The Financial Fairy Tales Blog

All lending institutions like banks now use your credit score rating to know how much they will lend you. People or institutions with a low credit score show that they have a higher risk of defaulting than those with a higher rating. It is for this reason that every person with an aim of getting a good loan or credit advance will strive to improve their credit at all times. If yours is constantly low, there could be many factors affecting it. Here, you will learn these factors that affect your credit and the effect they have.

Amounts Owed

Although you might be paying your credit debt on time, you could still be suffering if your credit usage is too high every month. Reputable credit bureaus and regulators check your credit utilization ratio to determine your credit score. Therefore, it is better to owe your credit card service provider a little money than a lot. Also, do not be misled,going without a credit card is not a better option. It will also bring your credit score down. Get a credit card and use it only when necessary.

Your Payment History

Your habit of paying bills and loan installments counts a lot. In fact, it determines over 30 percent of your credit score. The lenders want to know if they will get their money on time. Therefore, this factor looks at how late you were in making the repayments of all accounts that you have. Most service providers usually submit the reports of servicing of loans, late submissions of payments, and defaulting habits. If you want to learn how you can avoid this, visit the Boostcredit101 website. It has more details.

New Credit

Another of the factors that affect your credit is applying for too many new accounts within a short time increases the chances of having lower scores. The credit bureaus and financial regulators tend to think that you are going too far. It is a sign that you may get overwhelmed in repaying the debts. Therefore, they will lower your credit to give lenders a red flag that you have too many credit accounts that have been applied for recently.Though having a couple of new accounts is good, do not open all of them at the same time.

Credit Mix

There are different types of credits that are also called trade lines, for instance a mortgage, credit card, salary advance, and many others. If you have these accounts and they are healthy, service providers will think of you as a responsible person who can handle debts well. Thus, your credit score will definitely go up. However, make sure that you can handle all of your credit accounts well to avoid straining in the future. Again, do not open all of them at the same time.

The Age of Accounts

Your credit will definitely be affected by the age of the credits accounts that you hold. People who already have old accounts enjoy better credit ratings than those with new ones. Time is the best proof that you can handle your debts and credit accounts responsibly.

If you’re in need of some quick money – you’re not alone. Many of us have been there already. You might need a lump sum for a particular expenditure, or just to help you get by. If that’s the case, you might have decided that you’re in need of a personal loan. Thankfully, you’re in the right place. We’re going to look at 12 tips that should help you get the best personal loan for you. So let’s have a look…

1. Make sure you really need a loan

Some people think they need a loan when they don’t really – so only got for one if you’re absolutely sure. It’s a big mistake to burden yourself with more debt when you don’t really need to – but loans are still a viable option for those that do. Make sure you really need the money you think you do. If it’s for a new car – is there anything wrong with the old one? If it’s for a vacation – do you really need it? Loans should be for necessities rather than luxuries.

2. See if there are any other ways you could raise the money

Loans are vital for many people – but they aren’t the only way to raise the money. Can you take on overtime at work or ask your boss for a forward on your paycheck? Can you sell something that you don’t need anymore? Do you have friends or family who might be able to lend you the money without any interest? Try a few of these options, and think outside the box.

3. Shop around for the best personal loan rates and introductory offers

Don’t simply sign up for the first good loan deal you see – shop around. Personal loans are a competitive market, so you should be able to find plenty of special rates and introductory offers. One important tip is to make sure you look beyond the headline rate and check exactly what you’re going to be paying for the duration of the loan.

4. Make sure you ask a lender if they have any special rates

If you don’t ask, you don’t get. While many lenders stick to rigid terms, some might be more flexible than you think. Try asking them if they have any special offers or flexible terms they can offer you.

5. Check all the small print and repayment terms carefully

One way many loan companies make their money is by charging massive fees on late payments and other transgressions. Make sure you know exactly what you’re signing up for and read ALL the small print. If you’re unsure of what something means – clarify it either with the lender or someone you know that has experience with personal finance.

6. Make sure you know you’re going to be able to pay the loan back

While you might be enticed by those massive amounts of money on offer – make sure you only borrow an amount that you can afford to pay back. Your lender should check your earnings and other assets, but you’ll want to be as open here about your finances as possible. Tricking a lender into lending you an amount you can’t really afford is a terrible idea and could have consequences for your finances further down the line.

Make sure you can afford the regular payments and that you’re happy risking the collateral that the loan is borrowed against. In other words, if you don’t want to risk losing your car, don’t use it as collateral and don’t borrow an amount large enough to cause this to happen.

7. Make sure you’ve got a good credit score

While it can take a while to fix a bad credit rating – it’s always a good idea to know exactly where you stand when you start applying for loans. Poor credit history could be the reason you keep getting rejected. If that’s the case, there are a few steps you can take to try and improve your credit rating so that you can start getting accepted.

If you want to improve your credit score, you need to start paying off your debt regularly and don’t miss any payments. Close unused accounts and get your overall finances in order – and try and pay more than the minimum on your debt. If you can pay off some of your debts completely, then do that.

8. Only take one loan at a time

Piling debt upon debt is another bad idea. While you shouldn’t be able to take out too many loans simultaneously, it’s sometimes possible. Make sure you only really have one major loan debt.

9. Avoid payday loans

If you need money desperately, try not to turn to a payday loan. While these are often a viable short-term option for some people, the interest rates are extremely prohibitive. If you find yourself unable to pay back quickly or miss a payment period, your debt could skyrocket. Try and stick to banks and traditional lenders that have longer payment plans rather than a quick payday loan.

10. Stick to reputable lenders

Do a bit of research to make sure the lender you go with comes recommended – especially if it’s someone you haven’t heard of before. There are tons of different lenders these days, so it’s not unusual to find good rates at a new or unheard of place. But be careful and stick to ones who have good reviews (you can look for these online).

11. Try and fix your rate

You might be offered a flexible rate, but it’s a good idea to try and fix it if possible. With a flexible rate, you might end up paying more if interest rates go up, but a fixed rate will let you know exactly what you’re going to have to pay.

12. Don’t automatically buy PPI

PPI could protect you if you can’t afford to make any repayments – but it can also be expensive. If you want, you can get PPI from a third-party rather than relying on your lender’s own protection. This can often be a cheaper way to stay covered. If you want to find out more about the best personal loans for you, there are plenty of places to look online.