5 Undeniable Reasons People Hate Credit Reports

Did you know that each time you apply for a loan, the lender pulls out your credit report via a hard inquiry? And the hard inquiry stays on your credit report as “negative information” for about 24 months. Even applying for a credit card affects your credit score in a negative way. Plus, details of bankruptcy or a lawsuit that can stay for more than 7 years on your credit report. There are several more reasons why most people hate credit reports.

credit report

Here are the 6 undeniable reasons people hate credit reports

1) Student loan missed-payment information can stay on your credit report for 7 years

Missing a student loan payment can be more costly than you think. Your credit report is regulated by a federal law known as the “Fair Credit Reporting Act(FCRA)”. It is their job to make sure only the responsible one receive both federal student loans. To tighten the screws, they keep your missed payment(one or more) information for about 7 years from the date of the first missed payment.

2) Credit card delinquency information also stays for 7 years on your credit report

Delinquency, in general, is defined as a minor crime committed by someone misinformed or uninformed. You are wrong if you think you can get away by missing a couple of credit card payments. The information about your missed payment stays on your credit report for about 7 years.

3) Your credit report also registers a charge-off

A charge-off is debt write-off by the creditor or lender if they classify the borrower to be a delinquent and as a result, is incapable of repaying the money. Creditors write off the debt 6-8 months after not receiving a single payment. A write-off can offer short term relief to the borrower, but no one can get away with it. It stays on your credit report for 7 years.

4) A debt settlement is another negative item that stays on your credit report

A successful attempt at debt settlement may reduce the money you owe to the lender but the records stay on the credit report for 7 years from the date of settlement. Moreover, a debt settlement also affects the credit score of the debtor.

5) A foreclosure also lingers on your credit report

A foreclosure is a legal process in which the lender tries to recover money from a borrower who is unable to pay off the debt but had applied for the loan with collateral. The collateral is usually a real estate property. One you find yourself in such a situation, you won’t be able to borrow more money as the accounts will stay on credit report for 7 years from the first missed payment.

The bottom line

Credit reports are maintained by credit bureaus to benefit the lender, the borrower, and the federal government. You may not like to glance over your credit report but it is the only way a lender can verify your credibility.

7 Payment Options Every New Business Need to Consider

7 Payment Options Every New Business Need to Consider

Technology has changed the landscape on how businesses can accept payments for goods and services. The old days of collecting cash payments and then taking them to the bank to deposit them into a business checking are becoming outdated, as new forms of payment processing take hold.

If you are starting a new business, here are seven payment options you need to consider to make your payment processing easier and faster.

  1. BACS

The BACS (Banker’s Automated Clearing Scheme) payments system allows you to accept direct debit authorisations from customers and it allows you to make direct credit payments to the bank accounts of your suppliers and employees. You need to get a SUN (Service User Number) number to set up an account up before you can use the BACS service.

The SUN number is used to track the debit and credit transactions your business makes and to ensure that your payments are processed efficiently. You must be sponsored by a major bank based in the U.K. to qualify for a SUN number. As a new business, you typically won’t qualify for sponsorship until you have been in business for three years and you’ll have to rely on a third-party who has a SUN number to process your BACS payments.

  1. PayPal

PayPal is useful to send and receive money from many different areas of the world through your website. PayPal is also useful if you are going to do auctions on your business website as they will bill the buyers and send them reminders about ongoing auctions you may be doing. You need to set up a premier or a business account with PayPal to take advantage of its services.

A premier account is useful for businesses that expect to do a lot of credit card transactions per day through the website. The business account allows you to accept credit card payments and send out mass payments. Signing up for PayPal is easy and is done online. You’ll pick the services you want to use at the time you sign up for an account.

  1. Faster Payments

Faster Payments allow customers to send money directly to your bank account. The customer will need the sort number for your bank and the account number you want the payment to be deposited in. The payments typically get deposited on the day it is sent by your customer. You need to be a member of a bank that utilises the Faster Payments system to take part in the program. You should also be aware that there are limitations on how much can be sent at one time over the Faster Payments system. The limits vary depending on how the payment is sent.

  1. CHAPS

CHAPS (the Clearing House Automated Payment System) is another system people and businesses in the U.K. can use to make payments to accounts housed at member banks. The CHAPS system is typically used when a business has to make high-valued payments to suppliers. CHAPS is particularly useful if you are establishing a real estate business where fund transfers typically have to take place on the same day you are signing the paperwork to consummate a real estate transaction.

