Personal finance. student loans debts do not go on your credit record

Every time you apply for credit, for example a credit card or a loan, the lender will request to see your credit history from a credit reference agency. The information they hold is so detailed that there's really no need for us to fill out that long application form, because within a fraction of a second they can see all they need to know from Experian, Equifax or Callcredit, the three main credit reference agencies. You would be very surprised to see just how much they know about you. Banks, building societies and other financial institutions providing credit have been passing on details of your financial transactions to the credit agencies. Every time you apply for a credit card, every time you miss a mortgage repayment – it gets noted. They know whether you pay the minimum or the balance each month, they even know details of your credit limit on each credit card. They also look to public records, the voters' roll and the public register of court actions because that is where all county court judgements are listed. It all happens automatically, and when your credit history is requested, the computer will provide a statistical analysis of your financial habits and provide an assessment of your suitability. It enables, the industry argues, lenders to make an accurate judgement about whether they should lend you money or not. However, there is one piece of financial information that the credit agencies are not allowed to access, and that's the student loans. Despite the industry's remonstrations to the government, nothing has changed, and they are not allowed to access the information. The reason? Student loans constitute a debt to the taxpayer, they were not funded by commercial business. Before September 1998, the student loan system worked like this: once graduates were working and earning the national average, which was Ј15,000 at the time, they had to repay their loan on a monthly basis by direct debit. 59,000 of those pre-1998 graduates still haven't started repaying their loan, and each has on average a debt of Ј2,750. In September 1998, the student loan system changed, and the system remains the same to this day. Now, repayments are taken directly at source, straight from the salary in the same way as national insurance and income tax. This method has been a lot more successful. The lending industry is not happy about the student loan situation, their main argument being that they need to know, when considering an application for credit, if the applicant has extra financial responsibilities. The introduction of top-up fees resulted in increasingly large student debts, and as the post-1998 loans have to be paid off at a rate of 9% of the graduate's income once it has reached Ј15,000, it is a large portion of income to lose. The Association Consumer Credit Counselling Service made the following statement: “Knowing whether a young person has a student loan and whether it is being paid back, is useful.” So they are in agreement with the lenders. The Citizens Advice Bureau is also keen to have the information made public, because they feel that graduates could be taking on too much debt, and if lenders could see their student loans, they would ensure that graduates are not given the ability to borrow beyond their means. However, the Department for Education and Skills is showing no signs of wavering on its decision to keep individuals' debts to the Student Loan Company private. For the foreseeable future – the situation will remain the same and student loans information will be inaccessible to the credit industry.

Consumer confidence in banking takes a hit

A recent survey has shown that consumers' confidence in banks has taken a real hit, with one of the major causes of this decreasing confidence thought to be the recent situation with Northern Rock. According to the results of the survey close to 25% of Brits state that they do not trust lenders, and less than 50% thought that high street banks could be trusted. The turmoil and chaos that erupted after Northern Rock was found to have taken a loan from the Bank of England, fuelling rumors of a near collapse and resulting in many of the bank's 1.5 million savers withdrawing billions of pounds worth of savings. As a result of this situation the Bank of England has stepped up assurance over the guarantee of savings of Northern Rock customers, as well as the savings of customers with other banks that fall into a similar situation. However, it seems that these assurances have done nothing for consumer confidence in banking, with over fifty percent stating that they no longer trust high street banks. The survey revealed that of the 2484 people interviewed only 46% now trust high street banks. Building societies fared a little better, with 48% expressing confidence in building societies. Online banking has also taken a knock, with experts stating that reduced access to online bank accounts by Northern Rock customers also affecting this area of banking. Only 25% of consumers now trust online banking according to the survey results. One industry professional stated that consumer confidence in banking and finance was already fairly low, and added that the recent turmoil with Northern Rock has contributed to this lack of confidence. It is not just the banking industry that has taken a knock, however, according to professionals. Lenders across the whole financial sector have been affected by lower levels of consumer confidence. It is thought that this could be as the result of problems throughout the whole of the financial sector, which has stemmed from the credit crunch sparked in the sub-prime sector in the Unites States, which has resulted in global repercussions.

