Debt Consolidation

Have you ever wondered, "How can I consolidate debt and save?" You can reduce your interest rate charges by using your home equity loan to consolidate all of your outstanding debts. Your home equity loan can be used to consolidate debt and pay off the following accounts:

• credit card balances
• department store balances
• gas card balances
• installment loans
• auto loans
• any account balance that is outstanding.

8 Steps to Good Credit

Step 1: Pay Your Bills on Time

Make it your personal goal to pay your credit and other obligations on time and for the required amount each month.

Debt obligations will include:

· Credit card charges

· Loan payments

· Rent or mortgage payments

· Utility bills

· Service or product bills

· Taxes

· Support payments

· Other

Take advantage of automatic payments and other online bill payment strategies offered by lenders and credit card issuers. This will ensure timely payments.

If you forget to make a payment, act promptly on any notices of non- or late payments. Call the bill servicer to notify them that your payment will be sent immediately.

Do not ignore any creditor notices of non-payment. Contact the creditor to fix the problem.

Step 2: Build a Strong Payment Pattern

Adverse conditions such as late or non-payments are two of the most common items that are reported to the credit agencies. You can avoid adverse conditions by making on-time payments.

Your credit report will also list all open credit cards and loans, listing the amount borrowed and the amount owed on the account.

Your objective is to build a pattern where you pay off large credit card balances in full each month. This pattern conveys a sense of responsibility for your debt obligations.

You can build a strong payment pattern by charging everyday living expenses on your credit card, deducting the charge from your money account, and then paying off the monthly credit card charge in full each month with your money deductions.

Note that you need to follow these rules before you can undertake this credit payment pattern:

1. You must set aside funds for every credit card purchase you make.

2. You must pay your credit card balance in full each month.

3. You must have an existing credit line or home equity line (with lower interest rate) to finance large ticket items. Never finance purchases with your credit cards.

Step 3: Maintain only a Few Credit Cards

As your credit rating improves, you will soon receive pre-approved offers from credit card companies and lenders with attractive rates and programs.
You should limit your credit to three to four cards only. Maintaining a large collection of cards can hurt your credit rating.

Step 4: Close All Retail and Gas Cards

Since you maintain three to four major credit cards (e.g., VISA, MasterCard, Discover, or American Express), it isn't necessary to hold gasoline cards, retail store cards, and other specialized credit cards.

Simply use your major credit cards.

Again, holding multiple cards can drag down your credit score.

Step 5: Don't Have Too Many Outstanding Loans

Excessive loan balances (especially loans that exceed your Debt-to-Income ratios) can effect your credit rating:
Maintaining a good credit rating requires that you reduce your debt holdings by consolidating balances, closing unused credit card accounts, and paying off outstanding loans.

Step 6: Avoid Charging Close to Your Credit Line Limit

Don't use your credit card up to your maximum credit line balance because this can negatively impact your credit rating.
Maximized credit lines (including home equity lines, credit cards and unsecured credit lines) indicate that you are a consumer who borrows willingly. Many lenders consider this a great risk and may not approve you for additional credit.
A good rule to follow is to keep your balances at or below 60 percent of the available credit line.

Step 7: Review Your Credit Report Annually

About one in four credit reports have errors. Either a payment on a loan amount has not been recorded correctly or another billing company has posted incorrect non-payment information to your account.
Your credit report also maintains records on your employment, salary, bank accounts, etc., especially the information that you supplied when making a previous credit application.
You should review your report annually for errors and make the necessary corrections as instructed by the credit agency.

Step 8: Limit Inquiries on Your Credit Report

Multiple credit report inquiries over a period of time may negatively impact your credit score.
Every time you apply for credit, seek some kind on contractual service, or in some cases employment, a credit inquiry will be made on your report.
Models show that multiple inquiries over a period of time indicate an applicant who is anticipating credit problems. So limit credit inquiries when only necessary.

What about having multiple lenders compete for your loan?

