.
Peer lending simply matches up individuals willing to loan money to people who want to borrow money. The borrower must qualify to receive money by individual standards set by the person who will be lending the money. On the Internet sites, the qualifications involve credit scores and debt to income ratio. But other factors can influence the lender, such as the reason for the loan.
According to Celent, a research firm, peer lending sources are expected to grow 800% over the next three years. Some good advice, if you’re planning on using an Internet company – do your homework. Peer lending sites profit from fees they charge borrowers and lenders. Peer lending creates a win / win situation for both borrower and lender.
• (1956) Engineer Bill Fair and mathematician Earl Isaac found Fair Isaac — with an initial investment of $400 each — on the principle that data, used intelligently, can improve business decisions.
• (1958) Fair Isaac sends letter to the 50 biggest American credit grantors, asking for the opportunity to explain a new concept: credit scoring. Only one replies.
• (1963) Builds first credit scoring system for Montgomery Ward, beginning long-term
association with the company.
• (1970) Delivers the first scoring system for a bank credit card to Connecticut Bank and Trust.
• (1989) First general-purpose FICO score debuts--BEACON at Equifax.
• (1991) FICO credit bureau risk scores made available at all three major US credit reporting agencies — BEACONsm at Equifax, EMPIRICA® at Trans Union, and the Experian/Fair Isaac model at Experian.
• (2001) Partners with Equifax to launch Score Power™, the only online credit score delivery service giving consumers full access to FICO® credit scores (www.myfico.com).
• (2003) myFICO® service becomes first service offering consumers FICO® scores from all three major US credit reporting agencies, as well as three-bureau credit report.
• (2007) 100 billionth FICO® score sold, marking milestone for world's leading credit bureau score and the standard measure of U.S. consumer credit risk.
• (2009) FICO is in over 80 countries world-wide and expanded into new markets of Russia and India.
http://www.fairisaac.com/fic/en/company/history.htm
Marcy had seen advertisements for “Pay Day Cash Loans” on the internet and on TV. She often wondered how these programs worked. Having become frustrated with her family’s tight budget, and wanting to purchase that new grill they had been eyeing since the weather turned warm, Marcy found an online company that would loan her $800 until her next payday. The $200 interest and fee charges seemed steep, but in order to have that grill for the weekend, she plunged ahead.
What is a “Pay Day Loan”?
Pay Day loans are short-term loans (usually two weeks or until your next paycheck) held against your checking account and secured with the promise to repay on your next payday. Upon the due date borrowers have the option to pay back the loan in full plus finance charges, or they can opt to float the balance due to another payday and only pay back the finance charge.
For example:
Pay Day Loan of $800 borrowed + $200 Finance charges = $1000 owed
Pay Day 2nd Friday of the Month –
Option 1: Pay back $1000 total ($800 owed + $200 finance charge)
Option 2: Pay back the $200 finance charge ONLY and float the $800 to Pay Day 4th Friday of the Month (on the 4th Friday of the month, the borrower would owe $800 borrowed + $200 finance charge – AGAIN, for a total of $1,200 owed).
These loans prey on families struggling to make ends meet. The option to pay back only the finance charge and “float” the balance (up to 4 times = $800 paid to borrow $800) is attractive for families who live paycheck to paycheck and have little disposable cash left over. Many consumers who engage in Pay Day loans end up borrowing an average of eight to thirteen loans per year – that means they are paying huge amounts in finance charges – around 600%.
Holidays, like Christmas, and the desire to take a summer getaway, are factors that drive consumers to borrow from these services. There are many more reasons why consumers come up short on income:
1. The Economy – many people have experienced the hardship of decreased income due to reduced wages, fewer hours worked, and loss of jobs. Some of these people are trying to maintain a standard of living that exceeds their income.
2. Poor planning – gone for many families are the days of the savings account. The average family should have three months’ salary saved up just in case. How many people truly are prepared? Emergencies that families are not prepared to face, such as a broken major appliance or auto repair bill, makes a Pay Day loan an attractive quick fix.
3. Materialism – our “have it all, right now” society sends detrimental messages to the American consumer, especially to young adults just establishing themselves financially. Many people have fallen victim to mounds of credit-card debt which is destroying their credit and their lives. (Watch the movie Maxed Out: http://astore.amazon.com/wwwthedougand-20/detail/B001AT49KC.)
4. Stress – the frustration and stress of living “pay to pay” has consumers seeking solutions and a way out – sadly, Pay Day loans are not a solution but a fix that can end up being more detrimental than beneficial to a family’s financial life.
If you’re considering using a Pay Day loan, stop and evaluate your need and ask yourself, is this really worth it?
On November 20, 2007 Fannie Mae and Freddie Mac announced loan price increases for borrowers with credit scores below 680 on loans with loan-to-values above 70%. Simply put that means that if you don’t have a 30% down payment and your credit score is below 680 you are going to pay higher closing costs and/or higher rates on your home mortgage.
Unfortunately, higher mortgage rates are just one of the ways your credit score can affect the prices you pay. When it comes to credit card debt an average borrower can easily pay twice as much or more interest as someone with an exceptionally high score. Understandably, borrowers whose credit scores identify them as low risk are offered the lowest interest rates available.
