Have you been refused a loan and concerned about looking elsewhere?
While there are a number of reasons you may not be eligible for the home loan you need, one may be that you aren’t seen as “serviceable”.
This, essentially, means that you are not deemed able to pay off the loan due to calculations that say you have too many other potential areas of debt that needs repaying or daily costs. If you are unsure what serviceability means, or how it is calculated, have a look at our investment terms explained article here.
In the meantime, there are other things you can do to increase your serviceability and secure the loan you want.
- Shop around
Firstly, see if you are calculated as being more serviceable elsewhere. An understanding of different lending policies, which a good broker may be a help with, can assist. You can read this article here about choosing the best mortgage broker for you. Different calculations are used by different banks and lenders.
- Pay down debt (and avoid taking on more!)
If you can, it’s time to supercharge your debt repayments and clear them as quickly as possible. This is particularly good for buyers who are not intending to get into the market for some time.
Avoid upgrading your phone to a new expensive plan and taking on increasing levels of debt, all of these additional costs will decrease your serviceability (and your borrowing power).
You might also consider putting off that extra child until youve purchased – children, due to the high level of expenditure required to raise them, are seen in the outgoings category. Consolidating debt and spending some time paying this down may be one of the most important options here.
- Reduce credit card limits
High credit card limits affect your serviceability – even if you haven’t used them to their limits and do not intend to. Reduce them as best possible. You can increase them after you have your loan.
- Decrease other overheads where possible
Yellow Brick Road’s Mark Bouris recommends reducing your overheads, as well as avoiding taking on more.
“Fancy car leases, big smart phone plans and cable TV charges can reduce your net income and affect your serviceability,” he says as one of his 20 tips to ensure you get your loan.
You could consider consolidating short-term debt into longer term debt to reduce your monthly repayments.
- Ensure all your income is taken into account
Usually, tax returns and payslips are used to determine your income. If you receive substantial sums in bonuses or commissions each year that significantly lifts your overall earnings, and this hasn’t been addressed by your broker, then you want to bring it up.
- Split debt evenly with your partner
You may be purchasing together, but if the property is to be secured in your own name then make sure you have evenly divided up liabilities between both of you.
Noting down all the debt and outgoings as your own, rather than as 50/50 in your relationship, will significantly lower your personal borrowing capacity in the eyes of a lender.
The checking services, under the name GoBank, will provide banking access to almost anyone over the age of 18 who passes an identification check. The accounts will have straightforward and low fees: theres no minimum balance, no overdraft fees and a $8.95 monthly fee. The monthly cost can be waived with a monthly direct deposit of $500 or more.
Walmart customers want easier ways to manage their everyday finances, Daniel Eckert, senior vice president of services for Walmart US, said in a statement. When our customers have options, they win.
The nations largest retailer has been trying to get into the banking sector for years in an effort to open up access to the under-banked, people with little or no access to traditional banking.
Since the recession, many banks have tightened standards for banking services, thus limiting access for those with weak credit. Nearly 10 million US households to not use a bank, according to the Federal Deposit Insurance Corporation.
Walmart tried to become a deposit-taking bank, but the industry uproar forced the company to abandon its plan in 2007. The retailer has since been putting together a series of financial services that dont require a federal bank charter, such as its low-fee money transfer service launched in April and pre-paid cards in partnership with American Express launched two years ago.
Walmarts new GoBank, the companys first foray into full-service checking, is intended to fill the gap where traditional banking fails. It will not use a credit bureau rating to determine eligibility, as is typical with most checking accounts, instead potential customers only need to pass ID verification.
The service, which will launch nationwide by the end of October, also wont skimp on the features. Enrollees will get a MasterCard debit card and have access to mobile features like person-to-person payments and budgeting tools.
The standard credit card has no bells and whistles. While you shouldnt expect discounts and rewards with these cards, there are benefits to using one. They are easy to use, simple to understand, and anything but complicated. When you sign up, the credit card company will assign you a balance and you can make purchases up until that limit. Once you make your payment at the end of the month, your balance starts over. Here are a couple types of standard credit cards:
- Low interest. When you know youll be making a large purchase that takes several bill cycles to pay off, a low interest credit card can be an excellent method of credit. These cards usually start with a very low interest rate in the initial stages and increase over time.
- Balance transfer. While each balance transfer credit card differs on terms and rates, most are an excellent way to reduce the interest youre paying on existing debt. According to Jeff Weber of Smart Balance Transfers, The beauty of balance transfer credit cards is that you can actually transfer high interest credit card balances to cards with a much lower, friendlier rate. In other words, youre able to trade out an existing interest rate for one that fits your budget.
