Snap Investing

By Author: Peter Kenny
Article: Understanding credit scores can be confusing to some people. It is no wonder. While credit scores are one of the most important parts of living in today’s world, they are not usually taught in school. You, more or less, have to learn this on your own.

In simple terms, consider your credit school the way you would think of a grade in high school. The teacher uses all of the information he or she has on you (test scores, attendance, homework grades, etc) and comes up with a final grade for you. Some of the information he or she uses is more important in determining that grade than other information but in the end you are given a grade.

Credit scores are calculated in the same way, more or less, but instead of using test scores and book report scores it takes into account the information that is on your credit reports.

Credit scores would be useless to lenders if they were not standardized in some way, and they are. A score can range anywhere from 300 to 900. Where you fall within that range gives lenders an idea of how creditworthy you are. You want a high score. You should also understand that your credit score can vary with time and circumstances. It can go up and it can go down.

The manner in which a score is calculated is a secret, but here are some approximations on how it works.

About 35 percent of your credit score is based on your past payment history. This is one of the reasons it is important to pay your bills on time. Your credit score will be affected by how many bills you have paid late, how many of those bills were sent out for collection, if there are bankruptcies on your record and so forth. The more recent these things happened, the more weight it carries.

Approximately 30 percent of your credit score will be based on outstanding debt. In other words, how much money do you owe right now on other loans. This also applies to how many credit cards you carry and the credit limits that you have on those cards. In simple terms, the more cards you have maxed out, the lower your score will be. A fairly good idea is to always try to keep credit card balances at 25 percent or less of their limits.

Another 15 percent of your credit score is based on the length of time that you have had credit. The longer you have had credit transactions, the better.

A little known fact is that about 10 percent of your score will be based on the number of credit inquiries made on your report. If you have applied for several credit cards or other types of loans, you will have several inquiries listed on your credit reports. These look bad because to lenders they may indicate that you are in financial trouble. The more recent these inquiries have been made the lower your score will be. FICO scores only count inquiries from the past year so there is a time cutoff on these.

The last 10 percent is based on the types of credit you have right now. This might include the number of current outstanding loans and the available credit you have on credit cards that you already have. This type of information is used when you do not have a lot of credit history for the lender to use in order to make a decision. Syndication Source: ThoughtSearch.com Peter Kenny is a writer for The Thrifty Scot, please visit us at Poor Credit Loan and Compare Car Insurance
Visit Thrifty Scot

By Author: Peter Kenny
Article: Understanding credit scores can be confusing to some people. It is no wonder. While credit scores are one of the most important parts of living in today’s world, they are not usually taught in school. You, more or less, have to learn this on your own.

In simple terms, consider your credit school the way you would think of a grade in high school. The teacher uses all of the information he or she has on you (test scores, attendance, homework grades, etc) and comes up with a final grade for you. Some of the information he or she uses is more important in determining that grade than other information but in the end you are given a grade.

Credit scores are calculated in the same way, more or less, but instead of using test scores and book report scores it takes into account the information that is on your credit reports.

Credit scores would be useless to lenders if they were not standardized in some way, and they are. A score can range anywhere from 300 to 900. Where you fall within that range gives lenders an idea of how creditworthy you are. You want a high score. You should also understand that your credit score can vary with time and circumstances. It can go up and it can go down.

The manner in which a score is calculated is a secret, but here are some approximations on how it works.

About 35 percent of your credit score is based on your past payment history. This is one of the reasons it is important to pay your bills on time. Your credit score will be affected by how many bills you have paid late, how many of those bills were sent out for collection, if there are bankruptcies on your record and so forth. The more recent these things happened, the more weight it carries.

Approximately 30 percent of your credit score will be based on outstanding debt. In other words, how much money do you owe right now on other loans. This also applies to how many credit cards you carry and the credit limits that you have on those cards. In simple terms, the more cards you have maxed out, the lower your score will be. A fairly good idea is to always try to keep credit card balances at 25 percent or less of their limits.

