Many consumers will get items in the mail that say they are Pre Qualified and some will get items in the mail that say Pre Approved. However, do not be fooled, there are differences. Pre Qualified and Pre Approved is very common in the mortgage industry and if you are unsure of the meaning behind them both, you could set yourself up for disappointment.

Anytime you are in the market for a home you first will need to speak with a bank, credit union or mortgage lender. These entities will first request to Pre Qualify you for a mortgage, and then the next step will be to Pre Approve you.

Pre Qualified
When you speak with a bank, credit union or mortgage lender they will ask you certain basic information. They will want to know your average yearly income, if you own a car, what bills you have, revolving debt, how much you owe on credit cards and they may ask if you have any outside payments such as child support or lien repayments. They may also ask if you have ever filed for bankruptcy or had a foreclosure in the past 3 years.

Next, your bank, credit union or mortgage lender will perform a generalized estimate on how much you will be able to borrow. They will also provide an estimate on interest rate, taxes and or insurance. The Pre Qualification step will give you an overview of what you may be able to handle and get approved for when purchasing a home. This step will not affect your credit score or rating and will have not list as an inquiry on your credit report.

Pre Approved
The Pre Approval step is a more in-depth look at your finances and will provide a more accurate picture of what you will be able to be approved for. This step will require all the information you provided during the Pre Qualification process and query that information against your credit report.

This step will request a snap shot of your credit report and your financial commitment standing. Your credit report will receive an inquiry and the lender will then base their decision on the information listed in your credit report. If your credit report is not strong enough then the bank, credit union or mortgage lender may suggest options you can do in order to improve your credit score or credit rating.

Once you are Pre Approved you will have more confidence that you will be able to purchase your home. The next step will be to choose a home that is of equal value or of less value that you are approved for through the lender.

Empower – Educate – Take Action

H & I Credit Solutions

At some point in many of our lives, bad financial decisions are made that can affect your credit rating in a negative way. A rating of less than 580 is considered bad credit (some may say terrible credit), which limits the options of getting loans and other forms of credit available to you. Nobody wants to live their entire life with such a bad credit rating, certain measures may need to be taken to rectify the situation. One remedy for a negative rating is to apply for a bad credit loan. Believe it or not, there are institutions and individuals that specialize in giving out bad credit loans to persons with negative credit ratings.

The first step is to meet with a financial adviser and ascertain exactly how your credit rating is, so you can have a clear picture of the status and the options available as far as bad credit loans go. It is prudent to borrow what can be repaid quickly without further affecting the credit rating. A common form of bad credit loans, are loans for , computers, or jewelry. Most pawnshops will accept these items against a loan that has to be paid back with interest within the stipulated time frame. If the full amount is not repaid by the expiry of the said period, then the pawnshop can sell the item to recover their investment.

Another form of a bad credit loan is a loan against a car that you currently own. Proof of ownership (car title) has to be provided and left as collateral with the lender. It is usually common to be offered an amount a little less than the true value of the item used as collateral. Some lenders will also give bad credit loans against pay slips as long as the employment of the borrower can be verified. These loans are also known as payday loans. Payday loans are where the borrower agrees to repay the loan when they receive their next paycheck.

In most cases financial advisers will recommend that the borrower get alternative forms of bad credit loans instead of payday loans. Over the years, payday loans have got a bad rep due to high interest rates. A person with a low credit score can get a bad credit loan with good terms when they get someone with a good credit rating to co-sign with them. A co-signer should be a person that is well known to the borrower so that the borrower will not default on purpose thinking that because they know that the other person, they will cover the loan amount. Pay your bills, and you will be in good shape!

Empower – Educate – Take Action

H & I Credit Solutions

In a perfect world, students go to college for free, finish school, find a job, build a career up, travel or start a family. In the real world, most students have to take out student loans to make it through a college degree. As soon as they finish school and get a job, the specter of their student loan hangs overhead:  pay back the full amount of the loan, plus interest.