Many Internet services and brokers allow you to submit one form and have up to four lenders review your credit information.
Credit agencies understand that these services may require an inquiry by "multiple lenders" at the same time.
These kinds of inquiries, coming from multiple lenders within 20-30 days of each other, indicate that you are shopping for the best deal. Credit agencies will count these inquiries as being only one inquiry. This allows you to shop and negotiate the best deal without being penalized on your credit

Mortgage Protection Insurance.

Mortgage Protection Insurance.

Your house is a big investment - probably one of the biggest you're every likely to make. It is also the place that you and your loved ones call home; a shelter and haven from the outside world. That's why it is so important to ensure that your home and family are protected in the event of your death.

Mortgage Protection Insurance Cover. It's not a topic that any of us like to dwell on, but the sad fact is that should you die and the family are no longer able to afford repayments on the house, they will lose the property and the roof from over their heads.

Having a good life insurance policy in place to protect your property in the event of your death is vital. When you die, your family will have enough to worry about without the added stress of how they are going to hold on to the family home. Your life insurance policy will ensure that this problem is eliminated, with the mortgage balance being paid in full upon your death.

The main types of mortgage life cover.The type of mortgage life insurance cover that you require will depend upon what type of mortgage you have, a repayment or an interest only mortgage. There are two main types of mortgage life insurance cover, which are:
Decreasing Term Insurance Level Term Insurance

Decreasing term insurance.This type of mortgage life insurance is designed for those with a repayment mortgage. With a repayment mortgage, the balance of the loan decreases over the term of the mortgage. Therefore, the sum of cover with a decreasing term insurance policy will also go down in line with the mortgage balance.

So, the amount for which your life is insured should match the balance outstanding on your mortgage, which means that if you die your policy will hold sufficient funds to pay off the remainder of the mortgage and alleviate any additional worry to your family.

With the decreasing term insurance, the cover is usually taken out over the term of the mortgage, and payment is made should you die during the term of the policy. Once the policy has expired, it becomes null and void, so you will receive nothing at the end of your policy if you are still living. There is no surrender value on this type of cover, but it does provide a cost effective means of protecting your home and family during the life of your mortgage.

Level term insurance.This type of mortgage life insurance cover is for those that have a repayment mortgage, where the principle balance remains the same throughout the term of the mortgage and the repayments made by the property owner cover the interest payments on the mortgage only.

The sum for which the insured is covered remains the same throughout the term of this policy, and this is because the principle balance on the mortgage also remains the same. Therefore the sum assured is a fixed amount, which is paid should the insured party die within the term of the policy. As with decreasing term insurance, there is no surrender value, and should the policy end before the insured dies no payout will be awarded and the policy becomes null and void.

Terminal illness benefit.Both of the above types of cover normally include terminal illness cover, which means that the mortgage is cleared should you be diagnosed with a terminal illness rather than waiting until you actually die. This helps to ensure that you do not have the additional worry of trying to meet repayments when a terminal illness takes away your ability to work and earn money, and at a time when the whole family has enough to worry about without having to stress about meeting mortgage repayments.

Critical illness cover.Critical illness cover is another type of insurance policy that can be added on to either of the above mortgage life insurance polices and provides an extra element of protection and peace of mind. This type of cover can also be taken out as a stand-alone policy, but usually proves much better value if simply added on to a main life insurance policy.

With critical illness cover you will be eligible for a payout in the event that you are diagnosed with a critical illness. If you then go on to recover from the critical illness, the payout is yours to keep but the policy becomes null and void following your claim. The illnesses that are covered by this type of policy are defined by the insurer so you should ensure that you check the terms when taking out critical illness cover.

Adding critical illness cover to your policy will only increase your repayments by a small amount, but can provide valuable protection if you are diagnosed as critically ill and are therefore unable to work. With your mortgage repaid from the payout of this policy, you will not have the additional worry of trying to keep a roof over your head at a time when you should be concentrating on trying to make a recovery.