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Archive of posts published in the category: loans
Oct
23

Factors Affecting Credit Score

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The credit score is an expression used to determine one’s creditworthiness. An analysis of a person’s credit files sourced from credit bureaus is done by lenders to make decisions on whom to lend money. Credit scores are used to determine whether you qualify for a loan or not, and at what interest rates and credit limits. To have and maintain good credit is crucial when you need a loan, it will help in speeding up the process. Bill payment history, level of debt, credit history age, number and types of credit inquiries are some of the significant factors that affect creditability.

Financial Background

35% of your credit score is determined by bill payment history. To have a good credit score, you should ensure all your bills are paid on time. It is challenging to acquire a loan if you have any bill payment issues, like repossession of assets due to lack of payment. Even going against the payment agreements affects your credit score negatively. This history is usually recorded by credit bureaus. The best way to keep your credit score up is to ensure your records are presentable.

Amount of Debt Owed

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Another factor that affects 30% of your credit score is the amount of debt you owe creditors. This shows that you apply for other loans when you still have pending loans. Lenders and loan companies look at the amount of overall debt you carry, credit utilization and your loan balances. Lending money to someone is a significant risk and lenders will want to have maximum security on their money. Preventing high levels of debt by paying before acquiring another loan ensures a high credit score and attracts lenders to invest in your projects. With a high level of debt, one might end up getting late with some payments, thus increasing the credit history age, which is another factor that affects creditability.

Late Loan Payments

The longer you stay without paying a loan, the lower your credit score goes. Ensuring you pay loans on the agreed time, protects your credit score. It also increases your creditworthiness because investors would trust an individual that respects the terms of the agreement. This contributes to 15% of your credit score, and it considers the age of your oldest account and the average age of all your accounts. To protect your credit score, one should have one account or a few to also provide security for your investor’s money.

Credit Accounts Under Your Name

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Creditworthiness is also determined by the types of credit accounts on your report; these are revolving accounts and instalment loans. Having both contributes to 10% of your credit score, it is not significantly impactful but still relevant. Other than credit cards, one should also have loans for assets and even personal loan accounts.

Number of Credit Inquiries

The number of credit inquiries, especially over short periods, contributes to 10% of your credit score. Each time you apply for a loan; an inquiry is placed on your credit report. The more inquiries you make, the likelihood that your credit score goes down. It is okay to have a few inquiries, but you should avoid making several inquiries at a time. Some loaning companies limit you to either one or two inquiries per day to prevent a high number of credit inquiries, helping you maintain your credit score.

Being creditworthy is essential in today’s economy in order to run multiple things with limited capital. It helps you manage to start businesses or acquire assets without having sufficient funds. Some other factors indirectly affect your credit scores such as income, bank balance and employment status but are not a factor in the expression that calculates your credit score. It is vital to maintain a good credit score to access loans easily.…

Dec
1

Useful tips to get a personal loan approved

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You may be having a smooth running life. However, that does not mean that you do not have a problem. For instance, you may face a difficult or emergency situation at any point in your life. If it is a financial emergency, personal loans can be the solution you need. With a loan, you will get some adequate cash that can meet your personal needs. However, getting a loan is not that easy. You need to follow certain steps and abide by the terms of the loan provider to get approved.

Check eligibility criteria

loan eligibility The majority of loan providers do have a criterion for eligibility. For instance, some demand that borrowers ought to be within a given age group. They will also need to check the amount of your income per year. Others will want to check that you are not a defaulter of past loans or even credit card bills.

Verify the credit score

This is what lenders use to determine before giving out a loan. Therefore, before you apply for this particular loan, you need to check the credit score to ensure your loan plea does not get rejected. If the scores are not adequate to be rectified, this increases your chance of getting your loan approved. It can also get you attractive interest rate.

Give genuine details

When applying for a loan, ensure you give all details which are best to your knowledge. In fact, lenders do doubt your intentions and will need to check everything. They can also consider calling you to verify the authenticity of the documents you provided. Therefore, when you provide the genuine information you increase your chance of getting approved for the loan.

Avoid several applications

debt loan It is advisable to aim for the realistic loan amount. Avoid asking for huge amounts as your case is likely to get rejected. Also, a lot of people make the mistake of applying for the loan at various places. In such a case, lenders are likely to doubt your intentions and your chance of loan approval reduced. In fact, several applications can affect one’s credit score.

Sources of income

If you have a good work history, then you are likely to impress many money lending companies. If you have been working for about two years, then you have an added advantage. Avoid switching jobs to maintain a good source of income.…

Aug
24

Reasons why you need to consolidate your student loans

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There are numerous benefits of consolidating your student loans. This can help you in improving your credit rating and saving money. The following are the main reasons why it is important to consolidate or streamline these debts.

Enjoy low interest rates

You should avoid procrastinating and and make an effort of organizing with the federal or state student consolidation at the end of every year.  This will help you in taking advantage of the low interest rates offered on consolidated loans. This interest rate is sometimes as low as 4.7 %. You can save a significant amount of money by securing a low interest rate.

Peace of mind

Most of the people who have taken many loans have been having sleepless nights wondering how they will manage to pay their monthly loan payments. To make the matter worse, these individuals have other bills that need to be paid at the end of every month. Consolidating your education loans can help you in saving up to 50% or 60 % on your monthly payments.

Streamlining your payments

Many people have racked up many loans, some of which have varying amounts and interest rates over their school time. Such people are usually confused in keeping track of their bills. Consolidating your loans will make your life simple since you will be dealing with only one lender and be paying one loan.

Auto pay

Signing up for auto-pay when you are consolidating your loan is another great way of simplifying your bill paying. Again this will save you the stamp fees and the time taken in writing the different cheques.

Enjoy discounts for paying your loan on time

Just like with the auto pay, lenders will reward their clients with discounts for paying their loans on time. For you to enjoy these benefits, it is important to make sure that you are paying your loans in good time and consistently.

Improving your credit rating /score

cardsThe new lender will help you in paying off your loan once you have consolidated your student loans. Paying your loan and reducing the number of loans is one of the effective ways of improving your credit score. Banks Lenders will always check your credit score before lending you any money.

 

 

Help your parents

Probably your parent might have borrowed some money to pay your college fees. These loans can also be consolidated and then locked in the current rates.

Forbear or defer

Have you completed paying or consolidating your loans? Individuals who have paid their loans are given an opportunity of retaining their borrowing privileges by the state or federal government.

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