The Two Factors That Will Make Or Break Your Credit Score

The Two Factors That Will Make Or Break Your Credit Score

If you’re confused about how creditors measure your ability to pay back loans, read on and discover the two things absolutely must do to raise your score to its highest level.

Even if you do everything else wrong, these two actions will keep your credit score and ability to get a loan in good shape.

If you already have a good score – over 700 – don’t let these actions slip through the cracks and your score will stay high. If your score is lower — especially below 650 – start taking these two steps today and you’ll see drastic improvement in the next 6 to 12 months.

Factor 1: Pay Your Bills On Time

Obvious right? But, it’s easier than you think to pay late. And here’s something you may not know. You do not get a ding on your credit report for being one day late. This only happens when you are 30 days or more late. But don’t cut it too close, especially if you mail your payments in.

Also, keep in mind that credit cards, personal loans, auto loans and home loans are the most important bills to pay on time. Rent, utility, phone and cable payments usually don’t get reported, so they have no effect – positive or negative — on your credit score.  Of course, you may face other consequences like late fees or disconnection, so if you’re in a bind financially, make sure you make the smart choice. Keeping your power on may trump having a high credit score.

Avoid the Seven-Year Slump

If you make a late payment, it stays on your report for seven years. But here’s an inside secret many don’t know. It usually stops affecting your credit as time goes by. The first 24 months is the key time frame. How you’ve managed your payments has the most impact during the first two years on your credit report.

Factor 2: Use Your Credit Limits Wisely

The next big thing to worry about is your available credit and how much of it you use. Not many insiders will tell you this, but credit reports were actually created to make sure consumers paid their credit cards on time.

A credit card is an unsecured debt, which means the debt is not backed by anything like a car or a home. If you fail to pay a car or home loan, the bank comes and takes your asset – in this case the car or home you bought.

But what happens if you don’t pay your credit card? The bank can’t take that trip you took last month, the gas you put in your car a week ago, or the groceries you bought yesterday. All they can do is ding your credit – and penalize you by making it harder for you to get credit next time or at a decent interest rate.

Credit Cards Are a Big Deal When It Comes to Your Credit Report

That’s why credit cards are weighted so heavily in your credit score. In fact, they affect 30 percent of your score. What’s the only factor more important? You guessed it…paying your bills on time, which accounts for 35 percent of your score.

Paying your credit card on time falls under the previous factor, but credit utilization or how much of your available credit you actually use falls under this one.

Here’s how it works. Every credit card has a credit limit. This is the amount of money you can access. It might be $500, $1,000, or in some rare cases $50,000 or more. But this is all the credit you have to use. If you have a$500 credit limit, you can’t use the card to buy something that costs a $1,000.

You might be able to go a little over your limit, but not much. And if you do go over it, you’ll pay a hefty over-the-limit fee.

Explaining Credit Utilization

Let’s use $1,000 for an example because it is a good round number. If you carry a balance or charge $300 on the card, you’ve used 30 percent of your available credit. (300 is 30 percent of 1,000). According to your credit report, you have a credit utilization ratio of 30 percent.

Thirty percent credit utilization is thought to be the “magic” level by many credit- scoring experts. Go above that level and you get penalized. Stay below it and you get rewarded. Also, the higher you go above 30 percent, the more you get penalized and your score drops. The lower you drop below it the more your score goes up.

Before you do anything else to raise your credit score and improve your interest rates, get these two things right. If you do, you’ll be way ahead of most borrowers when it comes having a high score and qualifying for credit cards and loans.

Are Alternative Financial Services Better Than Too Expensive Traditional Banks?

Are Alternative Financial Services Better Than Too Expensive Traditional Banks?

The time has come for policymakers and payday loan critics to get to know those who use these alternative financial services.  That’s what Lisa Servon, a professor of urban policy at the New School in New York, did and she learned a lot about why these services are in demand.

She recently detailed her experience in The New York Times in “Are Banks Too Expensive to Use?” (http://www.nytimes.com/2014/10/30/opinion/are-banks-too-expensive-to-use.html) In it, she reflects on her experience as a clerk at a couple of check cashing businesses. During her work there, she rubbed shoulders with the so-called “unbanked” and discovered why they use alternative financial services.



