Accounts – Island Crisis http://islandcrisis.net/ Wed, 21 Sep 2022 12:47:45 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://islandcrisis.net/wp-content/uploads/2021/04/default1-150x150.png Accounts – Island Crisis http://islandcrisis.net/ 32 32 How to get a good interest rate for a personal loan https://islandcrisis.net/how-to-get-a-good-interest-rate-for-a-personal-loan/ Wed, 21 Sep 2022 12:47:45 +0000 https://islandcrisis.net/how-to-get-a-good-interest-rate-for-a-personal-loan/ Interest rates are on the rise as the Federal Reserve tries to fight record inflation. The central bank is doing this to make loans more expensive and they can try to slow the economy down, hopefully without sending it into a recession. However, rising interest rates mean that loans are now becoming more expensive and […]]]>

Interest rates are on the rise as the Federal Reserve tries to fight record inflation. The central bank is doing this to make loans more expensive and they can try to slow the economy down, hopefully without sending it into a recession.

However, rising interest rates mean that loans are now becoming more expensive and less desirable, compared to record demand since the start of the pandemic.

But can you still get a reasonable interest rate on a personal loan?

Select is studying how you can get the best possible rate on all loans in the new future and how to improve the rates on your current outstanding loans.

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How to get a low interest rate on a personal loan

The average rate for a personal loan over 24 months is 8.73%, according to the latest Federal Reserve Data. However, this average rate has been declining since 2018, when it was 10.32%. It is also important to remember that these are only average rates. There are currently personal loans with APRs below 4%.

Here are the three main components to getting the best possible interest rate.

1. A good credit score

Getting the best rate on a personal loan is no secret – the higher your credit score, the more likely you are to get a better interest rate. You generally need to have a very good or excellent credit score (740 and above) to qualify for the lowest rates. Additionally, a higher score can bring you other benefits like a longer repayment period and a bigger loan.

However, don’t let a less than perfect credit score deter you from applying. Even if you don’t have great credit, there are still ways to get a personal loan with a great interest rate. Other factors are considered by lenders to determine what you may qualify for, such as your work experience and educational background. In fact, there are personal loans specifically for those with poor credit scores, including:

Beginner personal loans

  • Annual Percentage Rate (APR)

  • Purpose of the loan

    Debt consolidation, credit card refinancing, marriage, moving or medical

  • Loan amounts

  • Terms

  • Credit needed

    FICO or Vantage score of 600 (but will accept applicants whose credit history is so poor that they have no credit score)

  • Assembly costs

    0% to 8% of target amount

  • Prepayment penalty

  • Late charge

    Greater of 5% of monthly amount past due or $15

OneMain Financial Personal Loans

  • Annual Percentage Rate (APR)

  • Purpose of the loan

    Debt consolidation, big expenses, emergency expenses

  • Loan amounts

  • Terms

  • Credit needed

  • Assembly costs

    Flat fee from $25 to $1,000 or percentage ranging from 1% to 10% (depending on your state)

  • Prepayment penalty

  • Late charge

    Up to $30 per late payment or up to 15% (depending on your state)

If you are unsure of your credit score, you may consider signing up for a credit monitoring service like Chase Credit Journey Where Capital One CreditWise®.

2. Your work history

The second part is the employment history. The lender will likely ask you for a work history to show that you can afford to repay the debt. To prove this, you’ll probably need to get a letter from your manager or the human resources department. Although more difficult, it is still possible to get approved for a personal loan if you are unemployed.

3. Verifiable income

Finally, you will need some type of verifiable income. As with work history, the lender will want to see your current income to ensure you can make the monthly loan payments. This is especially useful if you are still working to improve your credit score. Again, this may be a bit more difficult, but you can still get approved for a personal loan if you are self-employed and have irregular income.