Another 15 percent of your credit score is based on the length of time that you have had credit. The longer you have had credit transactions, the better.

A little known fact is that about 10 percent of your score will be based on the number of credit inquiries made on your report. If you have applied for several credit cards or other types of loans, you will have several inquiries listed on your credit reports. These look bad because to lenders they may indicate that you are in financial trouble. The more recent these inquiries have been made the lower your score will be. FICO scores only count inquiries from the past year so there is a time cutoff on these.

The last 10 percent is based on the types of credit you have right now. This might include the number of current outstanding loans and the available credit you have on credit cards that you already have. This type of information is used when you do not have a lot of credit history for the lender to use in order to make a decision. Syndication Source: ThoughtSearch.com Peter Kenny is a writer for The Thrifty Scot, please visit us at Poor Credit Loan and Compare Car Insurance
Visit Thrifty Scot

By Author: William Smith
Article: An Interest Rate is very well described as the price a borrower pays for the use of money he does not own, and has to return to the lender who receives for deferring his consumption, by lending to the borrower. Interest can also be expressed as a percentage of money taken over the period of one year.

An Interest Rate is very well stated as the rate of increase over time of a bank deposit. Rates discussed in the popular press are often actually bond yields. Thus, it will not be wrong to say that the yield on a bond is the interest rate that would make the present value of the bond payment stream equal to the current bond price.

An Interest, which is charged or paid for the use of money, is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often change as a result of the inflation and Federal Reserve policies.

Lets take an example to understand this well. If a lender such as a bank charges a customer $90 in a year on a loan of $1000, then the interest would be 90/1000 *100% = 9%. Thus the Interest Rate has been calculated here.

There is no easy answer to explain what causes the Interest rates to change, but generally speaking, it is only the inflation that will make interest rates rise.

The rate does fluctuate up and down, every day, hour by hour. Money is a worldwide commodity, and any significant event around the world that looks like it may even remotely affect the economy is the utmost reason for Interest Rate to move up or down.

Here the best examples are politics, wars, economic indicators also known as the employment data, new home sales, car/truck sales, factory orders, etc., governments, natural disasters mentioning the floods, earthquakes, famines, etc. All it takes is a publicly voiced theory or assumption from an influential person (i.e. Federal Reserve Chairman, President of U.S., etc.) and the rates can make very drastic moves.

Types of Interest Rate

Interest Rate can be majorly differentiated into 5 types:

The first and the foremost rate is the Variable Rate. This is the very basic standard interest of the lender. This rate will change whenever the lender alters its lending rate, going either up or down depending upon the rate of the Bank. There can be quite a difference between the variable rates of the various lenders and it is worthwhile shopping.

The second type of Interest Rate is the Discounted Rate. This is where the lender specifies a discount off the variable rate for a given period of time. During this period the Interest payable will vary whenever the lender changes its variable rate and the discount will be taken off the used rate.

When the discount period ends the rate payable usually reverts to the lenders variable rate. The borrower then typically has to agree to stay with the lender for a set period of time or face a withdrawal penalty or early redemption charge.

The third type of Interest Rate is the Fixed Rate. This type of Interest mortgages have the Interest Rate on the excellent loan fixed for a period of time. They thus guarantee borrowers that their mortgage payments will be for a set interval of time.

The borrower is protected from any upward swing in mortgage rates, but also does not benefit from any downward movement. Fixed rate deals many times involve the borrower to agree to a withdrawal penalty or early redemption charge if they decide to pay back the mortgage before the agreed period that the rate is fixed for.

The fourth type of Interest is the Capped Rate. Here is a mortgage where an Interest Rate is charged in line with current prevailing rates, but the borrower is given a guarantee that the rate will not go beyond a sure amount. These types of offers are known basically as limited for a period, two or three years.

The advantage to the borrower is that their mortgage rate can fall but there is a limit as to how high it can rise. At the end of this period the interest will revert to the lender’s variable rate.