The CHAPS system transaction happens in real-time and the recipient doesn’t have to wait for the money to clear. They can use it the moment it is deposited into their account.

  1. Android Pay

Android Pay allows your customers to pay you through their Android phones. You will need to have an account with Google’s mobile payments system and have a Point of Sale (POS) device that accepts contactless credit and debit cards. The customer needs to download an app from a participating bank and enter the debit or credit card information into the app. All the customer does is swipe the phone over the monitor on the POS device and the transaction is automatically processed without handling cash and debit or credit cards.

  1. Apple Pay

Accepting the Apple Pay system over an iPhone is very similar to the process used to set up the Android Pay system. You will need a contactless POS terminal system to accept the Apple Pay system.

  1. Nochex Online Payment Services

You are able to accept online transactions with a Nochex account. You will need to set up either a merchant or a U.K. Trader Account in order to utilise the Nochex system. The U.K. Trader Account is good for new businesses as the account doesn’t have any set-up or monthly fees while you are starting out.

If you’re just starting to break into the world of business, the above are a just some of the key payment options you should consider implementing.

Creative Ways to Fund Your Small Business Idea

Sometimes more difficult than coming up with a business plan or idea for your small business, is obtaining the funding necessary to get your business up and running. Whether your filing for a California corporation online or trying to start an LLC in Michigan getting your business off the ground is the first hurdle, but even after the initial investment the capital required to keep your business running usually requires some time. Thankfully, today’s technology and resources allows for some creative ways to raise capital for your small business that does not require a traditional loan from a bank. [Read more…]

WTF (Wait That’s Finance) Part I: Deep in the Money Naked Calls

finance book, finance textbook, textbook, this that and the mbaOh no here come the financial concepts, time to clear the cob webs we are going to talk about derivatives.  Want to sound smart at work today, drop the word derivative in some random sentences and wait for the looks you get. 

This is how my wife fell in love with me. Except this was back in college and I was a Chemistry major at the time.  I started dropping some names of the elements off the periodic table and the rest is history. 

What is a derivative?

What does the word mean, let’s take the root, derive.  Derive means to have origins in something else.  The lakes name was derived from ancient Mayan mythology.  With that said the derivative in the financial market is a security whose underlying asset determines the price.  Fluctuations in the value of the underlying asset (stock, bonds, currencies, market indexes) determine the price of the derivative.  You are betting whether you believe the price of the underlying asset will increase in price or decrease in price by a certain amount over a certain period of time.  Generally speaking, a derivative is often very risky; if you are risk adverse you may want to proceed with caution.

Why derivatives and how are derivatives used?

The question is why not, they are used for speculative purposes; remember the name of the game is managing risk.  Remember the other day when you were reading my article about Beta?  Alright go take a look, I will wait for you! We are using the derivatives as a hedging maneuver to reduce the risk of our portfolio. 

Types of Derivatives

The list is quite long for the list of derivatives; I could go on for weeks explaining all of these.  Common types of derivative contracts are: forwards, futures, options, warrants, swaps which then is broken out into interest rate and currency swap.   The title of the article is one of the varieties of the options. 

Example of Derivatives

If you are still following along let’s take a look at an example:  British company buying shares of (TTaTM) This That and The MBA off the NYSE using a stack of Benjamin Franklin’s!  This company is exposed to fluctuations in exchange rates between the nations.  To try to minimize the impact (hedge) of these flucations the British company would purchase currency futures.  This is a maneuver to lock in a particular exchange rate for any potential sale of the underlying stock of TTaTM, and the currency conversion back into Euros, the currency to which the British company prepares its financial statements.  That scenario we minimized the currency exchange rate fluctuations, if the British company wanted to invest in my company without the options contract they would be exposed to the volatility of my stock along with the volatility of the exchange rates. 

Any questions class?  What do you think?  I know we are Personal Finance bloggers, but has anyone had the privilege of working with options contracts?  Care to share a story or two?

PHOTO BY: fanz

Help!… Jerry is burning the bridge

burn bridge, employee burn bridge, burning bridges, burn bridges

While not directly related to personal finance, it can have big implications on your job search should you burn the bridges behind you.  Let’s face it if you are looking for work and there are burnt bridges out there it can make it a little more difficult and that my friend will affect your finances…badabing!  Let me share with you a little story of something that happened at work this past week.

