The Best Ways to Improve Your Credit Score

In order to start to improve your credit score, it is necessary to first understand how the score is calculated from your personal credit history. The information is listed in your credit report, which is obtainable from a credit bureau. We are able to take control of our financial health by improving our credit score and financial status.

How a credit score is calculated and impacts financial status?

The credit report outlines how the credit score is calculated, based on credit history. Credit history includes financial and bank accounts, credit and store cards, payments made on time, late or defaulted on and length of credit history. Errors in credit history are likely to impact accurate credit score calculation. Providing accurate information to the credit referencing company enables correct calculation that may potentially improve an individual’s credit score.

Lenders and creditors use the credit score when deciding to approve or decline a loan application, such as for a short-term loan. Two people applying for the same loan, but with varying credit scores, are likely to be quoted different interest rates and monthly repayment amounts.

Lenders use the credit score, as an indicator of ability to meet future repayments for both long and short term lending. The higher the credit score, the stronger the individual’s financial status and creditworthiness, leading them to be more likely to receive loan approval at a lower interest rate.

To be viewed more favourably for long or short-term loans, individuals can take steps to improve their credit history and score. Obtaining a credit report from a relevant credit agency, reviewing it and seeking advice from a financial professional, if required, may help individuals take steps to enhance their financial status.

Potential ways to improve a personal credit score

The steps an individual may take to improve their credit score include:

  • Being listed on the electoral roll at a current address.
  • Closing inactive accounts and credit cards and managing active ones well.
  • Making outstanding debt payments or paying minimum payments on time.
  • Paying all bills and financial repayments by the payment clearing or due date.
  • Building a healthy six-month credit history, such as not missing credit card payments.
  • Avoiding being responsible for another person’s financial habits or obligations.
  • Using quotations rather than credit searches when exploring financing.
  • Getting the timing of credit applications right; for example, not just after moving home.
  • Avoiding repetitive loan applications and rushed ones with credit declines.
  • Checking personal credit report annually for accuracy.

By taking control of individual financial and credit history, it is possible to enhance the possibility of improving personal credit score and loan options. As soon as a loan application is declined, avoid making further applications and obtain a credit report to find out why the loan was not approved.

If you’re struggling with a poor credit score and in needs of emergency funds, you may be tempted by “no credit check loans“. The fault with no credit check payday loans is they you could be charged far more interest. It may be better, in the long run, to improve your credit score. To build a credit history, start by using a credit card with a responsible company and make small, but regular, purchases and repayments. Showing long-term employment or self-employment history and home address with home phone, reassure lenders. Having a healthy long-term banking history with the same bank also strengthens creditworthiness.

Guarantor loans vs payday loans

There is a distinct difference between guarantor loans and payday loans, the obvious one being that guarantor loans require a credible guarantor, a person who financially vouches for whoever is taking out the loan. These types of loans are intended for people who are looking for bad credit loans, on the other hand, are secured on the borrower’s next income payment. Although both are forms of short term loans, other variations also apply.

The key differences between a guarantor loan and a payday loan are as follows:

Guarantor loan

  • Eligibility for a guarantor loan is not based on the credit worthiness of the borrower, but on the financial security of the guarantor vouching for the borrower.
  • A credible guarantor stands as security for the long or short-term loan.
  • The guarantor must usually be aged 23 or over and be a homeowner.
  • Loan amounts vary, depending on the duration approved.
  • Loan duration may vary over several months.
  • Guarantor loans may be for a range of purposes, including personal, educational or business.
  • Market interest rates usually apply.
  • Guarantor loans tend to be used by borrowers with poor credit history.
  • Application timeframe is based on receipt of guarantor details and signature.
  • Payouts may be made within 24 hours.
  • Long or short-term lending criteria apply.