Compare offers to find the best interest rate

LightStream Personal Loans

  • Annual Percentage Rate (APR)

    3.99% to 19.99%* when you sign up for autopay

  • Purpose of the loan

    Debt consolidation, renovation, car financing, medical expenses, marriage and more

  • Loan amounts

  • Terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

Marcus by Goldman Sachs Personal Loans

  • Annual Percentage Rate (APR)

    6.99% to 24.99% APR when you sign up for autopay

  • Purpose of the loan

    Debt consolidation, home improvement, wedding, moving and moving or vacation

  • Loan amounts

  • Terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

SoFi Personal Loans

  • Annual Percentage Rate (APR)

    7.99% to 23.43% when you sign up for autopay

  • Purpose of the loan

    Debt consolidation/refinance, home improvement, relocation assistance or medical expenses

  • Loan amounts

  • Terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

Select also has a comparison tool and a loan market that allows you to easily view different loan offers. You’ll need to answer a few questions and Even Financial will determine the best deals for you. The service is free, secure and does not affect your credit score.

This tool is provided and powered by Even Financial, a search and comparison engine that connects you with third-party lenders. Any information you provide is given directly to Even Financial and it may use that information in accordance with its own Privacy policies and Terms of use. By submitting your information, you agree to receive emails from Even. Select does not control and is not responsible for the policies or practices of third parties, and Select does not have access to the data you provide. Select may earn an affiliate commission on partner offers in the Even Financial tool. The commission does not influence the selection in the order of the offers.

At the end of the line

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff alone and have not been reviewed, endorsed or otherwise endorsed by any third party.

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Using Same Day Installment Loans Online From Direct Lenders https://islandcrisis.net/using-same-day-installment-loans-online-from-direct-lenders/ Mon, 19 Sep 2022 21:19:49 +0000 https://islandcrisis.net/using-same-day-installment-loans-online-from-direct-lenders/ If you are looking for money, it means you are having some kind of difficulty. Have you ever considered taking out same day installment loans from online direct lenders? It can be a reasonable solution to the critical financial situation. You can refer to a direct lender or you can refer to the network of […]]]>


If you are looking for money, it means you are having some kind of difficulty. Have you ever considered taking out same day installment loans from online direct lenders? It can be a reasonable solution to the critical financial situation.

You can refer to a direct lender or you can refer to the network of lenders. The second option saves you tedious research. On Instantcashtime.com, you can access the best loan offers on the market.

These days, it’s easier than ever to get a loan. You just need to act with caution. And you should have as much information about the product as possible.

How do installment loans work?

With same day installment loans from online direct lenders, you can solve your financial problem for a while. This type of loan is issued for a longer period of time, while the repayment can be made in installments over a certain period of time. Unlike payday loans, you don’t have to repay the entire loan all at once.

Same day installment loans from online direct lenders can be issued in different amounts of money. This depends on lender policy and state law, as there may be certain restrictions and limitations. An average installment loan can reach $20,000. Interest rates ranging from 6% to 36% further increase the final debt of the loan.

Installment loans are usually unsecured, which means they don’t need collateral like a car or a house. Instead, the lender uses your credit and financial data to decide if you qualify for a loan.

Get an installment loan online with bad credit

Regardless of your credit history, you can get same day installment loans from online direct lenders. https://www.instantcashtime.com/debit-card-loans/ . If your credit score is bad, you still have a chance of getting loan approval. As mentioned above, lenders may take many aspects into consideration when deciding on your application – loan size, repayment period, and monthly income. The basic qualifications are that you must be at least the minimum legal age to contract in your state, have an active bank account, provide an active email address, and be a citizen of the United States.

As long as you can prove your ability to make full refund on time, you won’t have to go through a credit check. A “soft” credit check will however be carried out. Fortunately, this does not affect your credit score.

Get the fast financial help you need

Since you can get a loan online with quick approval, you don’t have to wait for your money to arrive in your bank account. If you need money right now, just fill out an online application. The whole process has been digitized.

With an online loan, you can get the financial help you need in no time. When working with network direct lenders like InstantCashAdvance, you borrow your money instantly. This type of loan service allows you to make your loan decision the same day!

