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Credit Scoring

5 Best Ways to Improve Your Credit Score

An individual’s credit score is essentially the main determiner when it comes to whether or not he will get a loan or a line of credit. Most traditional lenders such as banks look at their potential clients’ credit report files, identifying markers that give them information regarding how a particular individual handles his income, what are his debt repayment habits, how his relationship with other lenders has been in the past, and whether or not he has any outstanding debt or not.

Most of the information contained within an individual’s credit report file goes into calculating his credit score, which is then used by lenders to calculate interest rates, loan value limits and general terms and conditions. This makes it important to understand what habits can help you build up your credit score.

  1. Register Your Name on the Electoral Roll

Registering your name on the electoral roll will not actively improve your credit score. However, it will make it easier for lenders to verify your identity. This will, in turn, increase your chances of having your loan applications accepted and will also speed up the evaluation process.

  • Pay off and Close All Unused Credit and Store Cards

A large number of lenders look at how much credit their applicants currently have, as well as how large is their outstanding debt. Having a large number of unused credit or store cards can signal banks and other lenders that an individual is unable to handle his personal finances.

This having been said, simply destroying the physical cards will do nothing as the credit accounts that are attached to them will still be active. You will have to get in touch with the providers and ask to close the accounts.

  • Do Not Be Late with Your Installments and Repayments

Repayment habits are extremely important to lenders. This means that they will look at whether or not the borrower has repaid his past loans on time. Those who have are consistently late with their monthly repayments are considered unsafe by lenders, which means that they will look for ways to minimise the chances that they will lose their money. Some lenders ask for collateral, while others set lower limits when it comes to how much money borrowers get.

  • Get a Credit Card to Build up Your Financial History

When lenders receive a loan application, they look at the borrower’s financial history. This includes past loans or debt. If there is no history to analyse, there is a big chance that the lenders will prefer to be cautious and offer large interest rates or terms and conditions that demand collateral.

Getting a credit card and using it once or twice per month, to pay for small purchases will help borrowers build up their financial history. This is because each purchase using the credit card will be marked, as will the repayments of the debt.

  • Use a Prepaid Credit Builder Card

Prepaid cards are great tools when it comes to building up your credit score. These are available throughout the UK and usually, come with a monthly fee of £5 that must be paid for a whole year. Financially, this fee is considered repayment for a small loan. Once the year is up, and the loan is repaid, the lender will mark the debt repayment on your permanent financial record. This may not seem like much. However, it is a great way to improve your credit score without having to spend much money. Lenders consider the number of repaid loans just as important as the amount of money that was borrowed through them.

Credit Cards

What Are the Various Borrowing and Spending Cards That You Can Choose From?

One of the most important financial tools that most of us constantly carry in their wallets or purses are credit cards. They help us buy almost anything that we may want or need without worrying about cash. However, these are not the only types of cards that we can use to organise our financial lives and boost our purchasing power. The popularity of credit cards is constantly falling, as individuals find new, better tools.

Today we will look at the many types of financial cards that consumers can get from banks, stores, and various private lenders, along with their uses and who they cater to.

The Two Main Types of Cards

There are two main categories that most cards fall into. These are “spending cards” and “borrowing cards”. As the name implies, the former allows you to spend the money that you already have in your bank accounts or other sources (such as fidelity points and earned discounts), while using the latter ones enables you to borrow money that you can repay at a later time.

Some financial advisors argue that borrowing cards can be a sure way to debt if not used properly, however, as most individuals find out, they too can be extremely useful, provided that they are used responsibly.

This having been said, here are the choices that you have when it comes to financial cards:

  1. Credit Cards

As most individuals may already now, these allow buyers to pay for products or services and pay for them later. From a technical point of view, a credit card is similar to a line of credit. It allows its owner to tap into a limited account to pay for various products. Once the limit placed on the credit card is reached, the owner may ask the lender for an increase.

Who Are Credit Cards for?

These are usually more useful to individuals who have a highly-organised financial life and a lot of discipline when it comes to how they spend money. Credit cards can be great tools in case of an emergency. However, they should never be used as a primary source of money.

They offer great protection against fraud and theft (they are locked using a PIN code that only the owner knows). Furthermore, they are great to use as a backup for unexpected payments.

The main downside, however, is that the interest rate is usually extremely high, forcing owners to return the money by the end of the month.

  • Debit Cards

Debit cards are essentially gateways to your bank accounts. They allow you to spend the money that you have saved up in your accounts.

Who Are Debit Cards for?