Who Are the Unbanked?

The unbanked are those who don’t use traditional banks. As of 2013, 25 million Americans were unbanked, meaning they had no bank account at all according to a recent report by the Federal Deposit Insurance Corporation (FDIC). Another 68 million were “underbanked.” Instead of using traditional banks, both groups used check-cashing centers, payday lenders, and fee-based prepaid debit cards to carry out their financial affairs.

Why Many Are Unbanked?

Here’s what Servon realized about why the unbanked or underbanked preferred this non-banking system to mainstream banks. They described banks as “more expensive and confusing and less service-oriented” than the alternatives. Many had grown tired of the increasing fees charged by banks.

Banks Getting More Expensive

Servon notes that — on average — the banks’ monthly service fees on checking accounts jumped 25 percent in from 2010 to 2011. From 2009 to 2011, the percent of free noninterest-bearing checking accounts also declined from 76 percent to 39 percent. The average overdraft fee also rose to $32.74.

It’s funny that payday loans seem to get all the criticism, but as recent studies have shown overdraft fees are much higher. If you consider the amount of the overdraft as a short-term loan and the fee as the interest, overdrafts can have an annual percentage rate (A.P.R.) of 5,000 percent.

This dwarfs the 200 to 500 percent A.P.R. of a 14-day payday loan, which runs 200 to 500 percent. Unfortunately many of those hardest hit by these fees don’t realize it because hardly anyone criticizes or threatens to shutdown the mainstream banks that profit from overdraft fees.

Why Alternatives Make Sense

Check cashers also charge a percentage of the face value of a check when cashing it. This fee can vary depending on the state, but usually runs at least two percent. Money order fees also vary, but many check cashing services charge less than the post office for the service.

Most banks no longer offer free savings accounts – even for minors. Plus, it is not uncommon to hear a horror story of how someone opened a savings account to teach their kids to save, checked the banking statement after the first few months and realized the kid had lost not saved any money.

Why? The bank subtracted $5 or $10 a month as a service fees. Unknowingly, the child’s original deposit had declined by $15 to $30 dollars. The lesson learned? Banks charge too much for their services.

In fact, mainstream banking costs are rising so high that even organizations that used to try and move the unbanked to the traditional banks are changing their policies. They’ve seen firsthand the damage these types of fees cause to their clients.

What do they recommend now? Believe it or not — check cashing centers.

More Choice Equals Better and Less Expensive Financial Services

What’s next for alternative financial services?

Alternative lenders and check cashers are already starting to innovate and improve products and services. Their offerings are becoming better and less expensive.

Not only do they compete with each other, but they also compete with the banks. In the end, this is good for consumers – whether they are unbanked, under banked or banked.

The key to succeeding in the financial marketplace is giving consumers options that they want and need. The demand for payday loans and check-cashing services indicates that it’s a necessary service for those who can’t get low-rate personal loans or free checking and savings accounts from traditional banks.

The Takeaway

As Servon asks in her Op-Ed piece: “Does using a bank really contribute to financial health?”  She concludes that “for an increasing number of people, the answer is no.”

All those who would answer no to that question, deserve alternatives. That’s why it’s necessary to protect options like payday loans, cash advances and other kinds of personal loans.

Instead of focusing on outlawing alternatives, policy makers should focus on improving the alternatives. Alternatives lenders should too.

And they are. That’s why there’s a huge amount of innovation happening in the lending marketplace – from lending clubs, peer-to-peer loans, and crowd funding. Plus, alternative lenders have also created payday loans and cash advances with more manageable payback periods and lower-rates.

Your best course of action is to use competition to your advantage. An online loan matching services enables you to do just that. You can apply to many different lenders at one time and since they are competing for your business, between you are more likely to find loans with the best rates and terms.

Why Payday Loans Cost More

Why Payday Loans Cost More

Payday loans are coming under increased federal scrutiny and recently New York prosecutors indicted a payday lender for usury. Technically, usury is the charging of any interest on a loan – even as little as one percent. However, in today’s terms it is typically redefined as “exorbitant” interest.