What to do if you can’t repay your installment loan

Life can be tough from time to time. By getting same day online installment loans from direct lenders, you take responsibility for paying back. In fact, you sign the loan agreement to finalize the deal. Before doing so, you should read the terms and conditions.

The main thing lenders are interested in is some type of commitment on your part. Your lender wants to work with you to repay. Proactively working with your lender can minimize message severity and improve flexibility.

If you are unable to cover your debt, the lender may assign you to a collection agency. The main objective is to get you to repay your loan. If there are guarantees attached to the loan, you will have to say “Goodbye”. The lender will most likely contact you to repossess the collateral as stated in the agreement. Remember state law. Depending on your state of residence, you and the lender will have different laws to follow.

The impact of not reimbursing your installment loan can be bad to very bad. Your credit rating will be affected. You may have to pay additional fees and interest rates. It will be more difficult for you to take out loans in the future. Make sure you know your rights and the laws in your state. Do not borrow money if you are not sure of your financial capabilities!

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The Dark and Secret World of New Zealand Credit Scoring https://islandcrisis.net/the-dark-and-secret-world-of-new-zealand-credit-scoring/ Sat, 17 Sep 2022 17:00:00 +0000 https://islandcrisis.net/the-dark-and-secret-world-of-new-zealand-credit-scoring/ Rob Stock is a Stuff business journalist specializing in money and consumer issues. ANALYSIS: In July, I met a woman who had recently come out of an abusive relationship. This meeting launched me on a frustrated and disappointing journey to understand how the zero to 1000 credit scores assigned to each of us actually worked. […]]]>

Rob Stock is a Stuff business journalist specializing in money and consumer issues.

ANALYSIS: In July, I met a woman who had recently come out of an abusive relationship.

This meeting launched me on a frustrated and disappointing journey to understand how the zero to 1000 credit scores assigned to each of us actually worked.

After the relationship ended, a loan company sued her for the entirety of a car loan her former partner had used to buy a car.

Charity Good Shepherd managed to persuade Aotea Finance to split the loan and only sue her for half, but it destroyed her credit rating.

READ MORE:
* Lessons on debt from a young woman who drowned in debt
* Loans program for low income people helps beat loan sharks
* BNZ clients get refund due to errors in loan documents

Banks, including the Bank of New Zealand, are canceling some loans taken out by victims of domestic violence, but are reluctant to talk about it openly, fearing a series of misrepresentations.

Prior to the abusive relationship, the woman was good with money, but now had a credit score of around 200.

Credit Simple, owned by credit reporting company Illion, says your credit score shows how creditworthy you are and a good score is over 500.

good shepherd

Good Shepherd Chair Diana Crossan asks Fincap policy adviser Jake Lilley and BNZ managing director of customer care Martin King about the policy of lenders who write off debt for women forced into debt loans by abusive partners.

Those with good scores get better offers from banks, telecom operators, insurance companies and electricity companies. A bad score can make it harder to get a rental, and sometimes even a job.

And yet, this woman’s score did not reflect her ability with money, but her past abusive relationship. It would take several years of good payment behavior to repair its score.

A bank told me that when it canceled loans to victims of domestic violence, it also helped them clean up their credit reports.

For every escapee from an abusive relationship who receives this help, how many do not? This was the first of many questions that I have yet to get an answer to.

The credit reporting system is an extensive financial monitoring system.

When we register with a bank, insurer, obtain a loan or open a feeding account, we “consent” to their passing information to the three credit reporting companies: Illion, Equifax and local company Centrix.

They compile credit reports on each of us and calculate credit scores.

The system helps trade, we are told. It allows lenders to decide who to lend to and at what price. It helps power companies decide who should pay up front for their electricity.

In the United States, scholars have accused the credit reporting system of being racist, as well as entrenching poverty and privilege.

The credit score is an American invention.  It was created in the 1980s and hailed as enabling more people to qualify for loans.  Critics say the system is unfair and entrenches poverty, especially among ethnic minorities.