 Jerry was a happy employee of my company (1),his boss left the company to go work elsewhere.  His boss contacts Jerry and recruits him to work there with him.  Jerry obliges and accepts the job to work with his new boss at company (2).  Jerry turns in his resignation and a competitor entered our market and Jerry is approached by company (3).  Jerry decides after going back and forth with wage increases between company (2) & (3), that company (3) is the way to go.  Jerry burned 2 bridges in this scenario.

Jerry burned his bridge at my company by leaving to go work with his former boss whom had recruited him and he also burned the bridge at his bosses company.  Jerry leveraged companies 2 and 3 to increase his rate of pay for his own benefit.  Jerry was pretty selfish.

I think that if Jerry had any kind of ethics when he put in his resignation to our company and notified company 2 that he had accepted the job, he should have upheld that allegiance and gone to work there.  For that I cannot respect him as a professional in the industry that we work.  Pretty stupid for Jerry considering the census for the area is less than 100,000. 

I understand why he did it he wanted to go with a company who he saw was moving into the area and he would get to develop that market.  I also appreciate the fact that he wanted to make the most money for his family. 

Well I have news for him; he is a middle aged man and likely may change jobs again.  This area is small and it could very well impact his future employment in this industry.  So with that, the best of luck to you Jerry!!!!

You never want to burn a bridge that you don’t have to, sure we all have changed jobs at one time or another but you want to go out on your former employer’s good graces.  Chances are that you will cross paths with your former employer at some point. 

Mutual respect of yourself and your employer should be taught in the grade school system.  This knowledge is essential to personal relationships.  We can apply this same principle to friends, family, and any other group or organization you are part of.  This will make parting much easier and can only benefit you in the future. 

I don’t even know why something like this needed to be posted, but sometimes the obvious needs to be pointed out, eh Jerry?  Don’t be Jerry!  Part with your dignity and your head high, because you never know when you may need to call upon your former employer or colleague.

Do you know any Jerry’s?  Have you ever burned a bridge?  Ever had to go back after you burnt a bridge to try and salvage it?  Go ahead, you can share!!

PHOTO BY: Idiom Savant

Shhh…. What do you think of that B*****?

budget, budgets are sexy, budgeting in the fun stuff, budgetinginthefunstuff.com, budgetsaresexy.com, mba, this that and the mba

Now that I have your attention, you are probably scratching your head wondering why that would be on a personal finance website.  Shame on you for thinking that!! What would your mother say?  The word is in the news all over the world now.  That magical word is BUDGET.  The congressional budget, state budget, city budget, your personal budget, budget for that trip, some websites use that as part of their web address…this budget that budget… What in the world does the word budget even mean? 

According to my good friends over at Merriam Webster here are the origins of budget:

Middle English bowgette, from Middle French bougette, diminutive of bouge leather bag, from Latin bulga, of Celtic origin; akin to Middle Irish bolg bag; akin to Old English belg bag. First known use: 15th Century.

Now that I read that I can understand what the word budget means, well can’t you?  Think about it, budgeting in essence is using the available resources that you currently have, you can’t spend more than you make.  Well you can, but it is frowned upon. A bag holding your instrument of trade could be seen as your bank or wallet holding your cash!

Lately, the wallet and bank of mine have been near empty up until February of this year when my wife started working.  She was working probably harder before; she was at home taking care of our two little kiddies.  (Cheeks if you are reading this and have made it this far in the article, I love you, sorry for the shameless plug for my wife)

Here is the modern day definition from Merriam Webster:

a : a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them

b : a plan for the coordination of resources and expenditures

c : the amount of money that is available for, required for, or assigned to a particular purpose

Taking a few moments out of your hectic routine on a monthly or bimonthly basis can help you find hidden cash flow problems (money you are spending that you may not know that you are spending) and free up some cash to throw at your retirement or any other goals you have.  Budgeting also helps you to set goals and gives you a target to work to.  Working day in and day out can become monotonous as the weeks and months fly by we wonder what we have accomplished looking back.  Well you are in luck, we can use the budget as a tool to show what we have accomplished. 

Setting a family budget doesn’t have to be elaborate or be on a fancy spreadsheet.  Write it on a napkin if you wish, but make sure that you stick to it.  Speaking of that my wife and I need to sit down and straighten out our finances now that we have 3 different cash flows!  

PHOTO BY: darek.zon