Tag Archives: Credit Report

Learning How Credit Works: Managing Your Spending

Learning How Credit Works: Managing Your Spending

Many Americans have a working knowledge of how credit works and yet still continue making costly mistakes that impact creditworthiness, interest rates on financing, and overall economic stability. Take time to learn how credit influences your life and the decisions you could make to improve your credit score. It can be surprising how a few simple changes can dramatically change your credit score for the better.

What Is A Credit Score?

Various credit bureaus track credit-related information for all U.S. adults. These bureaus use various formulas to calculate a person’s credit rating, a numerical value of his or her creditworthiness.

  • A bad credit score is any credit score under 640.
  • Fair credit scores hover in the 640 to 700 range.
  • Any credit score between 700 and 750 qualifies as a good score.
  • Excellent credit includes credit ratings of 750 to 850.

This scale may seem straightforward at first, but countless factors go into an individual’s credit scores. It is very important for anyone who seeks any type of financing or credit line to know the terms and conditions and how interest will apply to avoid significant credit-related problems in the future. Defaulting on loans or failure to pay your bills on time can negatively impact your credit score for years to come.

Things That Impact Your Credit Score

If you intend to apply for a credit card, a small business loan, or financing for a home or vehicle purchase, one of the first things a creditor will look at is your debt-to-income ratio. This ratio basically defines your financial flexibility. If you have a low debt-to-income ratio, this means you make more than enough money to pay your debts based on your average income. A high debt-to-income ratio means that you likely have very little income leftover after paying your bills each month. If you have a high debt-to-income ratio, a creditor will likely feel less inclined to extend you credit since there is a lower chance you will pay your bills on time and in full.

Credit bureaus also take your bill paying habits into account when assigning your credit score. Some of the various factors that can influence your credit score include:

  • Failure to pay a bill on time, or multiple late payments on a credit line. Consistent timely payments can comprise as much as 35% of your overall credit score.
  • Defaulting on a loan or failing to pay back a loan as required by the loan contract.
  • Attempting to defraud a creditor.
  • Changing jobs frequently.
  • Frequent or too many credit requests in a short timespan. This could indicate to the credit bureau that you are attempting to open several lines of credit at once.
  • Periods of unemployment.
  • Private and government liens. Some liens may remain on your credit report for up to ten years.
  • Unpaid utility bills.
  • Ignoring potential inaccuracies or identity theft. It is essential to carefully monitor your credit lines and address fraudulent or suspicious activity as quickly as possible.

Ultimately, whenever you take on any type of loan or debt it is essential to pay it off as soon as possible while abiding by the terms of the contract. A lender will stipulate when and how payments are due, how your payments apply to your principal and your interest, and your interest rates.

Working Your Way Out Of Bad Credit

If you want to increase your credit score, your first step is to prioritize your spending in a way that reduces your debt. Paying down the balances on your open lines of credit and active loans is the best way to increase your credit score, but this takes time. If you are trying to recover your credit score or are just starting to build credit, a few tips can help you avoid astronomical interest rates and set you up for a better credit score in the long run. Some of the things you can try to boost your credit score more quickly include:

  • Paying off liens as soon as possible. Liens are one of the most detrimental factors in your credit score, so work toward paying them off as quickly as you can.
  • Paying off higher-interest debts first. The higher the interest rate on a line of credit, the more you will pay overall to settle the debt. Target your highest interest rate loans and lines of credit and work on paying those off before your lower-interest rate debts. Of course, you want to keep making payments on all your debts, but prioritizing extra money toward your higher-interest loans will benefit you more in the long run.
  • Limit frivolous spending. Eating takeout every day for lunch at work is more expensive than many people realize. You could very likely buy groceries and cook your own meals for a fraction of what you spend on takeout. The money saved could make a major difference in your outstanding balances.
  • Limit the number of credit inquiries you request in a short time. If you are shopping for credit cards, research available offers on your own and wait to request an inquiry until you are sure the credit line meets your needs and budget.
  • Keep outstanding balances as low as possible. If you need credit for a sudden and unexpected expense this could be difficult, but ultimately you should strive to keep all outstanding balances as low as possible.
  • Pay more than the minimum payment. If your credit card requires a $50 minimum payment, remember that this amount will not entirely go toward paying down the principal on the account, but also the interest. However, whatever you pay over the minimum payment amount usually goes toward the principal. For example, on the credit card with the $50 minimum payment, paying $60 would ensure the extra ten dollars goes toward the principal, which in turn lowers the overall interest you will pay on the account.
  • Set up payment reminders. Most Americans pay their bills online now thanks to the ease and convenience of online bill paying software and most creditors having proprietary apps. Find out if your creditor offers any type of app or payment reminder program you can use to build a solid payment schedule for yourself.

