Friday, May 4

The Five C's in Lending

Did you ever hear about the 5 C's of lending? Most lenders use these five factors when considering a loan:

  1. Character- An evaluation of your financial performance and management; your credit score.
  2. Capital- This is your financial position; assets, liabilities, net worth and equity.
  3. Capacity- Your ability to repay the loan, your debt ratio.
  4. Collateral- This is what you offer the lender for security should you default or cannot repay the loan.
  5. Conditions- These are things a lender may want of you to assure or encourage repayment of the loan.

Work on improving your weak C's so that you can improve your chances of getting what you want. Knowing what a lender expects before applying can only help your chances of getting the loan.

Debt Ratios- Are they really that important?

Do lenders still use debt ratios when underwriting loans? They might depending on whether or not they use an automated underwriter or a human underwriter. Sometimes, they'll use both. Read on...

In our technologically advanced world, debt ratios no longer receive the same scrutiny that they used to. This isn't to say that they're not important, just that they don't receive as much attention as they used to. Today, most applications for credit are subject to a scoring matrix where numerous factors are taken into consideration. The number one factor is your credit score. Oftentimes, your credit score will determine whether or not you get the loan and the rate of interest that you'll be offered.

Things that these automated underwriting matrix's look at are:

  • Credit Score
  • Time on job
  • Time at address
  • Recent late payment history
  • Foreclosure\Repossession
  • Bankruptcy
  • Judgements
  • Number of accounts recently opened
  • Revolving account balances compared to account limits
If an application is not approved but 'deferred' to a human underwriter, they may consider, in addition to the automated findings, things like;
  • Your past relationship with them (if you've borrowed from them before)
  • Collateral for security
  • Debt Ratio
  • Savings and other assets

Debt Ratio can be very important if your application doesn't meet automated underwriting requirements, or if the lender uses a manual underwriting process!

Be sure to check out My Open Wallet for more information about personal finance!

Wednesday, May 2

College Student Identity Theft

The ease of obtaining and the potential for abusing credit cards by recent high school graduates in college is at an extremely critical stage. But it isn't just about financial ruins from ignorance or lack of financial responsibility, now we are talking about identity theft. Imagine; you're twenty years old, working towards an MBA, and you're stacking up credit card debt that will take many, many years to repay. While you're innocently working towards your degree, someone steals your identity. How is this going to affect your marketability in the workforce?
How well do you know your roommate? Are you receiving mail on campus? Who else has access to your credit card checks? You has access to credit card offers that you receive in the mail? You need to understand the risks and how people can rob you of your identity!

Best practice: limit the number of credit cards that you have and use to one or two and regularly monitor your account activity.

Here's some good information about credit cards at

Visit The Art of Making Money's recent carnival for much more information!

Tuesday, May 1

Announcing: Dosh Dosh and Technorati Favorites

The Money and Credit Blog is announcing that we are now exchanging Technorati favorites! There is a similar exchange going on at Dosh Dosh .

What a fantastic way to introduce others to your blog! By participating and favoriting, your blog will receive a higher rating on Technorati!
A Great Concept! A Great Opportunity!

Debt Enforcement Laws in New York

Click Here for other States!

New York Debt Enforcement Laws

Want to learn more about debt recovery and judgement enforcement in New York? Here is some information on New York debt collection laws including: New York Statute of Limitations, New York Judgments, New York Garnishments, New York Interest Rates and New York Bad Check Laws.

Legal: 16%
Judgment: 9%

Open Acct.: 6
Written Contract: 6
Domestic Judgment: 20 (10 yr. renewable lien)
Foreign Judgment: 20 (10 yr. renewable lien)

Face value of check plus two times check amount up to a maximum of $400 on NSF or $750 on "no account" (Demand prescribed by law). GEN.OB.1.1-104

90% of earnings, except 1st $127.50 wk. wholly exempt.