A line of credit, roughly defined, is the amount of credit that can be given to a borrower from a lender. Usually a contract or note of promissory is exchanged between the two parties, in which both parties agree to the line of credit amount, as well as the annual interest due to the lender at the end of the term.
Line of credit can be anywhere from a paltry sum such as twenty dollars, to a home lone of over twenty thousand dollars. Line of credit speaks volumes about your character and shouldn’t be taken lightly. Where and how much your line of credit can be extended is at the sole discretion of the lender. The lender holds all the cards in the transaction, basically.
Qualifying for a good line of a credit is somewhat of a Catch 22, in that in order to qualify for any line of credit you must prove that you have previously been reliable in paying back a previous line of credit. It’s like the old adage you may have heard upon graduation from college: “To get a job, you need experience. But to gain experience, you need a job.” Sometimes it may feel like there’s no way to get the ball rolling, vis a vis your very first line of credit.
One way to prove that you are trustworthy and will pay your line of credit back in full each month (or at least within a reasonable amount of time) is to sign up for a credit card when you’re in college.
Most people begin their line of credit this way, because credit card companies often target students to get a line of credit. Be vigilant with your spending, though, or this decision can come back to haunt you. Don’t be tempted to squander your line of credit - after all, it is not cash - because your line of credit rating will follow you wherever you go. In other words, don’t spend frivolously. Merely purchase the groceries on the card, and be certain to pay off your monthly balance line of credit each and every time you get your bill online or in the mail. This establishes a good line of credit track record. Banks and other lending institutions will check up on this line of credit record later.
Tim Gorman is a successful webmaster and publisher of Military-Loans-Online.com an online website that offers money saving rates on auto, home, bad credit, pay day loans and other free loan information that you can view in the privacy of your own home.
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When it comes to learning fiscal knowledge, some lessons result in better memories than others. One of the most satisfying lessons I have ever learned is that there are rules simply made to be broken.
Rules that produce benefits for everyone are not what I am talking about. These “good” rules include not cutting in line at the grocery store, at a 4-way stop the driver on the right has the right-of-way, and paying your taxes on time keeps the government operating. These are all good rules and should never be broken.
You, as a consumer, are must discern what type of rules are critical to be break. These rules are created by commercial businesses for their own benefit. The enterprise isn’t trying to help you with their regulations; they are looking out for themselves. This kind of thinking survives because we, the consumer, are intimidated when told “That’s against our rules. You can not do that.”
All consumers can benefit by learning to question the statement of “You can’t do that”. Once you learn how to do it, you might find it an enjoyable, and profitable, experience.
Rule #1: You Break It, You Bought It
Some time ago I passed the time in an airport gift shop waiting for a friend. Startled by the sound of breaking glass, I turned around to see an active youngster standing next to a shattered glass vase. The stern faced store owner pointed to a sign reading “YOU BREAK IT, YOU BOUGHT IT”. He then had the audacity to demand $49.95 for the vase. The young mother, clearly distraught, stood her ground and said “No.”
By the time I left, the woman and her child had left, the store owner was cleaning up the glass and I was amazed that someone else knew the truth about business. The truth is, accidents are apart of doing business and breakage is a legitimate tax deduction.
I suggest that if you do accidentally break something in a store, earnestly apologize and keep your wallet firmly in hand. If you want to pay to ease your conscience about being a bumble-bottom, fine. But only pay for the actual cost of the item as verified by the invoice, never allow the store owner to make a profit on your accident.
Rule #2: A CD Grace Period is set in Stone
Banks are extremely skilled at intimidating their clientele. They are also good at maximizing their profits. I allowed a CD to automatically roll over at a large bank instead of bothering to actually go to the bank and take care of it myself. In my defense, I mistakenly assumed the interest rate would be the same as the expiring rate.
Unfortunately, by the time I bothered to look at the paperwork and discover the rate was less than half of what I had been earning, the grace period of changes was over. When I called, the customer service person told me “Once the grace period is over, there is nothing I can do.”
Nothing he could do, but I politely asked to speak with a supervisor. Within a couple minutes I was granted a “promotional” rate equal to the one I had been earning on the expired CD.
A lesson can be found here about the trustworthiness of banks. As quickly as they adjusted my CD rate made me wonder how many other patron were letting the bank dip their fingers into their cookie jar.