What other bills are you paying that are affected by your credit score?
Recent studies have shown that 92% of the largest automobile insurers use credit data in underwriting new business. It has been estimated that a consumer with bad credit is going to pay 20 to 50% more in auto premiums than a person who has good credit.
An Insurance Credit Score is also used to determine whether or not you will get homeowner’s insurance and how much you will pay for it! This is based on the belief that the lower your score, the higher the chance that you will file a claim, inflate a claim or commit fraud.
Clearly anyone whose credit report doesn’t identify them as a perfect credit risk is a target to pay more for all the most expensive things in their life. How much would an average family save if they could cut their mortgage and credit card payments as well as their auto and homeowner’s insurance by 20-50% or more? Is it fair that the people who may afford it least have to pay more? That is something open to debate, BUT…
It’s also been determined that 79% of credit reports contained errors errors of some kind. Twenty-five percent of credit reports contained serious errors that could result in the denial of credit.
In other words, many people are paying the toll because the information on their credit report is grossly inaccurate. If you don’t know what’s on your credit report, how to analyze the information or how to raise your credit scores you may be woefully overpaying for some of the biggest items in your families budget. Be proactive, make sure your score is as high as it can be and realize the savings you deserve.
Daniel J. Poulos
Account Executive
[url]djpoulos@elitelending.biz[/url]
view all blog entries...
Aug 2009
What is Peer Lending?
The concept of peer lending has been around for ages. Families or communities would pool money together to help out those who needed loans. Each family who contributed would take a turn at being the recipient of the money. Still alive today and known in different cultures by different names, this concept has found its way into the Internet and has become a growing alternative resource for people seeking loans.
by valeria on Tue Aug 04, 2009 7:09 pm
Peer lending simply matches up individuals willing to loan money to people who want to borrow money. The borrower must qualify to receive money by individual standards set by the person who will be lending the money. On the Internet sites, the qualifications involve credit scores and debt to income ratio. But other factors can influence the lender, such as the reason for the loan.
According to Celent, a research firm, peer lending sources are expected to grow 800% over the next three years. Some good advice, if you’re planning on using an Internet company – do your homework. Peer lending sites profit from fees they charge borrowers and lenders. Peer lending creates a win / win situation for both borrower and lender.
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Fun Facts About FICO
As a Certified Credit Consultant with Credit Justice Services, I personally service and help consumers protect their credit rights so they can move forward in a positive direction in their financial lives. Using our 75 Day Credit Makeover TM, our mission at Credit Justice Services is to help people increase their credit scores by disputing the accuracy of the information being reported on their credit reports with the three major credit bureaus. A 2006 MASSPIRG study found that 79% of credit reports contain inaccurate information – that’s 8 out of 10 times. If I were in the business of being a surgeon, I’d be in a lot of trouble. An average client can see an increase of 50-100 points in their credit score in 75 days or less with our expert help. At Credit Justice Services, we talk to clients a lot about FICO scores, so I thought it would be fun to look up some facts about the Fair Isaac Corporation.
by valeria on Tue Aug 11, 2009 6:51 pm
• (1956) Engineer Bill Fair and mathematician Earl Isaac found Fair Isaac — with an initial investment of $400 each — on the principle that data, used intelligently, can improve business decisions.
• (1958) Fair Isaac sends letter to the 50 biggest American credit grantors, asking for the opportunity to explain a new concept: credit scoring. Only one replies.
• (1963) Builds first credit scoring system for Montgomery Ward, beginning long-term
association with the company.
• (1970) Delivers the first scoring system for a bank credit card to Connecticut Bank and Trust.
• (1989) First general-purpose FICO score debuts--BEACON at Equifax.
• (1991) FICO credit bureau risk scores made available at all three major US credit reporting agencies — BEACONsm at Equifax, EMPIRICA® at Trans Union, and the Experian/Fair Isaac model at Experian.
• (2001) Partners with Equifax to launch Score Power™, the only online credit score delivery service giving consumers full access to FICO® credit scores (www.myfico.com).
• (2003) myFICO® service becomes first service offering consumers FICO® scores from all three major US credit reporting agencies, as well as three-bureau credit report.
• (2007) 100 billionth FICO® score sold, marking milestone for world's leading credit bureau score and the standard measure of U.S. consumer credit risk.
• (2009) FICO is in over 80 countries world-wide and expanded into new markets of Russia and India.
http://www.fairisaac.com/fic/en/company/history.htm
Pay Day Loans
Marcy wondered how they were going to get through the week with the little bit of money they had left after paying the bills. Marcy and her husband had been struggling to make ends meet for a few months now. If they shared a car, they wouldn’t have to put gas in the truck this week. If they ate less meat and more beans and dug deep into the freezer, they might be able to cut down on the grocery bill. This form of budgeting was taking its toll on Marcy’s nerves, marriage, and family. Towards the end of the month, there was always more month left than money.
by valeria on Tue Aug 18, 2009 4:53 pm
Marcy had seen advertisements for “Pay Day Cash Loans” on the internet and on TV. She often wondered how these programs worked. Having become frustrated with her family’s tight budget, and wanting to purchase that new grill they had been eyeing since the weather turned warm, Marcy found an online company that would loan her $800 until her next payday. The $200 interest and fee charges seemed steep, but in order to have that grill for the weekend, she plunged ahead.