So what does exorbitant interest mean? The Merriam-Webster dictionary defines it as “going far beyond what is fair reasonable or expected.” So in actuality the exact level of the interest rate is debatable. So what is a fair and reasonable interest rate for a payday lender to charge?

What Is an Interest Rate?

Basically an interest rate is the cost of a loan. If borrowers have excellent credit scores and high-paying jobs, they usually qualify for the lowest interest rates. In other words, they spend less to borrow money than an average or bad credit borrower.

If you really think about it, it makes sense. A credit report shows they are a good credit risk because they pay back loans on time. This is why they have a high credit rating. On the other hand, borrowers with bad credit have suffered one of two things. They either have an inaccurate credit report — which they can dispute and correct — or they’ve had trouble paying back loans or other bills.

Now many times this may be out of their control. For example, they had to get necessary medical procedure, which cost more than they could afford. Unfortunately, they couldn’t pay the bill and the unpaid bill was reported to the credit bureaus, harming their credit score.

In the past, you could explain these types of situations to your local bank and still get a loan – but not any more. As banks have consolidated, lending decisions have become automated. A computer looks at your score and gives you a thumbs up or down. It also calculates an interest rate based on how “risky” you are as a borrower. If you have great credit your loan costs less, but if you have poor credit it costs more.

Are Those With Bad Credit Being Overcharged?

Not necessarily and here’s why. The lender charges them more because they are classified as a bigger risk, meaning past history has shown they may not pay back their loan on time or at all. Now they still need the money for a financial emergency and the lender has the money – and knows that many of the borrowers will pay on time and not default. The problem is they can’t identify that beforehand so they charge more for the loan. The higher rate offsets the cost of the loans that go bad or unpaid.

Is this a perfect system? No, but it is how almost all lending works – home loans, car loans, personal loans, etc. It may help to think of an interest rate as a price tag. In other words, you can buy $100 for $15 or you can buy $500 for $75 (15 x 5).

What Payday Borrowers Are Paying For

Now let’s take a step back from the “payday lenders charge exorbitant annualized interest rates” criticism and look at exactly what a payday borrower is “buying” beyond just the amount of the loan.

• Easier and Faster Approvals

• No Credit Checks

• Faster Access to Cash

• Time Savings

Have you ever applied for a bank loan? It is a very long and tedious process, especially if your credit is compromised. You have to provide a lot of documentation, including credit reports, pay stubs and maybe even tax returns. The bank may also require verification of all the documents you present – and you’ll have to complete a detailed application. You also need collateral to back many loans.

If you can’t do this, you may not have a lot or any other options. You can still find the money you need, but you’ll have to pay more for it. You’ll also be paying for a faster and easier approval, and the right to get a loan when you credit is subpar. The application process takes a couple of minutes and you usually only provide job (paycheck stub) and bank account information.

Now, if you have great credit and all your important documents at your fingertips, you should apply for a bank loan first and you’re likely to get the best rates and terms. Or if you have an excellent credit score, you might also find a credit card. A payday loan is probably not a necessary option for you – unless you need the money in the next 24 hours. The other options take at least a week or two.

But if not, it may be worth the increased cost of the loan to get cash now for your financial emergency. I don’t know your specific situation, but you do and you can easily figure out if the cost of a high-interest loan is better than the costs of the alternative.

Are you about to get an overdraft fee or have your power cut off? Obviously, those are expensive situations. Overdrawing your bank account by $10 can cost you three times as much – or $30 per overdraft. Having your power disconnecting is even more costly – you may have to pay your entire bill, a reconnection fee, and a deposit to get it back on. A $200 bill can easily turn into $600 ($400 past due; $200 deposit). In the meantime, how much will you spend going to the Laundromat and out to eat while the power is off?

Conclusion

Unfortunately, these valuable benefits are often overlooked when critics talk about doing away with payday loans. Why? Most don’t face the same challenges or financial difficulties as those who use and need short-term loans for emergency financial situations. They don’t understand how these loans actually save consumers money compared to their other alternatives.

Direct Deposit

Direct Deposit Makes Payday Loans Easier

Our modern society moves fast, and so does our money. Have you noticed that more and more of our business, social and financial transactions happen online? We can get our paychecks directly deposited into our bank accounts, we can pay bills online, and more and more of us simply swipe a debit card to make a purchase.

