Friday, October 24, 2014

Does Marrying Someone with Bad Credit Affect Your Credit Score?

There are ways to avoid letting your spouse’s credit history from affecting your own, and the best way of doing so is understanding how marriage affects your credit score.

In Ontario, the act of getting married on its own won’t change your records or your spouse’s, and once married you and your spouse will continue to have individual credit scores.

What is Bad credit ?

Bad credit is the failure to keep up with your credit agreements and the inability to get approved for new credit. This means you haven't paid your past dues on time. When you have bad credit, lenders are afraid of lending,as you may fall behind on any loan or credit card you're given. This will result for your application for credit to get rejected. The credit score is a good indicator to identify good credit and bad credit. If your credit score is below 620, then it is said that you have bad credit.

Joint Financial Decisions Matter

After marriage, some couples find that it makes sense to assume liability for their spouse’s debt either partially or entirely. Assuming debt changes your financial standing, which creditors will take into account when financing loans. Applying for debt as a couple is a serious decision because if your spouse was unable to make payments on their loans on time in the past, they may also struggle to do so in the future. Debt in arrears and overdue credit cards on loans made as a couple will affect you and your spouse’s credit score.

Giving Creditors Access to Your Spouse’s Credit History

Your creditors will not have access to your spouse’s credit history unless you add your spouse to your financial accounts. Your history will not automatically be merged with your partner’s credit history, however, creditors will look to see your partner’s ability to repay loans. If your spouse has a good credit score, that will tip the balance in your favour while the opposite is true of a spouse with a bad credit score.

Should you Share Your Finances with Your Spouse?

It may advisable to keep your financial accounts separate, especially on accounts where you are the one who uses it most. Even granting user authorization to your spouse allows your creditor to see your partner’s credit history.

If you’re unable to keep your finances separate, be prepared to have your history affect your spouse’s and vice versa. For example, when jointly applying for a credit card, the person with the lower credit score will raise the interest rate on your credit. In the case where both partners have a poor credit history, your application may not be approved at all.

Filing for Bankruptcy

If your spouse is unable to repay their debt, bankruptcy may be their best option. As long as their loans were made separate from you, most likely you aren't liable and in addition, your credit score won’t be affected. Before making the decision, it’s best to consult a professional bankruptcy trustee who will walk you through the important things to consider, such as finances, credit scores, repayment schedules, and plans to regain financial health.

Tips for Dealing with Bad Credit

● Taking your spouse’s last name will not erase your credit history, which is tied their Social Insurance Number

● For repairing bad credit, applying for a loan jointly can raise your spouse’s credit score. Another option would be to fix your credit score individually through prudent borrowing and repayment habits

● Always make your minimum payments! Even if you’re not making large payments to rid your debt, it’s crucial you make minimum payments as to not put yourself in larger debt than necessary

Venetia Rose has been a freelance writer and blogger. She loves to share and keep herself updated with the latest tips in financial consulting. Her interests are cooking, photography, craft and painting. Follow her on Face book

Tuesday, October 21, 2014

Life Insurance Options for Older People

Life insurance is and will always be an important consideration for people of all ages, financial statues, the young and old and, single or married. It offers people feel the security and reassurance that their family members will be covered in an unfortunate event. This is something that probably is higher on the agenda for older people who wish to ensure that their spouse or dependants will be provided in the event of their death. Many companies now offer specific polices which are geared towards older people although the types of cover offered may vary. Different types of cover catered for different needs. This is why it is crucial to have a research around before you buy any type of insurance.

Whole Life Plans

This type of plan has no fixed end date and lasts until the policyholder dies. Then, as long as the payments for the plan have been kept up to date, a lump sum payment will be made to the policyholder's estate.

The main benefit of taking out a whole life policy is the fact that it has no fixed term. It is also possible to ensure that your estate can use the lump sum which is paid to cover any inheritance tax that may be incurred. This is done by putting the lump sum in trust and a specialist tax advisor will be able to provide detailed guidance on this issue.

There are several disadvantages to older people taking out a whole life policy. The payments must be carried on so that the policy does not lapse and this financial commitment may be difficult for people of an advanced age. Also the need for a high level of life insurance may decrease over time as dependants reach maturity and the need to provide for them lessens. Possibly the biggest disadvantage is that the payments for a whole term policy are often considerably higher than for a fixed term life insurance policy.

Fixed Term Plans

This type of life insurance policy runs for a set period, which is often about 25 years. If the policyholder dies within that period then a lump sum payment is made to the estate. However, if the policyholder dies after the policy has expired, even if it is only one day later, then no payment at all is made. Policyholders receive no return on their payments when the plan finishes.

The main advantage of a fixed term life insurance plan is the cost. The monthly payment will normally be quite low. It is also good if the policyholder is only looking to provide cover for dependants up to a certain point in their lives such as children completing university.

The disadvantage of taking out a fixed term life insurance policy is that it is impossible to plan exactly what will happen during the period of time that the policy will run and a longer-term policy may turn out to have been more suitable.

Whether you are interested in covering either yourself or a family member it is important to research on what is offered in the market. There are many different types of insurance policies and some may tick a few of the requirements boxes but not all. It is important to ask a person who deals with these issues before applying or purchasing a specific cover. Generally, an older person considering taking out a life insurance policy would be better opting for a fixed term plan unless they have genuine concerns over inheritance tax. If this is the case then it would be advisable to seek specialist advice before making a decision.

