off of your report. This will bring you credit score up. Also, pay off debt as soon as possible. A 7% interest rate is not as good as a 5% interest. When your credit score goes up, refinance your mortgage and car note. This will save you thousands of dollars when it is all said and done. Don’t get me wrong, I have had credit blunders over the last few years and I am finally getting it together. My credit score went up 46 points in just one month from me disputing a few items on my report. It seems impossible, but if you put forth the effort it can and will get done.
http://www.bettysonly.blogspot.com
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Thanks betty. good tips. sounds like you are well on your way to success.
moneypenny
A mistake that I made early in my life was applying for too many credit cards and maxing them all out. And most of those cards weren’t that great either because they had a high interest rate so I was getting pretty screwed trying to pay them off.