A paycheck advance is no different. If you are approved for a fast cash loan, you can have the funds deposited directly into your account, ready for you to use however you need. Direct deposit of your cash advance loan is quicker, easier, and safer.



The Benefits of Online Banking

Applying for a payday loan used to be complicated. You would have to drive to a storefront location, fill out an application, provide paystubs and bank statements, fax it all in, and wait for an answer. And then you had to wait for your check.

Now you can apply online. When you apply for a cash advance loan, the two main requirements are that you are employed and that you have a viable bank account. By providing your bank account number, you provide your lender with the ability to deposit funds directly into your account. The money is usually deposited within 24 hours of approval and you don’t have to worry about a check being stolen or lost.

Direct deposit is especially handy if you need an emergency loan while out of town. Let’s say your car breaks down on a weekend trip. Or you run low on cash while your family is on vacation. Apply online for your payday loan, have the funds deposited into your bank account, and the money is there for you to use from any ATM, no matter where you are. You don’t need a storefront lender or a home bank.

Automatic Payments

You can also arrange to have the loan payment automatically withdrawn from your bank account—a smart financial move. If you miss a loan payment, you can be charged late fees and additional interest charges. By scheduling your payment to be made electronically on the date of your next paycheck, you never have to worry about remembering when your loan is due. The arrangements are made when you are approved for the loan.

With most of our other financial transactions happening online, it makes since to have your cash advance direct deposited as well. It’s quick, it’s easy, and it ensures that you’ll never miss a payment.

 

Payday Advance

Payday Advance Loans

If you are gainfully employed, but find yourself short of cash for one reason or another, you could benefit from a pay day advance loan.

A payday loan allows you to borrow money against your next paycheck. If you can provide proof of employment and a personal bank account, you are eligible to apply. It is free to apply so you don’t have to worry about a bad credit rating. Because your loan is designed to be paid with your next paycheck, you don’t incur any long-term debt.

The Process is Quick and Easy

It’s easy to apply for a cash advance loan. If you prefer, you can apply in person at a storefront location, where you will be asked to complete a simple application. You will need to provide recent paystubs as proof of employment, as well as a bank account statement. You will also need to provide your social security number.

If you are approved, you will receive your check the next business day, which you can then deposit into your bank account. Depending on your lender, you may be able to repay the loan with a post-dated check, or be asked to return on the day the loan is due to make payment.

Online Applications Are Available

Another option for a paycheck advance loan is to apply online. The process is similar but does have several advantages. You’ll be able to apply from your personal computer in the privacy of your own home.

Just like at the storefront location, you will be asked to complete an online application. In lieu of physical documents, you will be asked to provide your employer’s name and phone number, as well as your bank account number. The lender will be able to verify your employment and banking account status through these numbers.

If you’re approved, the money will be directly deposited into your banking account (the number you provided) usually as fast as next business day. You can then withdraw the money wherever you are, from any ATM. With this arrangement, you can also schedule an automatic withdraw from your account on the date the loan is due. This helps you avoid the late fees and higher interest rates associated with extended loans.

Consider a Pay Day Loan

If you find yourself in a cash crunch, for whatever reason, you don’t have to panic or feel guilt about your situation. Financial emergencies happen to all of us. A pay day advance loan is a viable option to help you through those tough times.

 

Quick Cash

Quick Cash Loans to the Rescue

If someone told you that you could apply for a loan today, and have the money in hand by tomorrow, would you believe them?

It’s true.

It’s called a quick cash loan, and getting one is fast, easy, and hassle-free.

Let’s say you have an unexpected medical expense. Or it was a cold month and your heating bill is higher than normal. Or you went on a weekend trip and spent more on gas and food than you had planned. Whatever happened—you’re short on cash and you need help fast. Payday is still a week away, so what do you do? You apply for a quick cash loan.

Apply In-Person or Online

Payday loan venders have storefront locations in most metropolitan areas. If you prefer working face-to-face with people, find one near you and discuss their terms with them.

You an also apply online from the comfort of your home, which allows you to compare multiple vendors and choose from the best rates. Either way, the application process is similar.