Saving money at the pump

A recent report in the Financial Times predicted that the average price for a gallon of gasoline in the United States may soon reach $3.00 . . . that's the bad news! The good news is, skyrocketing gasoline prices have caused many Americans to start looking for ways to either cut back on the miles they drive or find ways to make their cars more fuel efficient. That's good news because these fuel-saving attempts and attitudes will help reduce the fuel emissions that regularly foul our atmosphere. The question remains, just what do we need to do to spend less on gas and reap the reward of cleaner air; a few tips follow: Get your car in shape A well maintained car will burn less gas than one that has been neglected: 1. Keep your tires properly inflated; check your car's user's manual or look for the sticker that gives you the recommended tire inflation pressure. If your tires need replacement, look for tires that are rated as LRR (Low Rolling Resistance). Proper tire inflation along with the LRR tires will be your biggest fuel savers. 2. Change your motor oil at the manufacturer's recommended intervals and be sure to use the recommended 'weight' (viscosity) motor oil. While changing your oil, change the oil filter and check the engine air filter -- the air filter may not need to be changed every time you change your oil but it should be checked every time. 3. When you buy gas, pay attention to the octane rating marked on the gas pump -- it should fall within the octane range recommended by your car's manufacturer. 4. Buy your car a 'tune up' at the manufacturer's recommended interval -- on modern cars a tune up is mainly replacing the spark plugs, checking the engine timing and checking the spark plug wires. Drive smart How, where and when you drive are equally important factors in your attempt to save gas money and keep the air clean: 1. Do you really need to drive? Every trip to the store does not require car keys; walking a couple blocks will not only save your gas money it will help keep you in good health. More than just a couple blocks? Dust off your bicycle (or buy one) for those trips that are not more than two or three miles. Also consider public transportation and car pooling to and from work as gas-saving alternatives to your ignition key. If telecommuting is an option for your job, take it! 2. If you do need to drive, plan your route! Sometimes the shortest route has the most traffic congestion so you are wise to take the longer, less-traveled route to save gas by not being stuck in slow traffic. If possible, arrange your work schedule to allow you to drive to and from work in less congested traffic. 3. Slow and steady wins the race.“ When pulling away from a stop light or stop sign, go easy on the gas pedal and gradually increase speed -- jackrabbit starts are really bad for fuel efficiency . . . sudden stops don't help either, if you find yourself jamming on the breaks, you are driving too aggressively -- slow down and 'mellow out'!. When you're finally on the highway, keep your speed at the posted speed limit and, if you have a cruise control use it. Some other fuel saving tips 1. Don't spoil your car's aerodynamics by placing luggage or other things on top of your car. 2. Keep your car windows closed; in the summer air conditioning won't effect your gas mileage as much as open windows. 3. Travel as light as you can -- more weight in your car equals poorer gas mileage. 4. If you rent a car you'll be buying your own gas so rent the most fuel-efficient car available. 5. If you are ready to trade your car in for a new one, give serious consideration to a hybrid vehicle or at least a vehicle with the best gas mileage rating you can find. Rising gas prices will probably be with us for quite a long time so take some of these tips to heart to save money and save our environment.

Is filing for bankruptcy the solution

Bankruptcy may seem to be an easy solution for major financial problems. But it is always better to avoid filing bankruptcy at all cost and to turn to it only as a last resort. Once you file for bankruptcy, this point will remain on your credit record for ten years. This will make it difficult for you to receive loans and credit. Some lenders may allow for limited credit with bankrupt; but only after extensive explanations, and at a higher interest rate and with added credit fees. Another reason for avoiding bankruptcy is that some types of bankruptcy call for repossession of assets. Once the bank finds that there is something with you that is not necessary for living, the item may be seized to pay for debts and bankruptcy expenses. With bankruptcy, financial difficulty will not be solved and your life becomes an open book as the court pries into all aspects of life wherein you will have to provide all financial information like savings, investments and assets. Though bankruptcy may seem to suggest some freedom from financial debts, there may be other debts that will have to be paid like alimony, court judgment costs or child support. So keeping these points in mind, it is always better to avoid bankruptcy. Debt consolidation is one of the best means of avoiding bankruptcy. These companies help you by examining your current loans and come up with a program that incorporates all these debts. The company handles the payment to all the creditors; you just have to make a single payment to them every month. They will also get you a lower rate of interest and a longer time period to repay the loans, thus making you save some money. Easy access to credit cards and credit accounts at department stores has now made it rather easy to fall into debt. It is better to pay bills with cash, and not use credit when money runs low. So cancel the credit card account! If you fall in debt, instead of hiding from the debt companies, it is better to talk to them as they may be able to negotiate and help you solve your debt. It is always better to plan a budget calculating debt ratio to income when in debt. Just write all the bills and expenditure that you have. Then you can determine how much has to be paid for bills, and how much is left for other spending. If required, you can also sell your home and downsize to avoid bankruptcy. The only benefits of filing for bankruptcy are that the stress of dealing with numerous creditors is relieved. Once bankruptcy is discharged, as most of the debts get written off, creditors cannot pursue them. However, the disadvantages to bankruptcy are many. Businesses can be sold and employees dismissed with bankruptcy. Equity in a home is most likely to be sold as with bankruptcy, reliable assets of value are lost. Bankruptcy is a costly process where all the fees for courts and trustee are drawn from the debtor’s assets. On filing for bankruptcy, it is not possible to hold certain public offices like MP, magistrate or even practice as an accountant or a solicitor. Moreover, with the new bankruptcy reform law, it is difficult to use Chapter 7 bankruptcy to get a new start in one’s financial lives. Under the old law, one could file for bankruptcy through Chapter 7 or 13. In Chapter 7, you can keep your exempt property like the equity in your home. Here most of the debts are discharged. However, in Chapter 13 bankruptcy, you have to agree to pay off all your debts over a period of three to five years. So according to the new bankruptcy law, most of the bankruptcies are forced to file for Chapter 13 bankruptcy. Moreover, according to the new law, you have to meet with a credit counselor for six months before applying for bankruptcy. However, as there are insufficient credit counselors, it is rather hard to accomplish this. It is also required that you attend money management courses at your expense before discharging your debts. However, it is always better to approach a good bankruptcy lawyer before taking any steps!