Bad credit can happen to anyone for various reasons, so use these tips as a starting point and develop a repayment plan that helps you tackle your debts in the most beneficial way possible to escape debt and increase your credit score.

Been Turned Down by Car Dealership? Car Dealerships that Work with Bad Credit and No Credit

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Been Turned Down by Car Dealership? Car Dealerships that work with Bad Credit and No Credit

If you are looking to buy a used vehicle with less than perfect credit, you may have found that traditional local car dealerships are unable to finance your purchase. While purchasing a vehicle is stressful even with the best credit, having negative marks on your credit can make it seem impossible. Luckily, there are other options to financing your used car purchase while still getting you a reliable vehicle for your family. You can try to ask a family member to loan you the money or you can search for bad credit car dealerships.

Finding Bad Credit Car Financing

Been Turned Down by Car Dealership? Car Dealerships that work with Bad Credit and No CreditWhen looking for auto financing with bad credit, it is important to decide how you would like to finance the vehicle. If you have found a used car that you really want at a particular dealership, you may choose to find a company such as Red Mountain Funding. We have working relationships with many dealerships in the Mesa, Arizona area.

If you haven’t found a vehicle you want, you should start by entering car dealerships for bad credit near me into a google search. Red Mountain Funding is one of the only car dealerships to help you get the car you want even when you have been turned down by other dealerships.

What are Bad Credit Dealerships?

If a traditional auto loan and a personal loan from family are out of the question it is time to start searching for a guaranteed credit approval car dealership in your area. A bad credit car dealership focuses on financing used vehicles for people who have had issues in the past that have resulted in bad credit. Most of these dealerships operate as buy here pay here car dealerships. This means that you will make all your car payments directly to the dealership rather than a bank or financing company.

Benefits of Bad Credit Dealerships

If you have a steady income and are fully employed, Red Mountain Funding will make the financing process easy. You be asked to bring in proof of income and employment. This information will be used to calculate how much you can afford to pay monthly on a vehicle. Once they have determined your ideal payment amount, they will review their inventory for vehicles that meet your family’s needs. Often you will have an approval immediately and leave with your car the same day.

Types of Bad Credit Car Dealerships

You may be thinking “there are several car dealerships near me with no credit check, how do I choose?” While the choice may seem difficult, you should start by researching the terms of the loans each dealership offers, the approval process, and the inventory the dealership has on hand. You don’t want to compromise quality for ease of financing.

Determine if you are looking for financing at bad credit car dealerships with a buy here, pay here option or an alternative financing company that will give you a guaranteed approval loan to be used at a dealership of your choice.

Been Turned Down by Car Dealership? Car Dealerships that work with Bad Credit and No CreditHaving bad credit should never stop you from getting a reliable vehicle for yourself or your family. Everyone has made mistakes or fallen on hard times in the past and we are here to help you get back on level ground. Having a great quality used car with payments you can afford and financing you can achieve will help you to rebuild your credit for future purchases. We strive to make the financing process as painless as possible regardless of your credit history. Contact Red Mountain Funding Inc. today to find out how we can help you get behind the wheel of a safe and reliable vehicle.

Red Mountain Funding is a family owned and operated bad credit repo car dealership that would love to help you get the reliable vehicle that your family needs. We specialize in providing people with less than perfect credit with the auto financing they need. Not only do we have a stock of pre-owned or repossessed vehicles, we also have working relationships with several dealerships in the area to get you the car you want with no credit check necessary.

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Ethical Car Sales: Understanding ‘Straw Purchases’ in Auto Buying

Ethical Car Sales 'Straw Purchases' in Auto Buying - Red Mountain Funding

A straw purchase is when goods or services are purchased for someone other than the person making the purchase. Not all straw purchases are bad.