If the standard credit card is the vanilla of the group, the reward credit cards are the cherry on top. These cards are backed by rewards programs and incentivize each purchase with accumulating points. The cardholder can then redeem these points for prizes like airfare, hotel accommodations, gift cards, concert tickets, or whatever else the program offers. A few examples include:
- General reward cards. Most major credit card companies now offer general reward programs to consumers. These programs reward the cardholder for every dollar spent on the card by assigning points. These points can then be used for everyday purchases, given to charity, or redeemed in exchange for gift cards.
- Cash back cards. While prizes and rewards are great, some people prefer cash. The typical cash back card rewards consumers for making purchases by giving one percent back on all purchases. These cards frequently come with annual fees attached to them.
For consumers with very specific needs and demands, specialty credit cards are advantageous. They serve as an alternative to generic cards that have no particular target group. Two of the most popular types of specialty cards are:
- Student cards. Student credit cards are for college students with no credit history. These are introductory cards that help students build healthy credit while taking advantage of lower than average rates.
- Business cards. If youve heard of business executives making charges to their business account, its probably being done on a business credit card. These specialty cards provide specific bonuses and perks, such as expense reports, higher credit limits, and individual employee cards. Many also offer rewards programs with redeemable prizes geared towards the corporate world.
Bad budgeting, irresponsible spending, or honest mistakes can all lead to credit issues. For consumers with below average credit scores, credit repair cards are a great solution. These cards are designed to rebuild poor credit history while establishing limits and guidelines to ensure there is no reckless spending behavior. Two examples are:
- Secured credit cards. As the name suggests, these cards are secured by an initial down payment or some sort of collateral. In the unfortunate situation that a payment cannot be made, the credit company is legally allowed to use the collateral to satisfy the debt.
- Prepaid credit cards. While they arent really credit cards by definition, they can serve the same purpose for people with poor financial history. The cardholder can transfer a specific amount of money to the card each month and it gets declined when the balance reaches zero.
As you can see, there are plenty of choices to choose from. While these are the basic types, each credit card company has their own unique rules, rates, rewards, and advantages. Before selecting your card, read the fine print and ask questions about things you dont understand.
Unbanked and underbanked consumers, many of whom have modest incomes, face numerous financial challenges. In recent years, product development designed to serve these individuals has almost exclusively leveraged prepaid accounts. Meanwhile, consumers have become much more aware of the importance of building and maintaining a good credit score–a goal not typically achieved with prepaid products. Regulatory and profitability challenges have caused some providers of secured credit cards to leave the market, although a few national financial institutions as well as several smaller ones are finding ways to make their products successful. Opportunity awaits issuers that are willing to reevaluate this underdeveloped product. Millions of consumers–young adults, recent immigrants, and consumers with past financial difficulties–are in need of credit building tools.
Mercator Advisory Groups most recent research report, Secured Credit Cards: An Alternative Path to Mainstream Card Products, examines the competitive landscape for secured credit cards, reviewing emerging products features and positioning.
Secured credit cards are a valuable tool for consumers to build or rebuild credit, comments Michael Misasi, senior analyst at Mercator Advisory Group and one of the reports authors. Financial institutions should not overlook the opportunity to establish long-term relationships with secured credit products.
Highlights of this research report include:
- A review of the secured card product landscape
- A discussion of the relevant target markets for secured cards, thin/no file and subprime
- Estimated addressable market (number of consumers) for various secured card market segments
- An analysis of key product trends such as upsell strategies, use of partially-secured cards, and the budgeting use case
This report contains 19 pages and 5 exhibits.
Companies mentioned in this report include: Bank of America, Capital Bank, Capital One, Digital Credit Union, First National Bank of Omaha, Fifth Third Bank, Merrick Bank, Navy Federal Credit Union, Suntrust, Synovus Bank, US Bank, USAA, Wells Fargo
Members of Mercator Advisory Groups Credit Advisory Service have access to this report as well as the upcoming research for the year ahead, presentations, analyst access, and other membership benefits.
For more information and media inquiries, please call Mercator Advisory Groups main line: (781) 419-1700.
For free industry news, opinions, research, company information and more visit us at http://www.PaymentsJournal.com.
About Mercator Advisory Group
Mercator Advisory Group is the leading independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the worlds largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal PaymentsJournal.com.
Read the full story at http://www.prweb.com/releases/2014/09/prweb12155298.htm
Just make sure you understand the fees and terms of these credit card offers and can fully pay off the debt by the time the offer expires–set up an automatic payment to chip away at it–lest you end up owing a ton of interest on the full amount when the offer expires.
