Monthly Archives: March 2020


3 actions that affect your credit record, avoid them

A credit record is a fundamental financial instrument used by banks; and there are actions that affect your credit record. Banks, with your credit record, evaluate your solvency and ability to pay when you apply for a loan. This applies to all the loans that you can conceptualize, such as mortgage loans, or loans with mortgage guarantees.

Next, we are going to tell you 3 actions that, believe it or not, negatively affect your credit history and can be quite harmful when you are on the occasion of getting a loan.


Action 1: Don’t pay your debts on time

Action 1: Don

It may seem a little obvious that we mention this; but it is extremely important to keep up to date with loan installments; not to mention that you must pay them fully and without fail.

Having credits with expired terms in addition to risking your assets will give a bad image to your credit record.


Action 2: overdraw your card

This means that, if your credit card has a certain credit limit, then it is good for you to check your balance when checking your history. Ideally, your balance should be well below the credit limit, otherwise your credit history will be affected. That is why it is very convenient that you avoid, at any time, overdrawing your card.


Action 3: Pay a credit with another credit

Action 3: Pay a credit with another credit

This is obvious, if you pay a debt with another debt you are only managing to owe more money than in the beginning, the only difference is that it will be to another person; But this will look bad on your credit history because you will notice that you are in debt for long periods of time and that does not look good at all.


Conclusion of these actions that affect your credit record

What you should know about all this is that, whatever happens, you should keep an eye on your credit history constantly and carefully, because if you do not do it you may run the risk that when your chance to obtain some type of loan arrives or a mortgage refinance, you will be in trouble.

Redemption loan for debt rescheduling or loan consolidation

Existing loan is replaced by a new loan

Existing loan is replaced by a new loan

In many cases, loans are concluded with a term of several years, and in the case of construction finance even with several decades. However, numerous changes can occur during this time. For example, it may no longer be possible for the borrower to raise the previously agreed high loan rates, and the interest rate level may have dropped in the meantime, so that it may make sense to reschedule the existing loan. More of this story:

As part of a debt restructuring, an existing loan is replaced by a new loan. This is interesting, for example, if the new financing is significantly cheaper than the existing one, but also if several small loans can be merged, which reduces the rate burden, rescheduling can be worthwhile.

Loan is closed immediately

Loan is closed immediately

A redemption loan must therefore be taken out for the debt rescheduling. This can, but does not have to be agreed with another institute. However, when taking out the loan, it should be noted that the existing loans can often not be repaid easily because borrowers must observe notice periods. If an existing installment loan is to be repaid, notice periods of six months must be observed. If the loan was concluded before the new consumer credit directive, which came into force in June 2010, the terms of the contract may still include the termination notice in the first six months. Newer loans and loans after the first six months can be canceled with a notice period of three months so that the new loan can then be used.

In the case of construction finance, however, the redemption loan cannot be used as quickly because the notice periods are significantly longer. In the first ten years, termination is generally not possible or only possible by paying a prepayment penalty. After the first ten years, the termination is then possible with a period of six months. In order to still be able to take out the cheap redemption loan at the currently low interest rate level, the banks offer the forward loan. This loan is closed immediately, but the payment can be postponed up to five years into the future. During this forward time there are of course no interest costs and payment obligations, so that they only serve to hedge the interest on the redemption loan.


Loan or credit – what will be a better solution?


For many people, the concept of loan and credit is used interchangeably. In practice, however, the two terms are different and it’s good to know the pros and cons of these financial products. In this article you will learn what solution will be a better choice in the current situation and the purpose for which the commitment is to be allocated. Let’s start by presenting the differences and describing individual forms of receiving funds.

Non-bank loan – advantages and disadvantages.

Non-bank loan - advantages and disadvantages.

Loans can be granted by any person or institution, provided that the lender owns the money. The operation of granting a given amount is regulated by the Civil Code in the case of an amount exceeding USD 500. Financial support for smaller amounts need not be recorded as a written contract.

Non-bank loans may be granted to a person who is in debt and has a negative history in the registers. In addition, lenders can be private investors who provide financial support on very favorable terms – at a low interest rate. A disadvantage for the lender may be that they provide financial support on their own responsibility and from their own capital. On the other hand, the borrower has the option of receiving funds, even in situations where banks issue a negative decision.

Loan features:

  • verification and other registers is not required

  • the purpose for which the loan is to be granted does not have to be determined
  • the loan can be granted at any interest rate
  • the capital transferred to the borrower becomes his property
  • the repayment date does not have to be specified in the contract

Bank loan – pros and cons.

Bank loan - pros and cons.

Loans are granted by banking institutions and SOKI. It is an obligation to make available a given amount of money for a given purpose and to set a deadline by which the borrower must repay the loan. In this form, the person taking out the financial support must allocate it to the purpose which was specified in the written contract. The disadvantage of the loan is the fact that a positive assessment of creditworthiness does not mean that the borrower will receive the amount of money I need. In such a situation, banks may propose a smaller amount. Obligations in this form involve arranging a pile of formalities.

Credit features:

  • creditworthiness verification is required, which has many factors

  • signing up requires a purpose to be allocated

  • capital is put into temporary disposal and is not the property of the borrower

  • a written contract with repayment deadline is required

Credit or loan – what will be better?

Credit or loan - what will be better?

The answer to this question is individual and depends on many factors. For people who need a large amount (eg for building a house), the loan will probably be more favorable due to the fact that firstly – it will be difficult to find a private person with such capital and secondly – the interest rate over a very long period (eg 30 years) may be lower. Of course, it is worth getting acquainted with the offers of various institutions to make an analysis or use the services of a financial advisor.

On the other hand, loans have many advantages in the case of slightly smaller amounts (eg up to USD 100,000). If you find a trusted investor who prefers to spend your money on an investment, which is a loan, the final price of the liability can come out much better. Many people keep their savings on bank deposits at a very low interest rate (say, for example, 3%) – such a person prefers to invest their savings in a loan for a person who is willing to pay twice as much. The interest rate (eg 6%) is beneficial for both the lender and the borrower, because it is practically impossible to get a loan with such a low interest rate.