Payday loan

  • Eligibility for a payday loan may be based on income security and credit worthiness.
  • Payday loans are secured by the borrower’s next income payment.
  • Payday loans are available to people aged 18 plus and home ownership is not a requirement.
  • Loan amounts range from £100 to £1,000.
  • Payday loans are cash advances to meet expenses or emergencies.
  • Payday loans are used by borrowers attempting to preserve their credit history.
  • Fees are not based on market lending interest rates, but on overdraft and late payment fee charges.
  • Loan duration is usually one month, unless extended at an additional cost.
  • Applications may be approved online with payouts within 30 minutes.

Comparing a guarantor loan with a payday loan

How an individual benefits from a guarantor or payday loan depends on their borrowing needs and existing financial circumstances. With a credit worthy guarantor, interest rates may be more favourable than payday loan fees for a similar short-term loan.

Borrowers taking out a guarantor loan or a payday loan are both under an obligation to meet their debt payments on time. If a payday loan borrower defaults, additional charges may be added, incurring higher borrowing costs. With guarantor loans, if a borrower defaults, the debt payment may be claimed from the guarantor.

The guarantor loan provides more flexibility in terms of amount, duration, interest rate and monthly repayment amount. Each lender has different lending criteria for each loan type. Comparing what lenders offer may provide cost-savings in the long run.

Whether looking for long or short term loans, aspects to consider include the purpose of the loan; the amount required; payout timing required; potential repayment duration; affordability of loan repayments and likelihood of loan approval. Seeking professional advice will help the individual concerned select the most suitable loan for their requirements.

PiggyBank offer flexible no guarantor loans for bad credit, which if approved, can be paid out on the same day.

Banks Fail to Help Customers who Lose Thousands in Online Mistakes

With the rise of online banking, it’s become so much easier for customers to transfer funds between accounts, pay off bills over the internet and so much more. However, it’s also become a lot easier to make a mistake as well, and see your funds end up somewhere entirely different to where you expect.

You might have done it yourself, putting a figure wrong in an account number or sort code and being unaware that your cash has disappeared into a stranger’s bank account. However, you’d hope that when this does happen, the banks would cooperate and help find your money and get it back to you. Shockingly, this does not appear to be the case.

There are stories emerging of people losing thousands of pounds through innocent mistakes. In one instance, a customer put in the correct account details but failed to provide a reference on the transfer, something which Nationwide, the bank she was transferring the money to, require. The money didn’t appear in her account and instead got lost in the system. It wasn’t until she launched a formal complaint that they fixed the issue.

Other customers have had to jump through even more hoops, having to get the financial ombudsman involved before they finally had their issues resolved. Obviously, being out of pocket by thousands of pounds whilst the issue is resolved is not a situation that anybody wants to find themselves in.

Until regulations or standard practices are brought in to address this problem, the onus is on the customer to make sure they do not make a mistake. To avoid it, double or triple checking is a good start, but you could also send a small amount through as a test, then ask the intended recipient if they’ve received it before you send the rest. When it comes to your finances, vigilance is key.

For a payday loan or short term loans, contact us for more information.

Investing in the loan market

Traditionally, many people think of investing as placing savings or lump sums into an investment vehicle, such as a high-interest savings bank account, ISA, unit trust, bond or hedge fund. Other forms of investments include currency, property and artefacts. Investing in the loan market, such as in long or short-term loans, takes on a different meaning.

What does it mean to invest in the loan market?

Investing in the loan market means being part of a group who each take a part of what is called a syndicated loan, such as a loan leveraged by a private equity sponsor buying out a business’s equity. The loan is secured on the operating company’s assets and may therefore be referred to as a secured loan. If a default in long or short term lending occurs, lenders have a legal claim on the business’s assets.

Business owners may benefit from easier access to larger loan amounts, especially where credit history is weak. In the longer term, secured loans may be more cost-effective for expanding their operations.

How does investing in the loan market work?

In developing business, a company may take out a loan with a bank by signing a legally binding agreement. The loan rate applied is generally lower than loans issued within the bond market because the banks make up the difference in business financial service or product fees.

When buying out a business or business equity, a private equity sponsor may leverage a loan by paying between 30 to 70 per cent of the total price and covering the balance with a syndicated bank loan. The loan is underwritten by a large bank which then syndicates the loan out to other banks or institutional investors. These syndicated loans may comprise an amortising term loan and bullet maturity term loan with revolving credit facility.

