Wow, Credit Scores Aren’t What They Used to Be
Housing loans, ouch, have you tried to get pre-approved through a major lender recently? Even with what would have been considered good credit scores last year, you may not find the same thinking now. Fair credit to a major lender now means poor credit and good credit is only considered fair. Scary, isn’t it?
What does that mean for first time home buyers now? It means that they may be stuck renting for the next ten years if their credit is not satisfactory. What is the fix? Currently, some homebuyers are putting their downpayments towards repairing their credit. Unfortunately, the only way to get loans nowadays is to have much higher credit. In the long run, this will be better for the rates for the prospective homeowner, however, they may have depleted the necessary 3%-10% downpayment that they had saved up.
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Letters of Credit
International trade is becoming more commonplace than most would think. Small business startups that are looking for cost reductions in labor are now able to outsource fairly easily using nothing more than the internet and a PayPal account.
In some dealings with international businesses or workers, the topic of letters of credit may have come up. This will be especially true in dealing with large amounts of products for import or export.
A letter of credit is where a bank vouches for you or your company. That’s pretty much it. You have to prove to the bank that you can pay by either opening a line of credit that can cover the amount or by actually depositing the amount described in the letter of credit. By using a letter of credit, business can act faster in making deals because there is an assurance that the requester will be paid.