Applying Is Easy

You will be asked to complete an application asking for basic information, such as your name, address, phone number, and social security number. You will also be asked to verify your employment and provide proof of your bank account. If you apply online, you can do this with your employer’s name and number and by providing your bank routing number and personal account number. Once this is verified, and your application is approved, you may have your money in as little as 24 hours.

When you apply online (some storefront locations also offer this option) the cash will be directly deposited into your bank account. So even if you’re stuck out of town without cash—you can access your quick cash loan from any ATM.

Money When You Need It

Life is full of emergencies, and emergencies usually require money to fix. If you find yourself in one of life’s unpredictable moments, you know where to find the emergency cash you need—apply for a quick cash loan.

 

How Easy

Getting a Payday Loan is Easier than You Think

How easy, you might ask? It’s as easy as getting on your home computer and supplying some basic information about yourself and your finances. If you need quick cash, there’s nothing easier.

Done from the Comfort of Your Home

There’s no need to get in your car and drive to the far side of town. You can apply for a payday loan from the comfort of your living room chair. Using your laptop or home computer, do a quick search for online cash advance lenders. You’ll find there are plenty of businesses willing to offer you a payday loan. By using your search to compare lenders, you can find the cash advance loan that offers you the best terms.

Apply Online

Once you’ve found the right cash advance lender for you, begin the application process. You’ll be asked to fill out an online application that asks for basic information, such as your name, address, phone number, and social security number. You’ll also be asked to provide the name and phone number of your employer, as well as your bank account number. With this information the lender can confirm your employment and that you have a bank account. That’s all you need. It is Safe & Secure, so there’s no need to worry if your credit score is less than perfect.

Money Deposited Directly Into Your Account

If you are approved for the payday loan, the quick cash lender will be able to deposit your loan money directly into your bank account, based on the information you provided. You will usually receive the money within the next business day and can withdraw it from your bank or any ATM, no matter where you are or what you need it for.

Schedule Your Payment

To help you avoid fines or late fees associated with late payment, arrange with your lender to have the loan payment automatically withdrawn from your next paycheck. Provide them with the date of your next payday, and schedule the payment. You’ll meet your financial obligations and won’t have to worry about accidentally spending your money on something else before you repay your loan.

Apply Again

Once you’ve established a relationship with a lender, you may be able to receive future loan approvals without having to reapply each time your short of cash. Ask your lender about pre-approval for future loans, or even pre-paid debit cards that you can reload based the amount approved from your fast cash lender.

While it’s important to never borrow more than you need, and, of course, to not spend more than you have, financial emergencies are a fact of life. If you need cash, and you need it now, consider a cash advance loan.

 

Emergency Cash

Emergency Cash Advance Can Help In Our Times of Need

Every day, as we live our lives we never know when the unexpected might happen. Whether it is a simple emergency such as your car breaking down or a major emergency involving tragedy with a loved one, there is always the looming financial burden around the corner. We can all use some emergency cash to help alleviate our worries. A simple payday advance for emergencies is a great way to get the money you need for anything unexpected that may come up.

If your car breaks down, then you will need the money to pay the mechanic shop. Parts and labor are very costly, especially for foreign cars or older cars for which acquiring a part can be costly. A payday advance is ideal for this very reason. You need your vehicle in order to work, pay bills, visit family, and any other reason for travel. Quick cash advances can help you pay the bill so that you do not have to worry about coming up with cash by other means to pay or waiting until your next paycheck before you can pay off the debt to the mechanic.

A more serious emergency such as a medical bill or funeral bill also requires that you have the money you need to pay for these types of services. If you have very poor credit, then some institutions are going to require you to have the necessary funds up front in order to take advantage of their services. The good news is that a quick payday loan is able to help you in this situation as well.

An approval for a payday loan is based on your income from your job as opposed to evaluation of your credit, so even people who have bad credit can get approved for the cash they need. Medical bills are very serious, but your health and the health of those you love are equally important, so getting a payday advance for cash is an immediate way to help pay the bill for the treatments you or your family need.