Friday, October 17, 2014

5 Signs You Need to File for Bankruptcy

Most people see bankruptcy as a bad thing. No one wants to have to file for it unless they absolutely have to. In fact bankruptcy is there to help people and businesses get their finances under control (Source: Abakhan &Associates Inc.). It may not be fun, but sometimes bankruptcy is necessary. There are many signs that you are heading in the direction of bankruptcy. The following are five of the more common signs, but this list if not exhaustive. 

Borrowing to meet expenses

You may be living on credit cards just to buy food and other basic necessities. If not the use of credit cards, you may be taking out payday loans to get you through to the next paycheck. Whatever your particular situation is, part of your economic survival is dependent upon borrowing. This situation will usually get worse, not better, and the total amount you owe will keep growing. 

One or more debts are in collections

Regardless of how many debts you have, if one or more of these debts are currently in collections, then you may need to file for bankruptcy. This debt may be a car loan that is overdue that is putting your car in danger of being repossessed, or you may be receiving phone calls from debt collectors. Debts in collection are a sign you do not have control of your finances.

Behind in your mortgage payments

This is a bad sign. Once you get behind on your mortgage payments, it can easily lead to foreclosure. Home lenders are notorious for adding late fees and penalties to mortgage payments that make catching up difficult. Bankruptcy can often save your home. In some cases when you file for bankruptcy, some late payments or other penalties may be forgiven. However, it most cases the late payments and penalties are put on hold. The creditors will not be able to collect if at all until your state of bankruptcy has been resolved.

Your savings is gone

Hopefully if you manage your finances correctly, you seldom to never have to touch your savings. If you have a savings account and it depleted, this is a warning sign that you may need to file for bankruptcy. In addition, if your retirement accounts have also been cashed in or you are considering cashing them in, you may need to file for bankruptcy. A bankruptcy can protect your retirement accounts.

You can only make the minimum payments on your credit cards

If you have sufficient income to pay the minimums on your debt each month, you may not think you are on the verge of bankruptcy, but the fact is, you are not making any progress in paying down your debt. The slightest disruption in your personal finances can easily tip you over the edge and into a bankruptcy. If you have multiple credit cards, it is a smart idea to narrow it down to one card. This will help you stay away from the temptation of using too much of your credit to the point that you can’t pay it back. However, you don’t want to get rid of all of your credit cards because you want to try to maintain the best line of credit as much as possible.

There is no single sign that indicates you are ready for a bankruptcy. However, if you can recognize the signposts as you travel down the road to a bankruptcy, you may be able to make necessary changes. At the very least, you will be ready to file for bankruptcy at an appropriate time and not undergo needless stress in your life by delaying the inevitable.

Thursday, October 16, 2014

How To Stay Calm And Make A Plan During An Unexpected Financial Crisis

No matter how good you are at setting up your finances, a crisis could come along and make life difficult for a while. During those times, it's important to keep calm and have a plan. While dealing with difficult financial situations can be stressful, it is possible to overcome them quickly and stay out of debt. These six tips will help you develop a plan to help you deal with your money troubles: 

Set Small Goals

When you're dealing with complicated financial issues, it's easy to get caught up in try to get through it all. However, small, attainable goals are the way to stay on track when things get overwhelming. Set daily savings goals and weekly objectives that will get you to where you want to go. Some ideas including using coupons, stop eating out and putting more in your savings account. Your long-term goal can quickly become overwhelming if you don't have small milestones you can check off the list along the way. 

Cut Daily Costs

In financial matters, every little bit counts. Look for for ways to cut a dollar or two out of your expenses each day. Meals, vehicles, and utilities are great places to look for unnecessary expenses that can be trimmed. Make it a point to write down a list of items you need when you go to the store and don't get one thing that's not listed. Many people overspend simply because they buy things they think they need or use, but don't.

Pay Off Small Debts First

Normally, it's a good idea to pay off your highest interest debt first. However, since you don't see a monthly benefit to paying off debt until the balance is gone, start with the smallest balances instead. That way, the extra money you save each month will help you weather your current financial storm.

Speak With The Experts

If money is tight, the last thing you want to do is spend more of it on financial advice. That said, experts will be able to plan an individualized path and a budget to get you through your current issues. The upfront cost is well worth it in terms of strategic planning and peace of mind. Financial experts can advise you on the best solutions to your financial issues, like credit card debt, bankruptcy and more strict budgets. 

Sell Unnecessary Items

A financial crisis is a great opportunity to simplify your life. There are likely a number of valuable objects in your home that you no longer need. Consider selling jewelry, televisions, and even second vehicles if they aren't truly necessary. You can do this at a garage sale, or through your local classifieds online. For items that are worth more, don't be afraid to wait for a better offer. Getting your money's worth on a car is often more important than selling it quickly to a first bidder. 

Ask Family For Support

No one likes to ask their extended family for a loan. Your family and friends are probably worried about you though, and are a great resource when financial times are difficult. Just remember--if you feel uneasy about asking them for help, just be sure to help them when the situation is reversed. You don't always have to ask for money to get support though. Consider staying with relatives for a short while if you can't afford rent, or let them provide more dinners for your family.

A financial crisis is a difficult, frightening event that no one wants to experience. While it can be scary, these tips can help you overcome your financial issues and get back to normal life in no time.

Informational credit to Paddon & Yorke Inc.

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