Legal Straw Purchases

Parents make straw purchases every day when they purchase clothes for their children, buy groceries for an elderly neighbor who can’t get to the store, or pay a friend’s electric bill so their lights stay on.

Sometimes a straw purchase is not an act of kindness. It can also be an act of fraud.

Illegal Straw Purchases

Purchasing a gun for someone and lying about who will be using the gun is illegal, as is buying alcohol, cigarettes or other tobacco products for someone who is under the legal drinking or smoking age in Arizona.

Car Loan Straw Purchases

It’s common to wonder: Is a straw purchase on a vehicle illegal? Straw purchases come up frequently with auto loans, especially if the person needing the car has poor credit or no credit.

A common straw purchase scenario is the use of a co-borrower. The co-borrower’s credit is used to get approval for the loan. A co-borrower is different from a co-signer in that the co-borrower is a joint owner of the vehicle.

Co-signers don’t hold an ownership interest in the car but are held responsible for making payments if the primary borrower fails to pay. This type of straw purchase is legal.

Borrower Straw Purchase Scams

What is not legal is for a borrower to purchase a car solely in their own name without revealing the identity of the person who will be using the car. In fact, if the car is used for illegal purposes, the original purchaser on the Arizona auto title may be held criminally liable. If you’ve done this, an Arizona auto title service may be able to help you fix it.

Another type of borrower scam is for a purchaser to use someone else’s information on the loan application to qualify for the loan.

Dealer Straw Purchase Scams

Unfortunately, there are car dealers out there who will try to use a straw purchase to scam buyers with poor credit. There are several possible scenarios for this scam. All of them start with the dealer telling the buyer that they can’t possibly qualify for a loan by themselves because of their credit situation. The dealer then tell the buyer to find a co-signer for the loan.

The dealer already knows that the buyer won’t get approved for a car loan, even with a strong co-signer. Despite this, the dealer continues to convince the buyer to get a co-signer by telling them that it will help reestablish good credit.

Option One

The dealer tells the buyer that if both parties are on the loan, the interest rate and the payments will be very high. Then the dealer explains that if only the signer with the strong credit history is on the loan, the payments and interest rate will be low.

Option Two

The deal falls through because the dealer can’t convince the primary buyer to stay off the loan. A few days later, the dealer calls to tell you that you must bring the vehicle back and they will charge you for its use. Sometimes a dealer threatens to keep the car you brought to trade in.

The buyer, now desperate, asks what they can do to keep the car. The dealer says, “If the co-signer wants to buy a car, the co-signer can buy it in their own name.”

Option Three

This one is underhanded. The dealer sells the car to only the co-signer without the primary buyer or co-signer realizing what’s happening. This is accomplished with a second set of paperwork. The seller rushes the paperwork and things get very confusing. Excuses are made about needing extra paperwork to get the loan approved.

Later, after the purchase is complete, the dealer may destroy the proper paperwork. This intentionally leaves the paperwork with only the co-signer as the buyer. It can take over a month for everything to come to light, and this usually happens when the person who thought they were co-signing gets the first bill and the primary buyer isn’t anywhere on it. It can be very difficult to undo this.

How to Avoid ‘Straw Purchases’ in Auto Buying

Obtain a copy of your credit report and scores before you attempt to get a loan. Bring a copy with you to the dealership so you will know if someone tries to tell you something that doesn’t match what you know is true.

When the dealer tells you that you’ve been approved, ask to see the approval letter. The letter from the lender will have both names of the people responsible for the loan.

Another option is to get pre-approved for a loan. Go to a bank or finance company ahead of time to get pre-approved. This allows you to go to the dealership with your financing already in place. Red Mountain Funding lets you apply online.

Don’t sign more than one contract. The dealer may make an error and ask you to sign another contract. If so, rip up the first contract personally before you sign the second one.

Have the co-signer with you at the dealership. Don’t sign anything unless you are both there.

There should be only one contract, even though there are two people signing. The contract will have two signature lines, one for the primary buyer and one for the co-signer. Make sure the right signature is on the right line.

Take your time! Buying a car is a lengthy process. Do not go to the dealership if you have an appointment coming up, and do not let the dealership rush you. If anyone tries to rush you, be suspicious and don’t hesitate to get up and walk away.