Rule #3: The Insurance Agent Always Knows Best
People selling insurance are imaginative creators of rules to help themselves make a larger commission and the companies they work for are no better. An example here is “dwelling coverage”. This amount is what the insurance company will pay if your house burns down or is destroyed somehow necessitating you to rebuild.
If you try looking for more information in your policy, there isn’t much. Inquire of your agent how they arrive at the replacement value of your home and the premium you pay and you might get an answer similar to “The computers calculate that automatically, it works the same for everyone”.
In my case, the last premium notice I received had the replacement value of my home considerably higher than its market value. I called my agent again. He explained if my home was destroyed the insurance company would rebuild it for me, which would cost more than buying an existing home.
Good sound bite, but I would still have to pay a higher premium to buy coverage insurance my home for more than it’s actual worth. While on the phone, I lowered the coverage to the market value and saved nearly $100 immediately. I know if something happens, I will only receive market value for my house. However, that will be enough for me to buy an existing house and not have to go through the headaches of building one.
Rule #4: Warranty Cards are Mandatory
I used to thing I wouldn’t have any warranty coverage on my stuff if I failed to return the little card manufacturers enclose with any new product. Do you still think that? It’s what manufacturers want us to believe.
Their reason is simple - the manufacturers use these cards to gather marketing data about their consumers: age, income, where they shop, etc. Plus, if there is ever a recall on the product, they have a name and address to contact you.
That is the only reason I ever fill out and return one of those cards, and then only with my name, address and product serial number filled in. I know there is still warranty coverage even without the card, so why spend my time helping the manufacturer gather marketing data for free?
Rule #5: Social Security Number Requirement
Lately, the crime of identity theft has been increasing in coverage on the news. Identity theft is when a crook obtains enough information about you to make credit purchases in your name, leaving you to explain that you have never flown to Australia. What information do the crooks need to know about you?
Your Social Security number and name is all. That’s why it is important to never divulge this information to anyone unnecessarily. In fact, the only reason you have to give it to anyone is because the government wants information about you. Your employer needs it to report earnings, banks and financial institutions need it to report earnings, and the IRS wants to collect their taxes on your earnings.
Lately, insurance companies want to run a credit check on you, and credit issuing companies want to run a credit check on you, and for this they need your Social Security number. Federal law prohibits credit grantors from denying you credit without telling you the reason - if you ask. So be sure to ask, and always shred any document with your personal information like name and/or Social Security number before throwing it in the trash. It is up to you to take as many precautions to protect your number as you can.
Rule #6: Contractors Are Paid Up Front
Some questionable rules are created by individuals. Remodelers such as carpenters, housepainters, roofers and drive-way repair persons have an interesting rule they want you to believe is etched in stone. This rule says “You are required to pay 1/3 of the project costs up when you sign the contract”.
I’ve learned that with contractors it is easy for them to be sidetracked when a more profitable job comes along. To counteract this understandable issue, I change their rule to “I’ll pay 1/3 after the materials are delivered and the job started”.
All legitimate contactors will agree, in my experience, once you politely explain to them why you are doing it this way. He may still get sidetracked, but at least he won’t be using your money before starting your project.
Rule #7: Sign on the Dotted Line
Never sign any contract without reading it carefully. This includes all the fine print, so take a magnifying glass with you.
You say you never sign contracts without reading them? Good for you. Does this include everything you affix your signature to? You know the lease, bill of sale, rental agreements or credit card slip all constitute a contract. Once you sign, you have agreed to all the terms of the contract, even the ones you don’t understand or think are e “unfair”.
When you start calling attention to provision of contracts you don’t like, you may be told “That’s our standard contract. We can’t change it”. Wrong, they can and most will if it means the difference between making a sale or you walking away.
Leases are good examples of changing contracts. If you are a desirable renter, the landlord may make certain improvements instead of renting “as is”. If you find clauses undesirable, and the landlord won’t remove them you would probably be better off renting elsewhere anyway.
The time to check over a contract is before you sign, not after you have signed it and are home again. A friend of mine leases things like cars and office equipment for his business and he claims to have never signed a lease without changing at least one phrase.
Go ahead and try being a rule breaker. You might like it and it could save you headaches and money, too.
Roger Sorensen is a Financial Speaker and Author and the editor of Money Basics - The Newsletter found online at the website Slave2Work.com. You can contact him through the website, read articles he has written and find his most recent book “You Don’t Own Money 2nd Edition” at the http://www.Slave2Work.com Bookstore.
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