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Borrowing Trends

APPLYING FOR CREDIT

When you consider applying for credit, it is important to familiarize yourself with the current borrowing trends, based upon the national average, because your credit ranking not only determines if you are approved for or denied a loan, it's also a factor banks use to determine how high or low the finance charge percentage rate will be on the new credit account you have applied for. New credit accounts are defined as credit cards, auto loans, installment loans (usually department store credit cards), and loans. See if you can cut your credit card payments by up to 60% or more!

A lot of us appear to be acting a little more conservative when it comes to opening new credit accounts, such as mortgage loans and credit cards. Experian's website which focuses on educating consumers about credit, recently looked at consumer's borrowing behavior. Their study showed that 16.9% of consumers with good credit over a five-year period applied for new credit cards or mortgage loans and only 12.6% of "fair or bad credit" consumers applied for and opened new credit accounts. Studies showed that accounts an increased number of credit accounts for which balances were ninety plus days late. In addition, student, auto, and other installment loan negative balances have increased. The national FICO score averages (credit report ratings) have decreased at an average of seven points, which has caused the national average credit score to drop from 678 to 675.
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PURCHASING A NEW HOME WITH LESS THAN PERFECT OR BAD CREDIT

Did you know that you can be approved to purchase a new home with less than perfect credit? What does this mean for consumers? Many lenders will now approve you for a loan, with no money down if your credit score is 580 or higher. Sound too good to be true? Don't allow your doubts to cause you to miss out on a good deal. Many online lenders are more lenient when approving loans than banks, due to the vast competition on and off the Internet. These companies provide experienced loan originators/officers, that can get you preapproved in less than 30 minutes!
How do you determine if a company is truly helping to get you the best deal or not? First, try to apply with a company that carries a minimum of seventy-five to one hundred loan products (loan products means they work with 75-100 lenders or more) so you can receive more approvals, and various rates to choose from. A good loan officer or originator will disclose and explain all approvals, your options, be patient, and assist you with determining which loan product is best for your situation. There are many sharks out there, so be certain you verify a company's rating with their local better business bureau, in addition to, checking their online rating at bbb.org in an effort to also determine if they are legitimate. You can usually determine if a loan officer/originator knows their job, by asking them questions upfront about the loan process; if an originator can't explain the steps of a loan and provide an estimated processing timeframe to you, don't allow that person to process your loan application.

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13 Financial Tips For College Kids

Few college students have learned the difference between needs and wants. The Administrative Office of the U.S. Courts reported that about 1.6 million personal bankruptcies were filed in 2003, up 7.4% from 2002, suggesting that many adults haven't learned the basics of personal finance either.

So it's no surprise that many kids don't know how to handle money. Their parents wanted only the best for their kids and, in most cases, provided it. But fiscal responsibility sometimes got lost between designer clothes, piano lessons and a cell phone.

Richard Boyum, professor emeritus of counseling and psychology at the University of Wisconsin-Eau Claire, says most students eventually master money management, but it often takes a few mistakes along the way.

"There are many opportunities to spend money and some students think of money as something to spend rather than as something to save," Boyum says. "I once had a student show up in a new jacket. He said it was a $200 jacket, but he got it on sale and had 'saved' $100. I said, 'Show me the $100.' I explained that he hadn't saved $100, he'd spent $100. This surprises many students.'"

Some young adults have trouble with credit cards and view the credit limit as an invitation to spend what they consider to be their money. Boyum tells the students that credit comes from the bank--not grandma. For many, this is a revelation: Banks are in business to make money and customers have to pay interest on the balance if they miss the due date.

For some students, the concept of accrued interest on debt is as foreign as compound interest on savings. But the information is readily available when opening an account at Wells Fargo (nyse: WFC - news - people ), Bank of America (nyse: BAC - news - people ) and J.P. Morgan Chase (nyse: JPM - news - people ) or any number of smaller banks.

Boyum urges students to use a debit rather than a credit card and to save the receipt. If a student has a credit card, he urges the kid to leave it at home and to not use it unless absolutely necessary. Racking up a fat bill for dinner and drinks with friends and putting it on the credit card isn't a necessity, contrary to what many students believe on Friday and Saturday nights.

Boyum tells his students to do the math on small indulgences. Some say they only spend $20 a week on beer. Well, kids, that comes to $1,040 a year for Anheuser-Busch's (nyse: BUD - news - people ) Budweiser and Adolph Coors Co.'s (nyse:RKY) Coors. The total shocks most students.

Boyum urges his students to keep an accurate record of expenditures. Basic bookkeeping helps to keep spending in line and underscores the importance of writing a budget and sticking to it.

Work can teach students discipline and the value of a buck, but study should be a kid's primary concern when in school. Some students work just for pocket money. This is a bad idea, especially when trying to wrap your mind around differential equations or Chaucer's Middle English.

"I tell my students there are 168 hours in the week," Boyum says. "There are 56 for sleep and 40 for school. That leaves 72 for other activities, including part-time jobs and socializing. Students are astonished by this and I tell them that time is their major resource."

School days are a time for kids to figure out the basics. In addition to literature, math and science, they learn about sex, politics and how to organize their life.

"They're young and they make mistakes," Boyum says. "They learn from their mistakes and, on the whole, learn to manage their lives."

Author: Scott Reeves (Forbes.com incerpt)

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ARE YOU PERSONALLY AWARE OF ANY FINANCE TIPS THAT MAY BETTER EDUCATE OUR READERS?