Loan investors use credit analysis to assess the borrower’s credit rating. The loan duration, risk of default and post-default loss are considered in order to estimate secured loan investment viability, while profit is made from changes in the interest rate and terms. A short term loan for bad credit would be a riskier investment, as the customer would likely be taking out a high interest loan because they have a poor credit history. Secured loans are administered and settled through legal execution, rather than a clearing system, making them a less riskier investment option than unsecured bonds.

What are the benefits of investing in the loan market?

Investing in secured loans is an option available to institutional investors seeking benefits above higher-yield bonds. These benefits typically include:

  • The borrowing company secures the loan with their operating assets.
  • Higher rate of recovery if default occurs.
  • A floating interest rate with added margin.
  • Reduced price volatility within the secondary market.
  • Private monthly management account access.
  • Comprehensive protective covenants over borrowers.
  • Loan investors may modify terms of agreement.

Secondary loan market prices now provide the potential for greater leverage for investors to gain higher profits. Being secured or a “secured asset class” means loan risk and volatility is lower, with added lender protection contributing to the potential for generating more predictable returns.

Should you apply for a short term or payday loan?

In situations where you are stressed out over money and simply don’t have the money to pay your bills or an unforeseen circumstance, you may feel trapped. One option that many people contemplate in circumstances like this is a short term or payday loan. The opportunity to get money you need in a hurry is extremely appealing and under certain circumstances it could be a good option for a lot of people. But how do you know if a Payday loan is the correct choice for you?

Can you afford it?

The first thing you should ask yourself is “Can I afford to repay it?” If the answer is no, then you might want to avoid getting a short term loan. The main reason being that if you cannot afford to repay the loan you will find yourself in even more debt which essentially digs you into a deeper hole. You have to break the circle of getting into debt over and over again in order to get back on your feet financially.

Short term and payday loans should only be used as a short term financial solution and not a long term way of managing your finances. If you are borrowing money to make repayments on other loans and debts, you may be in a vicious circle and it might not be the best thing to do.

No debt problems are unsolvable. If you think you need help with your debts, you can contact the CCCS free debt remedy service at www.cccs.co.uk

How is Your Credit?

If your credit history is not good and you have a report ripe with missed payments, defaults, and late payments then the chances of you getting approved for a loan from a bank, other traditional loans or a low APR credit card are unlikely. Credit cards can also be a very expensive way of borrowing money, if you only pay back the minimum repayment per month. To see how expensive credit card debt can be click here.

For this reason, short term loans are an option for people with poor credit. Also, successfully paying off your short term loan can help you start to rebuild your credit history which is a big bonus. Guarantor loans and borrowing money from friends of family are also avenues that are worth exploring.

Is it an emergency?

What exactly will you be using the short term loan for? Do you simply want some new shoes or a new dress to go out in? Or do you need to pay your rent to avoid getting evicted? Short term loans should really only be used in case of an emergency. Using them for shopping or other things that aren’t necessity can have a similar effect as abusing credit cards. You will find yourself in pools of debt that you cannot afford to pay back. So make sure you are seeking the loan for a necessity rather than just something you want.

Payday and short term loans are one potential option for people in need of a loan to cover an unforeseen expense or emergency. But an application needs to be taken seriously and all avenues of credit, borrowing and budging should be explored before you make a decision.

Crackdown on Banks Selling Useless Account Extras

The Financial Services Authority (FSA) is to launch a crackdown on banks that sell products to customers that they can’t even use. These accounts are normally sold as an upgrade, viewed as offering a whole ream of extras to those who opt into them. In exchange for all these benefits, the customer pays the bank a monthly fee.

One of the most popular inclusions is insurance of various types, whether it’s home, travel, pet or one of a host of others. This is the area being given particular attention by the FSA as it has emerged many of the account holders will not be able to claim against the insurance should the worst happen.

Although customers may feel like they are safe and covered due to the premium they are paying for these extras, they could get a nasty surprise when they try to claim and find out that limitations on the product, which were not explained to them when they took the account, mean they can’t use the insurance for what they intended to.