Skip the Hassle

One option is to simply skip the hassle of the dealership. For more than 20 years, Red Mountain Funding has been Arizona’s trusted, family-owned-and-operated auto loan provider. Contact us to find out how we can help you find financing that fits your budget.

Everything You Need to Know About Your Free Yearly Credit Check

Everything You Need to Know About Free Yearly Credit Check - Red Mountain Funding

Lenders determine whether to extend a loan to you based on the information in your credit report. If they decide to offer the loan, they will use that information to determine what interest rate and payment terms they will provide. It is important that your credit report be accurate and that you are aware of the information it contains before seeking a loan.

As a part of the Fair Credit Reporting Act, the national credit reporting companies – TransUnion, Equifax and Experian – are required to provide you with a free copy of your report once every 12 months at your request.

What Is Contained in a Credit Report

The three national credit reporting companies each produce a separate report, and the information on each may be different. Some lenders report to one or more agencies, but not the others.

Your credit report will be formatted slightly differently for each company. The basic sections, however, are the same.

Personal Information

The section with your personal information contains details about your name, current address, Social Security number and telephone number. It may also contain information about previous employers with their address and the position you held. Finally, it will include any information about bankruptcies, civil judgments or tax liens against you.

Creditor Information

This is the heart of your credit report and contains all your current lines of credit. Each section here will contain the:

  • Creditor name
  • Type of loan
  • Credit limit or highest credit balance
  • Monthly payment amount
  • Current balance
  • Payment history

The payment history section shows any time a balance is 30, 60 or 90 days late. The creditor information section is what lenders use to determine if you are maxed out on credit cards, frequently late with payments or already paying a lot of debt.

Creditor Inquiries

The final section of the report contains any recent credit inquiries. When a potential lender asks for a copy of your credit report, you will see it noted in the creditor inquiries section. Several recent credit inquiries may indicate that you are looking to take on new debt.

How to Request a Copy of Your Report

There are three ways of ordering your reports from the credit reporting companies:

  • By phone
  • By mail
  • Through a central website

When ordering your reports, you may request all three reports at once, or merely one particular report. You are entitled to one report from each agency every 12 months.

Whichever way you request your report, you will need to provide your name, address, Social Security number and date of birth. You may also be asked to provide identifying information, such as the amount of a particular loan payment or the name of the county you lived in five years ago. The identifying information requested will vary with each report you request.

To order your report by mail, print out the Annual Credit Report Request Form and mail it to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

Or call 1-877-322-8228 to request your report over the phone.

The easiest method of requesting your report is to visit annualcreditreport.com and complete the request online. This will also allow you to receive the report immediately after completing the request as a download to your computer.

The above source is the only official website to request your free credit report. The personal information it asks for is only to verify your identity; you are not signing up for any service or product.

There are many websites available that allow you to request a copy of your credit report, but they may also charge you fees or sign you up for a service after a free trial. Annualcreditreport.com will never email you asking for personal information, call you to request information or suggest other services you may need.

Correcting Mistakes on Your Report

If you find information on your report that is inaccurate or fraudulent, each of the three reporting agencies has a process by which you can dispute and correct your report. You must go directly to the reporting company’s website to dispute the information.

To file a dispute with Equifax, go to: https://www.equifax.com/personal/disputes.

To file a dispute with TransUnion, go to: https://www.transunion.com/credit-disputes/dispute-your-credit.

For filing a dispute with Experian, go to: https://www.experian.com/blogs/ask-experian/credit-education/faqs/how-to-dispute-credit-report-information/.

You will need to provide copies of any receipts or loan agreements that prove the information is incorrect, as well as a description as to why the information reported is incorrect. The credit reporting company will investigate your dispute – a process usually completed in 30 days. They will then either remove the information from your report and provide you with another free credit report showing the change, or give you the reason for rejecting your dispute.

You should also contact the lender reporting the incorrect information and request that they correct their reports.

Trustworthy Partners

The lender you do business with should be someone you can rely on, someone who understands the needs of those who have less-than-perfect credit. You need dependable transportation, but you may be asking, “How do I get a car with bad credit?”

Red Mountain Funding provides auto financing for bad credit. We are an Arizona-based family company that finances auto loans for everyday people. Red Mountain Funding is a trustworthy company that wants to help everyone get the financing they need – when they need it.

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