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Small Bad Credit Loans Can Aid Credit Recovery
Not only bad credit loans are the only source of funds that those with a poor credit score can count on, also, with the use of small bad credit loans it is possible to raise credit score and improve credit history. The process, as incredible as it may seem is rather simple and with a few months of bad credit loan repayments you can get your credit back on track.
Using bad credit loans for improving credit score and history has its benefits and its drawbacks too. There are many factors that need to be taken into consideration before jumping in to request a bad credit loan. Specially, there are two issues that you should take special care of: Making sure it is a small amount loan and knowing for certain that you will be able to repay it on time.
The Small Amount Requirement
Most bad credit loans come in small amounts, however, even if you can get higher amount loans, it is imperative that you keep the amount small in order to succeed with this credit recovery program. Otherwise, a low income to debt ratio will affect your credit score negatively and you would be getting exactly the opposite results that you want.
Small loans can guarantee that you will not have difficulties in repaying the money owed and that your credit score will not be affected by the new debt you have incurred in. Moreover, the continued repayment of these loans will keep getting recorded into your credit report, improving your credit history and thus increasing your credit score.
Assured Repayment: The Income Requirement
As far as possible, the lender needs to know that you will be able to repay the loan. Thus, you will be required to show proof of a steady income and this implies that you will have to provide copies of paychecks, tax presentations, etc. This is a very important requirement since you are applying for a loan with bad credit and the lender is running a great risk.
Of course, the income needs to be good enough so you can afford the monthly payments without sacrifices even if unexpected expenses arise. Thus, some lenders fix the monthly payments at a 40% of the monthly available income of the applicant. Some lenders also require that you show that you have remained in the same job for at least one year. If you have changed jobs recently but within the same field, this requirement may be bypassed.
Where To Apply
The best way to find the right lender for applying is to do a quick search online. Just select your preferred search engine and seek bad credit loans. When asking for information to the different lenders you will be presented, remember to request only small amount loans as thats what you are looking for and ignore other offers.
You can request loan quotes from different lenders and compare what each of them has to offer. After you have selected the loan and lender that best suits your needs, you just need to fill the online application and wait to be contacted by them. Remember to make sure you can afford the monthly payments so you do not miss an installment or pay late. Within a short period of time you will improve your credit score and history.
Know when to get a home loan modification
If life is throwing you lemons and it’s hard to make lemonade, especially when that lemonade is your livelihood,then you need to step back and look at what is going on. 9.2% of Americans today are unemployed. 23% of Americans are “underwater” in their homes. 5.3 million homes in America are in foreclosure.
Lets face it, if you have a family and no place to live, then you are in trouble. So let’s start with the basic necessities, you need your home. Lets try to save it from going into foreclosure and keep you in your home.
The government has a program called Making Home Affordable that helps home owners modify their mortgage. There are requirements you must have in order to qualify you for the program. One of the main requirements is that your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) is more than 31% of your current gross income. So that means to help you qualify, you need to lower your debt. Once the service provider can verify your debt-to-income ratio or DTI, they have to also verify that you can pay the new amount. So in order to do that you must lower your debt.
The most important thing is to look for non-essential items to eliminate from your debt. Such items as a car could be a huge debt that when eliminated may increase your chances greatly for the home loan modification.
Most people have a car that they commute with to work. The car could easily take up a big chunk of your monthly nugget. If you factor in insurance and very high gas prices then that nugget could reach between $800-$1200. Think of any possible way to lower that payment monthly because the goal is to decrease your debt. If you can decrease your monthly debt then you are more likely able to get a loan modification by showing the bank that you have saved money in one place and are able to apply that money saved to your home loan. The bank is more willing to qualify your loan modification if they see that you are making an effort to pay the newly reduced monthly mortgage payment. If this means that you have to sacrifice waking up late and leisurely take the car to work and now you must wake up an hour earlier to catch the bus, then just do it.
There are many other subjects to learn about the Making Home Affordable program.
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