Anyone who has a bank account should also have a debit card. Owners can use them to make purchases without having to go to the bank to take out cash.

Unfortunately, these cards do not have the same amount of protection against fraud as credit cards. While lenders will be able to roll back certain transactions (usually of over £100), this will be limited to only certain types of payments.

  • Store Cards

Store cards are, basically, credit cards that can only be used in certain stores. Individuals can purchase products using them and must then repay the money within the month to avoid paying interest.

Who Are Store Cards for?

These are only useful to those who regularly spend money in these stores because they come with discounts. The downside is that the interest rate attached to them is considerably higher than that of credit cards.

  • Prepaid Cards

These are very similar to gift cards. They can be used to store certain amounts of money that can then be spent as if it were a debit card.

Who Are Prepaid Cards for?

Prepaid cards are great tools for travellers or individuals who do not have a bank account. They are extremely safe because they can be cancelled when stolen. Unfortunately, they are not accepted everywhere.

Property

Benefits of Taking Tenant Loan

The UK tenant population is growing fast. Tenants live in properties that they do not own. They are renting the place or living in housing facilities that their employers provide or living with their parents. Because they do not own property, these people cannot avail of a secured loan. However, to help them borrow a significant amount of money without a home to use as collateral, lending companies offer a tenant loan, which would allow them to borrow up to £35,000. Here are the benefits of taking a tenant loan:

Borrowers Do Not Need Collateral

Most lending companies require borrowers to provide something of value to serve as collateral when they apply for a loan. Some would use their home to secure a loan. Since tenants do not own the place where they live, they do not have something to use as security. Tenant loans serve as a response to the borrowing needs of people that do not own a property but need to take a loan of a significant amount. 

Open for People with Bad Credit  

Bad credit is one of the common reasons why lending companies reject the loan application. Bad credit means that you have some debts that you have not paid adequately, both past and present. The data regarding how you manage your debts appear on the website of the credit reference agencies in the UK, such as Experian, Equifax, and TransUnion. These bureaus keep a record of all credit activities of people that use credit cards, take loans, or buy items on an instalment basis. Once a lending company discovers that you have a bad credit record, it will reject your loan application. 

In the case of tenant borrowers, bad credit is not something to worry about because lenders that offer this type of loan consider other factors when evaluating a loan application. Tenant loan applicants have a high rate of approval, and only a few have received a rejection letter. 

No Restrictions on How Borrowers Use the Funds

When you fill-up a loan application, one question that you must answer is the purpose of the loan. Some lenders would release a loan for medical bills, loan consolidation, car repair, and utility bills payment. A few lending companies might not approve a loan application for shopping, travel, and leisure. With a tenant loan, you can use the funds for whatever you want, such as shopping, vacation, or purchase of a new car, making a tenant loan the best option for renters that have bad credit to borrow money from a legitimate lender.

Better Loan Amount Range

Lending companies that allow poor credit loan grant small amounts, with £5000 as the maximum, which might not cover your emergency, and you might need to take a second loan to pay off a hospital bill, house repair, or car repair. With tenant loan, you can borrow up to £35,000, which is convenient if you are undergoing an expensive medical treatment or if you have a home remodelling project. You can start a small business using the funds from your loan.

Easy Application and Quick Release

Taking a tenant loan is easy and quick. You may apply online by completing a form and attaching all the necessary documents. You must be a regular tenant in your current residence to apply for a loan. If everything is in order, you can have the funds after a few hours or a few days of approval.

Not owning a home or property does not mean you cannot take unsecured loan anymore. Your being a tenant would qualify you to a tenant loan, which has fewer requirements and higher loan amount range than the regular unsecured loan. 

Emergency Funds

Why Take Short Term Loan for Your Emergency Needs?

There are times when an emergency prop up that requires cash. If you have no savings, you could find yourself in a predicament. Borrowing from relatives and friends could be your first option, but with everyone affected by inflation, you might not get help even if there are people that want to help you. If you need cash within the day, taking a loan from a bank could take a day or two to process. Perhaps, taking a short term loan is the answer to your problem.

Here are some reasons to take short term loans for your emergency needs:         

You Can Apply for Online

Applying for a short term loan is easy because you do not have to hand in your application personally. You can browse the internet for lending companies that can lend you money payable in less than a year.

Before deciding which lending company to apply, check several offers first to find the best deal in terms of annual percentage rate and repayment terms and conditions. Choose a lender that charges the lowest interest rate and offers the most comfortable repayment options. Fill up the application form on the website by providing all the information that the lending company requires. Check if you have not missed and anything before hitting the submit button. Lending companies reject forms that are incomplete or not filled up correctly.