PA

The credit score is an American invention. It was created in the 1980s and hailed as enabling more people to qualify for loans. Critics say the system is unfair and entrenches poverty, especially among ethnic minorities.

That’s because, like the abuse victim I met, people with lower credit scores find life harder and more expensive.

In New Zealand, studies of the sector do not seem to have been done, including whether the system is biased and whether it is used for legitimate purposes.

A senior property manager told me that after two decades in the business, he felt the scores had no predictive value for whether tenants would pay their rent on time.

A credit score and credit information is only useful if it has predictive value.

After meeting the abused woman, I had a second credit score shock when I applied for a $15,000 loan from Latitude for a story verifying the lender’s advertisement that it offered loans “from 8 .99%”.

I had a credit score of 984 out of 1000 on my Credit Simple credit report, yet I was offered a 20.99% loan.

Latitude said there was an error in the information given to it by Equifax.

Equifax gave me a credit score of 832.

I still had two questions: how can I have two scores out of 1000 so different, and how often do people get offered overpriced credit because of mistakes?

I checked my score at Centrix. It was 866.

What explains the differences?

Centrix chief executive Keith McLaughlin said part of the variation was due to not all credit reporting companies having the same information.

Centrix chief executive Keith McLaughlin says a low credit score makes someone's life harder because it means more expensive credit.

Abigail Dougherty / Stuff

Centrix chief executive Keith McLaughlin says a low credit score makes someone’s life harder because it means more expensive credit.

“We have a lot more comprehensive data in our systems than others,” McLaughlin said.

“It allows us to be much more precise and much more precise.”

Could this mean that the cost of a loan could partly be based on the choice of credit bureau by lenders? How would that be fair?

If my three credit scores accurately reflect my creditworthiness, then my three scores of 832, 985, and 866 should all represent the same risk of me defaulting on a loan.

I can’t tell you if that’s the case because while the three credit reporting companies provide analytical reports to their customers (like banks, power companies) they don’t share them with the public. .

I asked for help understanding the scores, but foreign companies Illion and Equifax refused my requests, prompting this reaction from McLaughlin: “I’m quite surprised, because credit scores are very important in the life.”

Centrix was more open. Its credit ratings represent the risk that a person will default on their payment obligations over the next 12 months, if the trends of the past 12 months repeat.

If a lender gives loans to five people with a score of 559, they can expect one of the loans to have missed payments.

A score of 192 means the lender can expect only 0.17 good accounts for every bad one. A score of 781 means he should get 27 good counts for one bad.

Centrix credit scores range from zero to 1000. We all have one, and they indicate how creditworthy we are.  Source: Centrix

screenshot

Centrix credit scores range from zero to 1000. We all have one, and they indicate how creditworthy we are. Source: Centrix

My Equifax credit file contained a “relative risk” score of 19.32. His call center didn’t know what that meant.

Eventually, I received a short email from a public relations person at Equifax saying, “A relative risk of 2.5 means the candidate is 2.5 times better than the population average.”

So I’m 19.2 times less likely to default on an account than the average person?

To complicate all this, banks and property managers decide how to use the scores.

After several frustrating weeks, I have a growing list of questions about the accuracy and fairness aspects of the credit reporting system.

It works for people like me, mostly it seems, but does it let others down and entrench iniquity?

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3 Reasons Why American Express Is Warren Buffett’s Favorite Credit Card Paper https://islandcrisis.net/3-reasons-why-american-express-is-warren-buffetts-favorite-credit-card-paper/ Fri, 16 Sep 2022 09:45:00 +0000 https://islandcrisis.net/3-reasons-why-american-express-is-warren-buffetts-favorite-credit-card-paper/ During the very first months of the pandemic in 2020, Warren Buffett’s company Berkshire Hathaway (BRK.A -0.81%) (BRK.B -0.62%) sold a good portion of its banking holdings, which included credit card companies. Buffett said Berkshire was concerned about its exposure to the sector, given the uncertainty at the time. However, Berkshire hasn’t sold a penny […]]]>

During the very first months of the pandemic in 2020, Warren Buffett’s company Berkshire Hathaway (BRK.A -0.81%) (BRK.B -0.62%) sold a good portion of its banking holdings, which included credit card companies. Buffett said Berkshire was concerned about its exposure to the sector, given the uncertainty at the time.