According to Sheila Nicoll, the director of policy at the FSA, “these products are often referred to as upgraded accounts but if you end up paying for an element you can’t claim on, it’s money down the drain. We are closely monitoring the promotion of packaged bank accounts and the new rules will make sure customers know what they’re buying and that they can rely on the product or have the limitations explained before buying.”

These limitations will come into effect in March 2013, and could result in banks having to deal with another costly scandal if it’s revealed some of the services they offer are utterly useless. Whether this will result in another round of compensation payouts also remains to be seen.

For a payday loan or a short term loan, contact us for more information.

Credit Scores: Fair?

We often hear the saying “there is no such thing as a free lunch”, in other words, there is a cost to everything in life, one way or the other. Evaluating if a credit score is fair depends on which side of the fence you are standing on, borrower or lender and how this affects you.

Two ways of looking at credit score fairness include:

  • How credit scores are calculated and impact a person’s financial status.
  • How creditors or lenders choose to use an individual’s credit score.

How credit scores are calculated and impact a person’s financial status

An individual’s credit history information, derived from their credit report, is used in calculating a three-digit score ranging from 300 to 850, low to high, as an indicator of poor or good credit history over the past year. Different weights are given to certain parts of credit history, such as whether or not there are previous payment defaults, late payments and bankruptcies.

The FIKO credit score brand is mostly used by lenders, rather than the FAKO version, which is used for educational purposes, but is similarly calculated. When banks or creditors consider an individual’s application for lending, whether for long or short-term loans, the credit score is used as a predictor of the person’s ability to meet future repayments.

The lender or creditor uses the credit score in making a decision about the loan application, to either approve or decline credit. By viewing a personal credit report provided by a credit referencing agency or bureau, you can gain insight into your creditworthiness and the parts of your credit history contributing to your credit score.

How creditors or lenders choose to use an individual’s credit score

The credit score indicates an individual’s financial status, including account types, outstanding debts, debt payments and credit history length over the period of a year. Credit reports may contain errors; therefore it is the individual’s responsibility to annually check their credit reports, notifying the relevant credit bureau to ensure the information provided accurately reflects their credit score.

Credit scores are designed to be an objective calculation for creditors to use in deciding on approving a loan and what interest rates to apply. A person with a high credit score may be approved for a short-term loan with a lower interest rate and lower monthly payments than someone applying for the same loan, but who has a lower credit score. The reason is that the individual with the lower credit score shows a weaker credit history, potentially posing a higher risk of default on future repayments. However, there are some lenders who provide loans for poor credit scoring borrowers.

Those whose financing needs are met by lenders or creditors without many issues arising around their credit score may say that the use of credit scores is fair. Conversely, anyone who is adversely affected by lending decisions, such as for short-term lending and interest rates, may disagree. Financial status and individual responsibility in maintaining a credible financial history play a role in how credit score fairness is viewed.

Supermarket Chain Tesco launch range of mortgages

Whilst we might be more used to picking up our weekly groceries from leading supermarket Tesco, the company are adding another string to their bow, in the form of a range of mortgage products.

The news comes a massive three years after they originally announced they would be adding the service to their growing range of products that include car insurance and mobile phone contracts.

These mortgages are said to be targeting the ‘majority’ of their customers, but those wishing to take up their loans will need a deposit of at least 20% of the property value, alienating many first time buyers with smaller deposits.

The supermarket chain does plan to offer a full range of mortgage products in the future that will rival many high street banks but currently offer 2 year, 3 year and 5 year fixed rate mortgages.

Currently Tesco are offering a 5 year fixed rate at 3.89% with £800 product fee and a tracker mortgage that will run 2.69% above bank rate with a similar fee to the 5 year deal.

Obviously the head of Tesco Bank, David McCreadie believes the initial offering is good value for money but some mortgage experts aren’t too convinced by the offering, stating that the uncompetitive rates being offered will put off a lot of people.

Customers who are interested can organise their mortgage online or over the phone rather than visiting their nearest branch of the supermarket.