Fast Approval and Release

Most online lenders approve and release the funds on the same date of application. Urgent expenses such as repair of a leaking roof that you discovered when it rained the night or purchase of medicines for an unexpected hospitalisation could not wait for a few days. You must have the cash to pay for them.

By taking a short term loan, you can get the funds you need a few hours after the lender has approved your mortgage. You would receive the funds through your bank, and you can use the money immediately. When you borrow from banks and other traditional lending companies, you must wait for a few days to have the cash, which can be too late for some emergencies.

No Long Time Commitment

Thinking about debt can be stressful, especially when you are experiencing financial difficulties. Borrowing money for a short period would also mean you would only have a few months of worrying. If you are the kind of person that does not want to worry about debts for many years, short term loan will suit you well. The repayment period is short, and the lender would charge you less for the amount that you borrowed. Aside from paying less interest, you could look forward to being debt-free after a few months instead of many years.

Credit Score Is Not a Requirement

Lending companies that lend money for a short time are not strict when it comes to credit history. Even if you have a poor credit rating or no credit score at all, the lending company will approve your loan as long as you can pay based on the information that you provided in your loan application. One indicator of your ability to pay what you borrowed is your net income. You can arrive at this by subtracting your expenses from your earnings. Taking a loan when what you earn each month is not enough for your basic needs might not be wise.

For your urgent needs that require only small amounts, a short term loan is a good option. As long as you pay your debt promptly until you have paid up in full, you could avoid getting into a debt cycle. When you borrow again, you will enjoy a better deal and a more significant loan amount.

Doorstep Loans

5 Things You Should Know about Doorstep Loans

Finding yourself in need of cash to pay an overdue utility bill, urgent car repair, or medical bills can put you in a bad situation. Borrowing money from relatives and friends can help, but when these people are financially struggling like you, they might not be able to help. Why not apply for a doorstep loan? Many UK residents from the weak sector turn to this type of lending during difficult times. Since it is a loan, the lender charges interest. Nevertheless, doorstep loan continues to be popular among those who are in dire need.

Here are some essential things that you should know about a doorstep loan in the UK:

  1. Doorstep Loan Defined

A doorstep loan is a type of short term borrowing where local agents personally bring you the funds and collect a weekly or biweekly payment for the loan. Some people call this type of loan home credit because all borrowers receive funds at their homes and make payments through collectors that visit their house to collect your dues.

Doorstep lenders have the authority of the Financial Conduct Authority (FCA) to operate as a lending entity. To make sure that you are borrowing from a legitimate lender, always ask for the authorisation or check the inclusion of the company name at the FCA website.

  • Target Borrowers of Doorstep Loan

Doorstep loan may have a high-interest rate as it targets people that have a poor credit history, have meagre income, and those that do not have a bank account. Most lending companies release the funds through the borrower’s bank account. If you do not use the services of a bank, you can’t take a loan because there is no way of releasing the amount that you borrow.

Since doorstep loan or home credit brings the cash to you directly and collects payments from your house, opening a bank account to take the loan is unnecessary. You do not have to take a trip to the bank, allowing you to save time, gas, or fare.

  • Doorstep Loan Is Convenient

What makes doorstep loan highly accessible is the convenient way of taking a loan. Some lenders allow borrowers to submit their application online. After reviewing the application form, the company sends a representative to the borrower’s home address to explain the details to you. The agents would answer your questions regarding the loan and how you must pay it back. Once you have clarified everything, the agents would give you the funds. The agents would visit you during the payment date to collect your payment.

  • Available to Those with Poor Credit 

A doorstep lender does not consider your credit score or credit rating only when deciding to lend you money or not. They have several criteria as to who can borrow or not, and even with a poor credit rating, you might still qualify for a loan. Since the clients are from poor neighbourhoods, many of them would have poor credit or no credit at all, which disqualifies them from taking loans that require a good credit rating.

  • Quick Release of Loan

One downside of taking a bank loan is the delay in the approval and release of funds. The lender would check your application first to make sure that you have met all the requirements. Transferring the funds could be a problem if you do not have an existing bank account. If you have doubts regarding the means of sending funds to you, a doorstep loan is the best way to go because the agents of the lending company bring the cash to your home.

For your emergency needs, a doorstep loan is the best answer. Application and approval are quick, and you can get the funds and pay your debt straight to the agents that come to your doorstep.