However, Berkshire hasn’t sold a penny of the big credit and charge card company American Express (AXP -0.11%), which has long been a favorite of Buffett and currently accounts for nearly 7% of Berkshire’s portfolio. Here are three reasons why American Express is Buffett’s favorite credit card paper.

Image source: Motley Fool.

1. American Express has superior credit quality

Buffett knows the banking industry quite well, which is why Berkshire has invested in so many banking stocks over the years. In fact, Berkshire actually bought a bank decades ago called the Illinois National Bank and Trust Company, which the conglomerate ran quite well while it owned it.

Anyone who knows the industry that well knows that the first thing that can really sink a bank is bad debts. And in the credit card industry, loan losses can jump quickly in times of stress. At the end of the second quarter, American Express’ loss rate was lower than that of any of its major bank peers.

This is because American Express caters to a much more affluent customer base that is likely to be much more resilient during a recession or downturn. American Express has also been in the credit card business for some time and has a wealth of underwriting experience.

2. American Express has a strong brand

American Express has long had one of the most enviable brands in the industry. Buffett once told company CEO Stephen Squeri that “the most important thing about American Express is the brand and the customers who aspire to be associated with the brand.”

That’s a big compliment coming from Buffett, who invests in stocks for this very reason. Just look at the brand power of Berkshire’s largest stock portfolio, Apple.

The company’s brand is arguably the reason consumers will pay nearly $700 a year for the American Express Platinum card. Brand power isn’t always easy to quantify, but in the case of America Express, it’s a huge advantage that has added a ton of value to the company over the years.

3. American Express has various revenue streams

Many credit card companies rely solely on the net interest income they earn on credit card loans, which is essentially the difference between monthly interest payments earned on loans and what cost to the company to finance these assets. Interest on credit cards is high, so if you can avoid major losses, you can get away with it, but it’s harder than it looks.

In addition to credit card loans, American Express also operates an end-to-end payment network where it facilitates American Express payment transactions between consumers and merchants. Revenue from these transactions is actually the company’s biggest revenue generator. American Express also collects a good amount of revenue by charging subscription fees on several of its card programs, such as Platinum and AmEx Gold cards.

Over-reliance on interest income from loans can be a difficult business, which is why many bank investors like to see additional fee income business as well. American Express essentially flips this notion on its head by making the majority of its revenue come from fees. Payments businesses can also be very attractive once they reach scale.

American Express is an advertising partner of The Ascent, a Motley Fool Company. Bram Berkowitz has no position in the stocks mentioned. The Motley Fool holds positions and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends the following options: $200 long calls in January 2023 on Berkshire Hathaway (B shares), long $120 calls in March 2023 on Apple, short $200 calls in January 2023 on Berkshire Hathaway (B shares) , short calls of $265 in January 2023 on Berkshire Hathaway (B shares) and short calls of $130 in March 2023 on Apple. The Motley Fool has a disclosure policy.

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myFICO: How to Build Credit https://islandcrisis.net/myfico-how-to-build-credit/ Tue, 13 Sep 2022 16:34:00 +0000 https://islandcrisis.net/myfico-how-to-build-credit/ SAN JOSE, Calif.–(BUSINESS WIRE)–Whether you’re looking to get a mortgage, take out a loan, or rent a new apartment, you need to know how essential it is to have a good credit score. For many people, building credit starts with timely payment of a student loan or credit card. However, to qualify for a credit […]]]>

SAN JOSE, Calif.–(BUSINESS WIRE)–Whether you’re looking to get a mortgage, take out a loan, or rent a new apartment, you need to know how essential it is to have a good credit score. For many people, building credit starts with timely payment of a student loan or credit card. However, to qualify for a credit card or loan, you often need to have a good credit history. This creates a difficult “chicken and egg” scenario where you need credit to build credit.

