Prosper uses a bidding system where entrepreneurs create a profile, share their story and advertise their listing. The loan amount must range from $1,000 to $25k and must include the maximum interest rate they are willing to accept.
Hopefully you have already checked your credit reports and are correcting any errors. (If you have not done this, read my previous article, Start Your New Year Right By Checking Your Credit Reports ). Make sure you monitor and follow through on any disputes. That is a good start. With a tough economy, a good credit score is more important than ever as credit opportunities may be tighter.
Spending Power - When there is excess money somewhere within the budget it takes lots of control to not spend it. The urge to get the latest in electronics, fashion or a night out on the town may prove difficult to control. What we think we deserve and what we can afford to treat ourselves with do not always match. Individuals may not even have extra cash, but face the itch of having available credit now that their debt has been lowered. It serves no good purpose to use this credit unless it is to alleviate an emergency cost. If there is no savings, a credit card is a good option as long as the interest is lower. Some credit cards have interest higher than short-term loans. Watch what you spend and have a plan to pay it back in order to keep the most income in your own pocket.
A loan modification may save a homeowner thousands of dollars per month and provide them with peace of mind and financial stability, however, it is important the homeowner realizes the effects on credit that may result. Other loss mitigation services, including short-sales, may have similar effects on one's credit rating.
Even if you have no credit history, it's okay. Lenders understand that you have never availed credit in your life. But, they require you to earn because it will help them in knowing your ability of making payments. If you earn more, then you can easily get approved for a bigger loan.
Couple that with having children and a spouse to support, auto loan payments, credit card bills, student loans and anything else that is considered "revolving credit" and you have a monthly output of costs. This is exactly where a budget comes in. So many people take the time to create a budget but don't stick with it. For some, the budget is not realistic and only causes frustration. For some, it's just too easy to live off credit cards or other means of borrowed money. This only creates a situation where a person doesn't know where their money goes every month. It also prevents someone from saving because, in most cases, there is no budgeting for the future.