Tag Archives: credit score

How a payday loan can damage my credit score

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Payday loans really work well for those individuals who need a quick financial relief till they are able to acquire their pay. However, this option is more of a last resort when there is no source to acquire financial relief. Once you request for a payday loan the best part is that it is not really going to affect your credit score. However, one prime requirement is that you have to indicate your income source and the kind of job you are doing. The requirements for payday loan include a check that has to be post-dated. This check is meant to cover your loans once your pay is available in your account.

The possibility of your payday loan affecting your credit score
There is only one possibility of your payday loan affecting your credit score. Let us assume that you check that is post-dated is not able to cover your dues. This way your credit score can be affected. However, if you have another alternative to clear your loans then that is one possibility to save yourself. However, if the dues are not cleared that can result in serious repercussions like the Lender may file a case against you and if the judgment goes against you your credit history may appear in the records.

Settling the repayment issues
You have to be good in your analysis and if you feel that you will be unable to clear your loans then the best thing to do is to have a solution to this problem prior to time. You have to communicate with the lender and let him know your problem. He would most probably devise a payment plan for you that will help you pay back your loans. The issue with this settlement is that you may need to pay a high amount of interest, but at least you can save your credit score from considerable damage. However, you have to ascertain one fact that you may need to face a high amount of fees with payday loans and this can get you into a greater amount of debt.

Going for the alternatives

  • Cut down on variable expenses.
  • It is always a better option to borrow money from friends and family members. This will save you from a great amount of interest.
  • You can opt for a credit card that does not require you to pay a high amount of interest.
  • You can even have a negotiation with lenders with respect to your payment dates.
  • One of your options can be cash advance from the credit card.
  • You can consider to overdraw your bank account and that can be a perfect temporary arrangement.
  • You can even consider opting for a small amount of loan from a financial institution.
  • However, if you do not find any of these options feasible then your last resort can be that you should only borrow as much as you can pay easily.

Awareness is the key and can prevent unexpected problems. You should make sure that you review your credit reports quite often. This way you would be aware of any potential errors and can be protected from any fraudulent activities. Moreover, if you feel that your credit score has experienced an unexpected decline this means that you need to pay attention to your credit. The best part is that you can easily get an access to free credit reports through AnnuaCreditReport.com. There are also services available that can assist you in keeping a track of your credit score. Therefore, believe in the proactive approach. This way you can prevent potential issues relating to your finance and can take a step ahead towards financial stability. The best thing to do is to prioritize your financial resources and if you need funds in case of an emergency you should use your resources smartly so that you do not end up in a greater mess. Once you plan your resources in an intelligent way you can even prevent a credit score decline and you would not need to opt for a payday loan once your other resources are available at your convenience.

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Cash Advance Loans Small Facts

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cash advance loans small facts

cash advance loans small facts

A cash advance, also named payday loan is a loan taken until your next salary arrives. There are 37 American states where these loans are legal.

Cash Advance Small History

The first state where cash advance loans where approved was California in 1996. After that the law was also passed in other states making the industry of payday loans one of the most fast growing in U.S.

 

More About Cash Advance Loans

Most of the cash advance loans lenders are offering these loans even if yoou don’t have a perfect credit score and with no documents to fax. They also approve the applications for people with bad credit history and this is a big advantage over the traditional bank loans where is already very hard to be approved for the exact loan that you want and also you need to wait more.

How much you can borrow

You can borrow from $100 to $1000 and you need to return the borrowed amount when the deadline arrives. You can also extend the loan period but of course you’ll pay some additional fees. Because of the hish interest fees you always need to be careful on the amount that you borrow.

Usual requirements

Each payday lender can have his own requirements in order to approve a cash advance application but there are a few requirements which are used by all the U.S. lenders:

  • Be a U.S. citizen
  • Be at least 18 years old
  • Have a bank account
  • Be employed or have any other source of income

 

Things that you may not know about your credit score

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credit score influence

The credit score is used since the 1980s as an algorithm to check the consumers risk by the lenders and banks.
Because of this algorithm and the methods used to calculate it, most of the customers are having wrong conceptions about how they can keep their credit scores in good shape.
At this moment the average credit score in U.S. is around 660 with many people having low credit scores which also includes problems to get approvals for getting a loan, a mortgage and credit cards.
For a better understanding of the credit score you need to also understand the following points:

1) Because there are many methods to calculate the credit score based on each industry (for example the credit bureaus can calculate different credit scores for a mortgage lender and for a payday loan lender), the FICO score is the most important but even so the score can differ with some points.
2) Use credit cards to keep your good credit score. When you have a credit card and you pay in full every month your credit score will increase. This can be also achieved by an installment loan (for example a mortgage). Try all kind of credit types and try to pay them on time so you can increase your credit score.
3) The credit score can decrease or increase everytime there is a change in your credit report. For example the credit bureaus are updating the credit reports every 30 days for credit card issuers but this can also be updated immediatelly if a hard inquire is made.
4) Check your credit score to see if is good or bad. A credit check can be made in two different situations. When you just check your credit score and this will not affect your rating and when you apply for a mortgage or credit card and your provider will require a credit report. Anyway, it’s a good idea to keep track of your credit score evolution.
5) If you have a perfect credit score then is also required to be careful in time because now your rating can decrease quicker. For example if you have a credit score of 750 and a friend of you has a credit score of 650 and both have a 30 days late payment, your credit score will decrease more than your friend credit score.
6) Many of you have the wrong belief that your credit score will influence your job opportunities. Indeed they will look at your credit report to see your credit history but this can’t be made without your approval. This is why keeping an eye on your credit score can help you a lot.

What is FICO score

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fico score

These days your credit score is very important and we all know that when it comes to out finances. The FICO score has appeared in the 1980’s and it comes to help some companies to know the credit risk of a certain person based on her credit history. Fico name comes from Fair Isaac and Co, company qhich has developed a special software do calculate the credit risk. The FICO score can range from 300 to 850.

Credit Score vs. Credit Report
A credit score is totally different from a credit report and this is because your credit score depends on your credit report. The credit report contains your credit history with informations like:

  • Current credit accounts
  • Payment history
  • Credit utilization
  • Credit inquiries
  • Bankruptcy

Usually your credit report will cointain your credit history for the last 7 years but in the same time if you Have a bankruptcy it will stay in your credit history for up to 10 years. It is advisable that you require a free credit report each year so you can make sure that everything is fine.
The FICO score is not a part of your credit report even if generally is based on your credit history and the credit bureaus will always calculate your FICO score based on what they have on file from your credit hostory. As you can see this means that you can have up to 3 FICO scores which are totally different in the same time.

Credit Score – How is Calculated?
When calculating your credit score some parts of your credit history are more important than others and they will have a bigger influence on your overall score.
The FICO score contains:

  • Payment History – 35%
  • Total Amounts Owed – 30%
  • Length of Credit History – 15%
  • New Credit – 10%
  • Type of Credit in Use – 10%

From here you can see that having a good payment history and no debt can heavily improve your FICO score.

Why FICO score is so important?
Your FICO credit score is important because it will be there for your entire life and everytime you want to borrow some money, look for a mortgage, buy a car those companies will first look at your FICO score and then decide if they can help you our not.
When borrowing some money your FICO score will also be an important factor on how much you can borrow and how much you need to pay in return. This is because if you have a good credit score you don’t present a huge risk and you can receive very low interest rates.
This can be very tricky because if you credit score is not good and the interest rates will be high then you’ll pay a lot just on those fees.

Improve your credit score
If you already have a low credit score you don’t need to worry because you can improve it in time. The update for your credit score is made every month so any improvments made this month will have a positive result next month. The only bad thing is that all the info will be keeped in your credit history for 7 years.
Most important things to be done to improve your credit score:

  • Make all the payments on time
  • Reduce your debt

How To Improve Your Credit Score

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improve credit score

We all keep seeing advertisements which are saying that quickly improving your credit score is not possible but we also know that one of the most important factors for your credit score is credit utilization.Credit utilization is a total balance which is divided by total creditlimit and as you know you have a lot of control over it so it is possible to increase or decrease this total credit limit.
How we can improve our credit score quickly? Read our next advices and see what you can do.

 

Request a Credit Line Increase
Some credit card issuers offer you the option to request an increase for the credit line and this way you can extend your limit.They also can offer you an increase without making a credit inquire and this a good chance for you to take it.
Anyway, if they require additional informations from you then you can cancel your application because if they take your credit to be a part of the increase that you requested then your credit score will go lower than it is.

Pay Off Debt
While you pay your debt you also improve your credit score because you lower the amount owed.

Charge Less
By using your credit card less you can always boost your credit score because you’ll keep your credit statement balance lower and this way your credit utilization will go down.

Consolidate Credit Cards
You can always increase your credit lines age without reducing your total credit limit.This is the case if you have more cards from the same issuer and you can consolidate the new cards into the older ones just by calling the issuer customer service.Make sure you do this only if they assure you that your credit limit will stay at the same level.

Review Your Report for Errors and Omissions
Is good to review your credit report to see if there are any errors or even omissions.You can make sure you have all your account added there and if you see anything marked as negative and you think is not because of you then you can also dispute the problem and remove the mark.