In this article, myFICO gives you the information you need to build your credit from scratch:

First, we’ll look at what goes into your credit and your FICO® score. Next, we’ll give you some ways to build credit from scratch.

For more information on loans and credit, visit myFICO’s credit resources: https://www.myfico.com/credit-education/

What factors affect your credit rating?

The industry standard credit score is the FICO® score, used by 90% of major lenders to make decisions about credit approvals, terms and interest rates. Although the criteria for other credit scores vary, your FICO scores are calculated based on five categories of information gathered entirely from your credit report. Each category represents a percentage of your FICO score. These categories include:

  • Payment history (35%) How you paid your bills in the past

  • Amounts owed (30%) How much of your available credit you are using

  • Length of credit history (15%) How long your credit accounts have been established

  • Composition of credit (10%) Types of credit accounts used or reported, including credit cards, retail accounts, installment loans and mortgages

  • New credit (10%) How many new accounts have you recently opened and whether you have sought to assess a single loan or applied for multiple new lines of credit

How long does it take to establish a credit history?

Now that we have a better understanding of what credit is, it’s important to start thinking about how to build a credit history.

In order to receive a valid FICO® score, the credit report must have:

  • At least one account opened for six months or more

  • At least one account that has been reported to the credit bureau in the last six months

  • No indication of death on credit report (Please note that if you share an account with another person, it may affect you if the other account holder is declared deceased)

The minimum scoring criteria can be met by a single account or by multiple accounts on a credit file. So, if you are approved for new credit that is actively used and reported to the credit bureau, you should meet the minimum scoring criteria in six months.

Building credit from scratch

When you first make the decision to start building credit from scratch, it can seem paradoxically difficult to get a credit card or loan without having a credit history. However, there are several options that could help you start your credit-building journey.

Consider a credit card

Credit cards make it easy and convenient to pay for things like goods, services, bills and more. Unlike a debit card, which takes funds directly from your bank account, credit cards essentially act as an ongoing loan from the credit card issuer. When you open a new credit card account, the card issuer sets a credit limit that you can use. Available credit is the amount of money you have left on the card when you load it. Then, before the due date, you simply reimburse the credit card company for what you spent.

Open your first card account with a bank or credit union

If you have an existing relationship with a bank or credit union, they probably already like your business and that relationship could help you qualify for a credit card. Other credit card companies offer cards specifically designed for new credit builders.

Start as an authorized user

Becoming an authorized user on a family member’s credit card account can be a way to start building credit from scratch. Indeed, it can allow you to enjoy the benefits of their good credit history, even if you never use their credit card. The process for this is relatively simple; the primary account holder only needs to add your name to their credit card account.

However, this method does not have such a big impact on your own credit score, nor does it offer all the privileges of being a primary account holder. To start building your own credit score, you’ll probably need your own credit card account. For many people, their first credit card is a secured card.

Consider a secured credit card

Secured credit cards are a type of credit card that requires you to put down a security deposit to open an account. Typically, this amount then becomes your credit limit, protecting the card issuer if you are unable to make your payments. However, you cannot use this money to pay your balance or make other purchases. Secured cards are often used by new card owners or those looking for credit repair because they are generally easier to obtain and are usually reported to credit bureaus as an unsecured credit card.

Unsecured cards, on the other hand, are what you might think of as a traditional “credit card”. This basically means you don’t have to pay a security deposit to be approved, however, qualification can be exclusive to a specific range of credit scores.

Loans, rents and payments from service providers

There are other options for establishing a good credit history without using credit cards.

Student loans: For many people, the first loans they receive are for college or university tuition. By repaying these installment loans at regular intervals over a pre-determined period, you can start building a credit history. Student loans are also added to your credit mix, which can improve your credit score.