Pros: Easy to qualify for, might be able to finance the project without interest
Cons: Lots of pitfalls to beware of, such as offer expiration dates and high interest rates after the offer expires; short payback time period; no tax benefits as you might get with a home loan
Consider Personal or Unsecured Loans for Medium-Sized Projects
For projects between $15,000 and $50,000, Credit Karma says personal or unsecured loans are a good fit. Thats because these types of loans are easy to apply for, dont require any collateral (your home is not in jeopardy if you default), and they tend to offer higher loan amounts than credit cards do.
On the flip side, however, interest rates tend to be higher on personal and unsecured loans than they are on home equity or home equity line of credit (HELOC) loans. For example, a $50,000 unsecured personal loan at Wells Fargo has a 7.244% to 9.247% APR, depending on the term of your loan (36 months to 60 months)–which is a great deal more than the 4.06% APR you can get on a home equity loan, according to the latest average posted on Bankrate.
“I don’t know if you guys have ever been to the World Cup in Brazil, but the country shuts down. And the rice milling produced, in June and July, about 40% of what they normally run, because nobody went to work. We actually put televisions in different parts of the plant, to try to get people to come to work. And we got most of our people to come to work, but it didn’t matter that much, because the mills weren’t running,” Short said.
Order for rice protein
Robert Smith, senior vice president for sales, said a joint project with DSM that took two years and $3 million to develop a branded rice protein is now coming to fruition. The company’s Proryza rice protein brand, which was formally launched at the IFT trade show in June 2013, garnered its first commercial orders during the second quarter.
“Consumers are demanding non-allergenic, non-GMO, minimally processed, natural, and in some cases vegetarian or vegan protein sources. Our products meet all of these important criteria, which put us in the right place at the right time to drive sales well into the future,” Smith said.
All of that news made company officials bullish on the future. But expansion comes at a cost, and after consolidating debt and other charges, the company reported a hefty increase in its net loss for the quarter.
Consolidated revenues in the second quarter were $11.3 million, a 21% increase as compared to $9.4 million recorded in the same period in 2013. USA segment revenue increased by 116% to $6.7 million compared to the 2nd quarter of 2013. This also represented a 35% increase over the first quarter of 2014.
In Brazil, revenues were up 71% year over year despite the World Cup interrruption as the company’s Irgovel sudiary ramps up production. Rice bran production at the plant now tops 300 tons daily.
But the company recorded a net loss of $15.1 million for the quarter, or $3.52 per share. Short was adamant in a response to a question from an analyst that the company has sufficient cash to continue to operate for the near future without having to issue more equity.
Before there was uberX and Lyft, there were hackers.
These men, usually elderly and African-American, provided a similar service to carless customers leaving urban core stores.
They would charge customers who were carrying loads of groceries a small fee for a ride home.
Like Lyft and uberX, they capitalized on a need for transportation cheaper than a cab but more efficient than the bus.
That’s why it’s been worrisome to see the recent attempts by Jacksonville City Council members Stephen Joost and Robin Lumb to toughen regulations against the driver services.
POWERED BY DIGITAL AGE
Lyft and uberX allow people to download an app to their smartphones and click on it.
A driver using his personal vehicle will arrive to pick them up and take them directly to their destination.
The fee is paid through the app via credit card.
According to the Times-Union, city parking division chief Jack Shad recently told council members that the companies were operating illegally because they weren’t following city regulations, such as requiring their drivers to have a valid for-hire permit issued by the city and allowing city inspections.
They’ve been ordered to cease-and-desist even as the companies have asked to work with the city to craft regulations that account for new technology.
Joost and Lumb said they want penalties harsher than $500 per violation.
I get that Joost and Lumb want to make sure that people are safe when they choose a mode of transportation.
That’s a valid concern.
But Jacksonville has too big of a transportation problem for anyone to make it even harder for riders to have more efficient choices.
And for some people in Northwest Jacksonville who need to reach better-paying jobs south of the St. Johns River, uberX and Lyft could be a viable option.
While one-way bus fare is $1.50, buses can be delayed by stops and people can miss them, so many employers don’t count the bus as being reliable.
And that’s why many people forced to depend on buses don’t get hired.
An uberX fare, however, can be split among passengers, and can make the ride more affordable.
While many working poor can’t afford computers or cars, many own mobile phones as a 2012 Pew Center study found.
Many are also able to find secured credit cards and other cards.
So for some, uberX or Lyft may be a better option.