One benefit to customers choosing the supermarket’s offering, is gaining clubcard vouchers each month for their repayments. Thought to be around 250 points / £2.50 off for someone paying £1000 month off their property loan.

Only time will tell if the public take to the current offerings from the brand or will wait until they offer more competitive deals with their future offerings.

For Instant Payday Loans or No Credit Check Loans, call us today for more information.

Token Olympic Post

Its just seven days until the London 2012 Olympics Begins, and I for one am very excited. I’m not just excited because I love sport, or excited by having the eyes of the World on our great Capital city, or because of the much needed boost that the influx of tourism will give to our fair Isle. I’m excited because of the significant cultural shift that has happened since the 2008 games; the influx of Digital.

That may sound crazy. Of course Digital has been significant in our culture for at least 15 years. But looking back over how far tech, advertising, media and online communication has shifted in the past four years, we have come a long way! And the Olympics is the catalyst for making me appreciate this dramatic shift in human culture, and just how far we have come.

In fact, has there been a more significant cultural shift in the way that human beings consume information and interact in human history, than the last 4 years? A bold statement indeed so lets break it down:

Facebook
2008- 60 million users
2012- 900 million users

Twitter
2008- 2million users
2012- 140million users

Smart Phone Sales
2008- 139million devises
2012- 412million devises (so far)

IPad sales
2008- 0
2012- 34million units (so far)

Online newspaper readership
2008- 33%
2012- 58%

Instagram members
2008- 0
2012- 30million

These figures show the World has changed. Digital Globalisation is in full effect. A user can get news and information at a time and in a way that fits their needs and requirements, they can give opinion and comment and share with their peers. The lines of communication are open 24/7. We can see and speak to the Olympic Athletes, give them encouragement, hear how they are feeling, and even find out what they had for breakfast.

As a hungry consumer of Digital communication and news about the Olympics I feel part of this special event. Is it because its in London and Weymouth? No. Even if it was in Sydney I would feel more ‘involved’ than previous games because of the amount of media that is now open to me. I can consumer more data and information than ever before. Not just on the terms of the news outlets releasing information, but comment and narrative from people in the know, my digital peers and friends and family.

Four years is a long time in Digital. Will things change as significantly in the next four years? Who knows. What I do know is, as a tech CEO, its up to me to keep up to date with the latest trends and shifts in culture. It goes back to rule number one- focus on the user and all else will follow.

Decent Lifestyle for Family of Four Now £10,000 More Expensive

The Joseph Rowntree Foundation, a research group that looks into poverty, aging and society in the UK, have said that the average family of four now needs an annual income of £36,800 in order to live what they consider a ‘decent lifestyle’. This is up £10,000 pounds, or about a third, since 2008, an absolutely astounding figure. This has meant that the need for quick UK payday loans has risen.

The amount is calculated by taking into account all the different payments that the average family will have to keep on top of, including providing for children, paying bills, repaying mortgages (or paying rent) and everyday things like food and petrol.

There are a few big contributing factors to the sharp rise. One of the biggest is the increasing cost of petrol, which has resulted in families who need to run a car, whether it’s to get to work, do the school run, do their shopping or anything else, seeing a huge increase in their monthly outgoings.

Childcare is another big factor, with costs increasing at the same time as more families find that both parents need to work in order to bring in enough money to cover expenditure. The removal of tax credits for many families has also made a big difference in this area.

Of course, it’s not just rising costs that have resulted in this situation; people’s expectations have gone up too. Families now see a computer as an essential item, for instance.

However, the role of spending cuts across the country by both public and private bodies, along with prices for everyday goods increasing disproportionately to people’s incomes, can’t be ignored.

Julia Unwin, the Joseph Rowntree Foundation’s Chief Executive, believes that it’s a range of factors all playing their parts: ‘This year’s research shows that a dangerous cocktail of service cuts and stagnating incomes are being keenly felt by parents.’

The future is unclear for family budgets with so much uncertainty still present, but reports like this give a clear indication of the worsening situation.

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