Mortgage Loans – Mortgage Loan

What Happens During a Recession?

A couple different formal definitions exist for a recession. Here are a few popular ones:

• Suggested by economic statistician Julius Shiskin in 1975, a recession is when the Gross Domestic Product (GDP) has two down quarters (i.e. shows negative growth for two consecutive quarters). Another way to look at this is that our currency ends up buying less in other parts of the world.

• Another definition of a recession is when national unemployment rises one and a half percent in a year’s time.

• The National Bureau of Economic Research (NBER) has their own version that most economists like more. This involves a look at more factors than just the GDP or the unemployment rate. Real income, wholesale-retail sales, and industrial production also factor into whether they decide a recession is going on or not.

• Leonard Lauder of Estee Launder Cosmetics once put forth that lipstick sales could be a good indicator of a recession. The theory behind this was that shoppers would put off big-ticket purchases but placate themselves with the purchase of lower priced makeup. Therefore, if lipstick sales are up, we might be in a recession.

A recession is a slow down in the economy. However, it is more than that, a downward spiral with a negative feedback loop; a recession can take some time to recover from. Here is what happens in a recession:

• Something causes a problem for banks. Some form of over-speculation or crisis happens where they now cannot loan out money like they usually do.

• Small businesses cannot get loans to start their businesses.

• Business stagnates. New people are not hired for new businesses.

• Unemployment goes up.

• People get scared and stop spending as much money as they usually do. Credit card application and usage drops.

• Businesses fail and have to lay off people.

• Home values and mortgage applications go down

• After about a 10% unemployment rate, normal people start to get affected by the recession (i.e. not people living on the margins).

• People will start to look for recession proof commodities to invest in.

To help get out of a recession, governments will usually try a couple of things:

• promote interest cuts to encourage consumer spending

• make tax cuts to give people more money to spend

• increase money supply

• increase government spending

A very strong argument exists that excessive government involvement actually makes recessions last longer. The Austrian School of Economics, for example, advocates a laissez faire approach to the economy. They believe that government involvement is counterproductive to recovering from a recession. The Chicago School of Economics also believes in libertarianism as far as economics are involved.

Harry S. Truman, 33rd president of the US (1884-1972) was quoted in the newspaper Observer on April 13, 1958, “It’s a recession when your neighbour loses his job; it’s a depression when you lose yours.”

A credit score is the score associated with a person’s credit report. This score indicates how well a person has managed his or her credit in the past. Various methods to score a person’s credit report exist. However, the most commonly used score is the FICO score. FICO stands for Fair Isaac Corporation.

With a FICO score, the higher the score, the better the score is. FICO scores range from 300 to 850. A good score is anything 700 or above. This score is for the ideal credit consumer. They make their payments in time, they do not own that much debt, and they have demonstrated responsible use of credit for a long time.

A score below 600 will not rule you out but will probably get you higher interest rates. You can find out what your credit score is free; you are entitled to a free credit report once a year.

The following factors contribute to your credit score:

* payment history
* how much you owe
* how long you’ve had a credit history
* whether you’ve applied for new credit recently
* types of credit used

Why would you want a good credit score?

Companies use your credit score to see if you would make a good customer. Credit reports are used:

* for determining if you are a good credit card customer
* for determining how good a car insurance customer one might be
* for determining how good a mortgage customer one might be

Besides determining whether one qualifies for credit or not, the credit score also groups people into how desirable they are as a customer. Companies are willing to offer lower interest rates to people with higher credit scores because they are more desirable as customers. Conversely, the worst you credit score is, the less attractive the offers look like to you.

Besides situations dealing with credit, credit scores are also often used

* as part of a hiring decision
* as part of an apartment rental application

This may seem like an invasion of privacy but many companies are doing it.

What lowers a credit score?

* The biggest thing affecting your credit score is probably going to be missed or late payments. A lender hates seeing this on a credit report. Who wants to lend money to somebody who has shown themselves to be a bad borrower?
* Having balances too close to the maximum amount allowed on credit cards also lower a credit score.
* Applying for too many credit cards in a short amount of time lowers a credit score.

With all the many recent cases of denied PPI claims, many have begun seeking to get the money spent on these seemingly useless policies returned to them. Though the companies holding the policies don’t make it easy for their victims, there is help available. There are many firms that specialize in fighting for mis-sold PPI claims, and if you feel you have been mis-sold PPI, then they surely can help you.

Before trying to file a claim for mis-sold PPI, you need to know if you have in fact been mis-sold the policy. Simplicity Claims, a firm based out of the UK, specializes in these kinds of cases, and they could surely help you to determine whether or not you have been mis-sold PPI. To give a rough idea of some instances where PPI has been mis-sold, you can reference the following (although, this list is not complete):

- Not employed or self employed at the time of the PPI policy issuance. If either of these apply to you, it’s probably not possible for you to make a claim against the policy if the policy includes unemployment cover.

- Existing medical condition that could prevent you from working at any time. While this should have been explained to you when you were issued the PPI, if it was not, you can make a claim to get your money back.

- PPI policy was sold to you as a ’single premium’ policy. If your PPI policy was paid in full by funds that were borrowed at the same rate of interest as the loan or credit line, you should be refunded if you cancel the PPI. If for some reason you were not allowed to cancel the PPI policy, then you are also able to claim a refund. In the event that you are refunded only a fraction of what you’ve paid on the policy, then you can also make a claim.

These are by no means the only cases in which you can file a mis-sold PPI claim. A company like Simplicity Claims, who specialize in mis-sold payment protection claims can assess your current situation. If you feel that you’ve been a victim of mis-sold PPI, then you should definitely contact them today!