No matter how serious or minor your emergency may be, payday cash advances exist just for these types of situations. We all need a little help sometimes, especially when life throws us a sucker punch. Lucky for us there are payday cash loan offices everywhere online and in our community to help us in our time of need.

 

Faxless

The Advantages of Faxless Payday Loans

Your familiar with the saying, “The only sure things in life are death and taxes.” Well, you can add a third sure thing to the list—that technology will evolve faster than you can master the last new technology.

It’s sometimes mind-numbing to witness the rate of speed that technology changes—and how quickly we adapt. Digital cameras, smart-phones, Internet search engines (that make finding out about anything so easy)—all these were novel inventions to us as little as ten years ago. Now we can’t imagine a world without them.

These technological advances have affected every area of our lives, including our financial transactions…payday loans included.

Traditional Cash Advance Loans

Traditional quick cash loans involve faxing (remember when faxes were the latest and greatest technology!) a series of personal documents, including

• Your loan application with personal information (including your social security number)
• Recent paystubs
• Bank account statements

But here’s the problem with faxes. Some sources estimate that up to 30% of sent faxes don’t end up with the intended recipient, putting your personal information in the wrong hands. Even if the right person gets your information, they will have your application paperwork sitting on their desk where anyone walking by can grab or read it.

Fortunately, technology has provided a better way—the Internet.

Online Faxless Loans

Many payday lenders now offer faxless cash advances. If you apply online this will most likely be the process you use:

• Complete an online application
• Provide employment information, usually just the employer’s name and phone number
• Provide bank account information, such as your bank’s routing number and your personal checking account number

While there are still privacy risks, much of it has been minimized with the online process. For one, you’ll be sending your application directly to the email of the loan representative handling your account. It’s in their mailbox and only they will see it. When you are approved, your loan amount will be sent directly to your bank. It is worth taking the time to ensure that your lender will use high-end encryption when sending your personal information digitally. Rest assured that if your bank information is stolen, and you suffer a loss, the amount would be covered by the FDIC.

Increased Ease and Convenience

Along with the convenience of technology comes certain risks. Protect yourself by working only with licensed and accredited financial companies. Ask about their security practices before you apply. Once all your questions are answered, and you feel comfortable with the lender and what they offer, enjoy the ease and speed of a modern, faxless payday loan.

 

Find a Lender

How to Find a Cash Advance Lender

Applying for cash advance loans is an increasingly popular method for Americans who need to come up with emergency cash quickly. If you’re looking for the best place to apply for a payday loan, you basically have two choices:

1) A local storefront lender

2) Online

A Storefront Business

You’ve probably passed a payday lender during your regular routines around town—either driving to work or running errands. Most towns will have one or more of these types of businesses. You can either stop in a random location and start asking questions, or look in your local yellow pages for the listing of payday lenders. Always look for lenders that prominently display their state licensing as well as those that might have endorsements from your local Chamber of Commerce or the Better Business Bureau.

The advantage of finding a local lender is that you will be able to speak with a representative face to face. Many people prefer doing their financial business this way, as it allows them to ask questions and possibly pick up extra reading material about the process.

If you decide to apply, you will need to bring recent paystubs, copies of your bank statement, and your Social Security number. You’ll also likely be asked to leave a post-dated check to cover your loan on your next payday.

Online Lenders

You’re other option is to apply online. The advantages here are convenience, speed and privacy.

Type “payday lenders” into your search engine, and you’ll find dozens of online businesses willing to give you a quick cash loan. Just like with your local lender, you’ll want to check out your online lender’s credentials. Even better, you can read through customer feedback on the lender’s website, or search online for any negative news about the company.

Applying is very similar to a storefront loan, but even more convenient. In lieu of paper documents, you’ll be asked to provide your employer’s name and number, as well as your bank routing number and account number. If the online lender is able to verify your information, you can be approved in less than one hour. The money is directly deposited into your bank account, and automatically withdrawn on the loan’s due date.

Do Your Research

Whether you choose to work with a local lender or online, it is vital that you check your lender’s accreditations. Always read through the entire contract—including the fine print—to make sure there are no hidden fees with your loan. As long as you do your research and take the necessary steps to protect yourself, using a cash advance lender is a great way to solve your temporary cash shortages.