The last and the fifth type of Interest Rate are known as the Capped & Collared Rate. This is where the interest will not beat a maximum rate cap or fall below a minimum rate collar for a fixed period. At the end of the period the rate reverts to the lender’s variable rate.

Finally the concept of Interest Rate has to be taken after a serious decision-making. This proves that it is not at all a very easy task. Syndication Source: ThoughtSearch.com William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Interest Rate (All is Free)

By Author: William Smith
Article: An Interest Rate is very well described as the price a borrower pays for the use of money he does not own, and has to return to the lender who receives for deferring his consumption, by lending to the borrower. Interest can also be expressed as a percentage of money taken over the period of one year.

An Interest Rate is very well stated as the rate of increase over time of a bank deposit. Rates discussed in the popular press are often actually bond yields. Thus, it will not be wrong to say that the yield on a bond is the interest rate that would make the present value of the bond payment stream equal to the current bond price.

An Interest, which is charged or paid for the use of money, is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often change as a result of the inflation and Federal Reserve policies.

Lets take an example to understand this well. If a lender such as a bank charges a customer $90 in a year on a loan of $1000, then the interest would be 90/1000 *100% = 9%. Thus the Interest Rate has been calculated here.

There is no easy answer to explain what causes the Interest rates to change, but generally speaking, it is only the inflation that will make interest rates rise.

The rate does fluctuate up and down, every day, hour by hour. Money is a worldwide commodity, and any significant event around the world that looks like it may even remotely affect the economy is the utmost reason for Interest Rate to move up or down.

Here the best examples are politics, wars, economic indicators also known as the employment data, new home sales, car/truck sales, factory orders, etc., governments, natural disasters mentioning the floods, earthquakes, famines, etc. All it takes is a publicly voiced theory or assumption from an influential person (i.e. Federal Reserve Chairman, President of U.S., etc.) and the rates can make very drastic moves.

Types of Interest Rate

Interest Rate can be majorly differentiated into 5 types:

The first and the foremost rate is the Variable Rate. This is the very basic standard interest of the lender. This rate will change whenever the lender alters its lending rate, going either up or down depending upon the rate of the Bank. There can be quite a difference between the variable rates of the various lenders and it is worthwhile shopping.

The second type of Interest Rate is the Discounted Rate. This is where the lender specifies a discount off the variable rate for a given period of time. During this period the Interest payable will vary whenever the lender changes its variable rate and the discount will be taken off the used rate.

When the discount period ends the rate payable usually reverts to the lenders variable rate. The borrower then typically has to agree to stay with the lender for a set period of time or face a withdrawal penalty or early redemption charge.

The third type of Interest Rate is the Fixed Rate. This type of Interest mortgages have the Interest Rate on the excellent loan fixed for a period of time. They thus guarantee borrowers that their mortgage payments will be for a set interval of time.

The borrower is protected from any upward swing in mortgage rates, but also does not benefit from any downward movement. Fixed rate deals many times involve the borrower to agree to a withdrawal penalty or early redemption charge if they decide to pay back the mortgage before the agreed period that the rate is fixed for.

The fourth type of Interest is the Capped Rate. Here is a mortgage where an Interest Rate is charged in line with current prevailing rates, but the borrower is given a guarantee that the rate will not go beyond a sure amount. These types of offers are known basically as limited for a period, two or three years.

The advantage to the borrower is that their mortgage rate can fall but there is a limit as to how high it can rise. At the end of this period the interest will revert to the lender’s variable rate.

The last and the fifth type of Interest Rate are known as the Capped & Collared Rate. This is where the interest will not beat a maximum rate cap or fall below a minimum rate collar for a fixed period. At the end of the period the rate reverts to the lender’s variable rate.

Finally the concept of Interest Rate has to be taken after a serious decision-making. This proves that it is not at all a very easy task. Syndication Source: ThoughtSearch.com William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Interest Rate (All is Free)