The websites of both companies, by the way, show that they operate throughout the city.
The cab and limousine owners are right to be concerned about losing business.
And Joost and Lumb are right to be concerned about safety and whether Uber and Lyft are playing by the rules.
But we now live in an age of innovation, one in which technology and new ideas will continue to make life cheaper and more convenient for people.
Lyft and uberX, like the food trucks, are part of this innovative age.
Like the hackers, these companies — which operate in cities throughout the nation — have tapped into an unmet need.
City Council should find a solution that recognizes that need.
It should not do something that could hurt the very constituents it’s trying to protect.
Website for the Pew report: tinyurl.com/mt7e2ww.
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The Financial Conduct Authority has fined the Royal Bank of Scotland and NatWest £14.5 million for advice failings around mortgage sales.
Two separate reviews by the regulator found that in more than half of the cases sampled, the suitability of the advice was not clear from the file or recording. The advice failings in the sales process included adequate affordability assessments, not properly advising customers on consolidating debt and not providing adequate guidance to customers on which mortgage term was best for them.
Only two of the 164 sales reviewed overall were considered to fully meet requirements. In the banks own mystery shopping tests, in three instances advisers were found to have given views on the future movements of interest rates.
The regulator said that the banks failed to rectify the problem after earlier findings by its predecessor, the Financial Services Authority.
Tracey McDermott (pictured), director of enforcement and financial crime at the FCA, said: Taking out a mortgage is one of the most important financial decisions we can make. Poor advice could cost someone their home so it’s vital that the advice process is fit for purpose. Both firms failed to ensure that their customers were getting the best advice for them.
We made our concerns clear to the firms in November 2011 but it was almost a year later before the firms started to take proper steps to put things right. Where we raise concerns with firms we expect them to take effective action to resolve them without delay. This simply failed to happen in this case.
The FCA added that there is so evidence of significant consumer detriment and noted that the banks agreed to settle early and receive a 30% discount on what would have been a £20.7 million fine.
DUBLIN–(BUSINESS WIRE)–Research and Markets (http://www.researchandmarkets.com/research/g3bdnv/secured_credit)
has announced the addition of the Secured
Credit Cards: An Alternative Path to Mainstream Card Products
report to their offering.
Secured Cards Cement Long-Term Credit Relationships
Unbanked and underbanked consumers, many of whom have modest incomes,
face numerous financial challenges. In recent years, product development
designed to serve these individuals has almost exclusively leveraged
prepaid accounts. Meanwhile, consumers have become much more aware of
the importance of building and maintaining a good credit score – a goal
not typically achieved with prepaid products. Regulatory and
profitability challenges have caused some providers of secured credit
cards to leave the market, although a few national financial
institutions as well as several smaller ones are finding ways to make
their products successful. Opportunity awaits issuers that are willing
to reevaluate this underdeveloped product. Millions of consumers – young
adults, recent immigrants, and consumers with past financial
difficultiesare in need of credit building tools.
The research report Secured Credit Cards: An Alternative Path to
Mainstream Card Products examines the competitive landscape for secured
credit cards, reviewing emerging products features and positioning.
Highlights of this research report include:
- A review of the secured card product landscape
A discussion of the relevant target markets for secured cards, thin/no
file and subprime
Estimated addressable market (number of consumers) for various secured
card market segments
An analysis of key product trends such as upsell strategies, use of
partially-secured cards, and the budgeting use case
Key Topics Covered:
- Executive Summary
- Overview of Secured Credit Card Products
- Business Model
- Potential Market and Customer Base for Secured Credit Cards
- Market and Competition for Secured Credit Cards
- Industry Positioning of the Product Suite
- Product Trends
- Regulatory and Risk Considerations for Secured Credit Programs
- The Relationship Between Prepaid and Secured Credit Cards
- Conclusion: Strategic Implications and Opportunities
- Bank of America
- Capital Bank
- Capital One
- Digital Credit Union
- First National Bank of Omaha
- Fifth Third Bank
- Merrick Bank
- Navy Federal Credit Union
- Synovus Bank
- US Bank
- Wells Fargo
For more information visit http://www.researchandmarkets.com/research/g3bdnv/secured_credit
Of the roughly 21 million students attending US colleges and universities during this school year, 1 million will earn an associate’s degree, 1.8 million will earn a bachelor’s degree, 821,000 will earn a master’s degree and 177,500 will earn a doctoral degree, according to the National Center for Education Statistics.
So if you happen to be a recent or upcoming grad, the odds are you have three things on your mind: jobs, housing and finances.