Here are a few things you should know before you take out a student loan:

1. You must pay it back.
2. Yes, it charges interest.
3. No, it cannot be dissolved by bankruptcy.

Paying Back is Moving Forward

A student loan can be viewed pessimistically like it’s a burden that one undertakes in order to graduate, or it can be viewed as an opportunity to help someone realize his or her dream. Just like how most students who took out student loans were helped to achieve their dream, paying back a student loan is sending another person to college.

Take Your Pick: Student Loans or Some Alternatives

Gearing for college? Here are two types of student loans available to you:

Stafford Loan – this is a type of student loan backed by the U.S. Federal Government. Stafford loans are highly recommended for students who want to pursue college education because of their easier payment options and fixed terms and rates.

Private Loan – be cautious on this one as this might cause you more headache than there is already. Private loans charge higher interest rates than Stafford loans. Always compare rates before you settle with a private loan. Be careful with the fine prints. Always opt for private loans that offer fixed interest rates and easier payment options.

Alternative Sources of Funds
High grades? You may capitalize on academic excellence to pursue your college education. Scholarships and grants are always available to underprivileged, but deserving students who show interest to finish a degree in college. You may enlist the help of the school where you intend to enroll regarding grants and scholarships.
You may also consider working to finance your studies, instead of taking out a loan. This is ideal for those who would not want to be “tied down” with loan repayments after college.

“Necessary Evil”

One writer coined those words to describe a student loan. Regardless of the seemingly inescapable responsibility that awaits a student after college; most students opt for the chance it provides to finish their degree. Education provides people a fighting chance in life, and paying for a loan that gives anyone the chance could not be “evil”, but a necessary stepping stone to progress.

Empower – Educate – Take Action

H & I Credit Solutions

The benefits of an FHA loan may surprise some consumers. FHA stands for Fair Housing Association and surprisingly they actually do not provide loans. In fact, they actually insure the loan to limit the risk to the bank or institution that provides the actual loan.

FHA loans are a little easier on the consumer that wants to purchase a home. Conventional loans have more strict guidelines. FHA loans can allow consumers to easily qualify for a home loan.

Below are some of the benefits of FHA loan.

1. FHA requires a 3% down payment
2. Lower insurance
3. Lower closing cost (regulated by HUD)
4. Obtain a loan 2 years after Bankruptcy
5. Obtain a loan 3 years after Foreclosure
6. Lower credit score requirements

When FHA loans were introduced, their intention was to assist first-time home buyers; consumers that were not first-time home buyers can also take advantage of FHA loans.

FHA rules are not as strict on regulations regarding debt-to-income ratios, alternative credit, job requirements and past bankruptcies/foreclosures.

FHA loans also require a complete termite inspection report as well as other property condition reports just to qualify.

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H & I Credit Solutions

The question often asked is:

“I have a lot of good credit. Will my good credit cancel out my bad credit?”

Any amount of bad credit or bad credit entries on your credit report is devastating to your chances of being approved by a credit card company, a financial loan, or any company that extends a credit line to you. Most loan companies or credit lenders never actually physically look at your credit report or items on your credit report. A computer pulls your credit report, calculates your credit status, income, the amount of debt your owe, and stability. After the calculation of the a-fore mentioned items, a computer program then shoots out a status of ‘approved for credit’ or ‘denied credit’.

How does the credit calculation affect you?

Credit Card or Personal Loan

• Even a small amount of slow pay or a late payment will usually cause a red flag on your credit report for a credit card or personal loan denial.

Auto Loan or House () Loan

• The smallest amount of negative credit could cause the interest on an auto loan to shoot through the roof. Even a little bit of bad credit could cause you to not get approved for an auto loan, house loan, credit card or .

Credit repair is vital to consumers who want these & other finer things. Credit repair is the consumer’s defense.

Empower – Educate – Take Action

H & I Credit Solutions