What is a “Pay Day Loan”?
Pay Day loans are short-term loans (usually two weeks or until your next paycheck) held against your checking account and secured with the promise to repay on your next payday. Upon the due date borrowers have the option to pay back the loan in full plus finance charges, or they can opt to float the balance due to another payday and only pay back the finance charge.
For example:
Pay Day Loan of $800 borrowed + $200 Finance charges = $1000 owed
Pay Day 2nd Friday of the Month –
Option 1: Pay back $1000 total ($800 owed + $200 finance charge)
Option 2: Pay back the $200 finance charge ONLY and float the $800 to Pay Day 4th Friday of the Month (on the 4th Friday of the month, the borrower would owe $800 borrowed + $200 finance charge – AGAIN, for a total of $1,200 owed).
These loans prey on families struggling to make ends meet. The option to pay back only the finance charge and “float” the balance (up to 4 times = $800 paid to borrow $800) is attractive for families who live paycheck to paycheck and have little disposable cash left over. Many consumers who engage in Pay Day loans end up borrowing an average of eight to thirteen loans per year – that means they are paying huge amounts in finance charges – around 600%.
Holidays, like Christmas, and the desire to take a summer getaway, are factors that drive consumers to borrow from these services. There are many more reasons why consumers come up short on income:
1. The Economy – many people have experienced the hardship of decreased income due to reduced wages, fewer hours worked, and loss of jobs. Some of these people are trying to maintain a standard of living that exceeds their income.
2. Poor planning – gone for many families are the days of the savings account. The average family should have three months’ salary saved up just in case. How many people truly are prepared? Emergencies that families are not prepared to face, such as a broken major appliance or auto repair bill, makes a Pay Day loan an attractive quick fix.
3. Materialism – our “have it all, right now” society sends detrimental messages to the American consumer, especially to young adults just establishing themselves financially. Many people have fallen victim to mounds of credit-card debt which is destroying their credit and their lives. (Watch the movie Maxed Out: http://astore.amazon.com/wwwthedougand-20/detail/B001AT49KC.)
4. Stress – the frustration and stress of living “pay to pay” has consumers seeking solutions and a way out – sadly, Pay Day loans are not a solution but a fix that can end up being more detrimental than beneficial to a family’s financial life.
If you’re considering using a Pay Day loan, stop and evaluate your need and ask yourself, is this really worth it?
Payments Go Up When Credit Score Goes Down
Most everyone is aware that credit scores generally determine whether an application for credit will be approved or denied. Credit decisions are made on car loans, credit cards, mortgages and most other forms of credit based on an applicants credit score. But, the affect of your credit score is not limited to what happens on the corner of approval or denial. If you are sent down the road of approval, your credit score will also determine the tolls you’ll pay.
by valeria on Mon Aug 24, 2009 9:54 pm
On November 20, 2007 Fannie Mae and Freddie Mac announced loan price increases for borrowers with credit scores below 680 on loans with loan-to-values above 70%. Simply put that means that if you don’t have a 30% down payment and your credit score is below 680 you are going to pay higher closing costs and/or higher rates on your home mortgage.
Unfortunately, higher mortgage rates are just one of the ways your credit score can affect the prices you pay. When it comes to credit card debt an average borrower can easily pay twice as much or more interest as someone with an exceptionally high score. Understandably, borrowers whose credit scores identify them as low risk are offered the lowest interest rates available.
What other bills are you paying that are affected by your credit score?
Recent studies have shown that 92% of the largest automobile insurers use credit data in underwriting new business. It has been estimated that a consumer with bad credit is going to pay 20 to 50% more in auto premiums than a person who has good credit.
An Insurance Credit Score is also used to determine whether or not you will get homeowner’s insurance and how much you will pay for it! This is based on the belief that the lower your score, the higher the chance that you will file a claim, inflate a claim or commit fraud.
Clearly anyone whose credit report doesn’t identify them as a perfect credit risk is a target to pay more for all the most expensive things in their life. How much would an average family save if they could cut their mortgage and credit card payments as well as their auto and homeowner’s insurance by 20-50% or more? Is it fair that the people who may afford it least have to pay more? That is something open to debate, BUT…
It’s also been determined that 79% of credit reports contained errors errors of some kind. Twenty-five percent of credit reports contained serious errors that could result in the denial of credit.
In other words, many people are paying the toll because the information on their credit report is grossly inaccurate. If you don’t know what’s on your credit report, how to analyze the information or how to raise your credit scores you may be woefully overpaying for some of the biggest items in your families budget. Be proactive, make sure your score is as high as it can be and realize the savings you deserve.
Daniel J. Poulos
Account Executive
[url]djpoulos@elitelending.biz[/url]