1. Finding the Right Job
Certainly, the dollars are important, not least because average salaries for 20- to 24-year-olds have actually lost ground on an inflation-adjusted basis over the past 30 years. Even so, there are three important matters to consider first.
To start, does the work interest you? Can you see yourself at that company, school or hospital for a couple of years? Employers will give a pass to recent college grads for their first and even second jobs. Thereafter, your moves need to make sense (that is, to demonstrate increasing responsibility within a field) and the tenures should be lengthening. Recruiting and training new hires is a costly undertaking, so you can understand why no employer would want to make that kind of investment for the benefit of a candidate’s next boss.
Second on the list is environment. Look around. How do you feel about the people with whom you’ll be working? What about the person to whom you’ll be reporting? What’s the pace of the work flow? Remember, interviewing is a two-way street. So use that time to gain as much of a sense for the people in the company as they’re attempting to do the same for you.
Third–and as far as I’m concerned–the most important consideration: Will these folks help you to become more tomorrow than you are today? Will they train and mentor you? Are they setting forth a reasonably attainable career path? Given that US companies are trending away from apprenticeships and professional development activities, this is a critical consideration as you map out your career.
If the answers to the preceding are all positive, take heart. Not only will you be able to look forward to interesting work with people you respect at an organization that values your involvement, you can probably count on being fairly paid as well.
2. Deciding on a Home
Once you’ve zeroed in on a place to work, the next order of business is securing a place to live. College grads who need to split the rent often use sites such as Craigslist and Roomie Match for their search. But partnering with a responsible roommate is, at least at this stage, more important than finding a soul mate: Dating either works out or it doesn’t; when it doesn’t, the parties typically go their separate ways with little or any financial entanglements to unwind.
Not so with roommates.
Landlords don’t ordinarily care if there are one, two or six people sharing the space, as long as the rent gets paid. In fact, it wouldn’t be unusual for all the roommates to be asked to sign a lease that holds each party fully responsible for the total value of the contract. The term for that is “joint and several responsibility,” and the downside can be significant.
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What if four people are sharing a $3,000 per month apartment and one of them is unable to come up with the cash? Instead of $750, you and your other two roommates will each end up having to pay $1,000. That’s all the more reason to do two things ahead of time:
- Do your best to thoroughly assess the character and financial capacity of your prospective roommates. Verify employment, contact personal references, do a background check and trust your intuition.
- It’s also wise to establish a sacrosanct set of house rules, the most important of which should be that everyone is required to remit his or her share of the rent into a common account no less than one week before the payment is due (payroll dates taken into account). That way, a bounced check can be covered and more serious problems can be addressed ahead of time.
3. Organizing Your Finances
You’ll soon be on your own, so now is the time to devise a plan for handling all your financial responsibilities–rent, food, debt payments and so forth. I’ve written before about taking a 25% approach to budgeting as a starting point.
Assume that the first 25% of your gross (pretax) salary will be consumed by taxes: federal, state, local, Social Security and Medicare. The second 25% represents the most you should spend on rent or mortgage payments. If your annual salary is, say, $40,000, then 25% of that amount–$10,000 per year, $833.33 per month–would be as high as you should be willing to go.
The third 25% represents the maximum amount of debt service you can reasonably carry, including for the repayment of your student loans.
That leaves $833.33 per month for everything else–food, transportation, entertainment and a savings stash, which should total six months’ worth of expenses at the very least.
Can’t make that work? Then reconsider the apartment, limit your borrowing or renegotiate the payments for the loans you have in place (government student loans in particular can be restructured under a variety of relief programs). The point is that other than for your tax obligation, the money you earn is yours to spend as you see fit.
And one more thing.
This is the perfect time for establishing good personal credit habits, if for no other reason than it’ll save you money today and in the long run. For example, always make your payments on time to avoid budget-busting late fees, keep your credit cards at no or low balances and only apply for the credit you absolutely need.
Finally, be sure to check your credit bureau reports every year, not just because it’s important for you to know what the bureaus have to say about you, but also to ensure what they’re saying is true! The good news is that federal law entitles you to one free credit bureau report per year. (You can get yours at www.AnnualCreditReport.com–a site that’s run by the Big-3 bureaus: Experian, Equifax and TransUnion.) Remember to put your challenges in writing and calendar a follow up. You can also get a free credit score every month at Credit.com.
More on Student Loans:
- A Credit Guide for College Graduates
- How to Pay for College Without Building a Mountain of Debt
- Strategies for Paying Off Student Loan Debt
Image: Minerva Studio
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