Co-signed loans: If you’re having trouble getting loan approval, you can ask a loved one to co-sign. This means both parties share equal responsibility for the debt and the loan shows up on both credit reports. As long as you don’t miss any payments, this can be a great way to build up a good credit history.

Service providers: Utilities, cable, cell service, and internet all require you to sign contracts knowing that you will pay for their services each month. Many modern credit scoring systems take these payments into account when generating your credit score.

Rent payments: Sometimes landlords report your rental history to the credit bureau. Although this is not common practice, it may be worth asking your property managers if they do this or if they can get started.

How to get a good credit rating

Achieving a higher credit rating takes time, patience and financial responsibility. While you can’t get a perfect 850 overnight, you can focus on the behaviors and practices that creditors look for in a borrower. We hope this will form a habit that will help you maintain good credit over the long term. Here are some educational tips that can help you start building your credit now and in the future:

Paying your bills on time is the most important rule of thumb when it comes to building good credit. Your payment history accounts for 35% of your total credit score, so it’s best to avoid making a late payment. A few other considerations:

  • Spending well below your credit limit is considered best practice, as creditors generally view high spending as risky behavior.

  • Read the terms and conditions of each credit card before applying. Not only do you want to make sure it’s the right card for you, but you also want to know if you’ll qualify. If you apply and are turned down, the investigation may lower your credit score by a few points.

  • Maintain a healthy mix of credit cards and loans to show creditors that you have experience handling different types of debt. However, remember not to open too many lines of credit in a short time, as this can be considered risky behavior.

  • Finally, try not to close a credit account; only apply the credit cards you intend to keep and create a history with that account.

The importance of monitoring your credit score

Credit scores are an essential part of your overall financial well-being. Creditors use these scores to determine the approval of new lines of credit, interest rates and fees and even utility deposits, so a bad credit score can have lasting financial repercussions in many areas of your life. Knowing your credit score and credit history can help you better understand your current credit standing before applying for a new account. This way you know what you need to work on before applying for a loan or card.

How to check your credit report and credit score

Under the Fair Credit Reporting Act, each of the three major credit bureaus must provide consumers with a free credit report at least once a year. However, free credit reports do not include your credit score. This means you must go through an approved FICO® Score retailer, such as myFICO or Experian, to check your credit score.

About myFICO

myFICO makes it easy to understand your credit with FICO® Scores, credit reports and alerts from all 3 bureaus. myFICO is the consumer division of FICO – get your FICO scores from the people who do FICO scores. For more information, visit https://www.myfico.com/

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3 ways to boost your credit score without going into debt https://islandcrisis.net/3-ways-to-boost-your-credit-score-without-going-into-debt/ Fri, 09 Sep 2022 11:00:32 +0000 https://islandcrisis.net/3-ways-to-boost-your-credit-score-without-going-into-debt/ Image source: Getty Images When it comes to building credit, borrowing isn’t always the best strategy. Key points Keep your oldest card open to help show lenders that you have a credit history. Make full and on-time payments to get the most out of your payment history. Boost your credit limit by requesting an increase […]]]>

Image source: Getty Images

When it comes to building credit, borrowing isn’t always the best strategy.


Key points

  • Keep your oldest card open to help show lenders that you have a credit history.
  • Make full and on-time payments to get the most out of your payment history.
  • Boost your credit limit by requesting an increase every six months.

Your FICO score is like a report card for lenders. By looking at your borrowing history, lenders can determine how likely you are to pay them back if they extend credit. You may think that borrowing more will show lenders that you’re a reputable borrower, but there are better ways to boost your credit score. Read on to learn more about how to increase your credit without taking on more debt.

1. Keep your oldest card

When calculating your credit score, credit reporting agencies consider a variety of factors, including the length of credit history. In fact, history length is the third largest contributor to your overall score. Having a longer credit history is considered a positive indicator when calculating your credit score because it shows that you have a borrowing history.

Like many things in life, a credit score generally improves with age. The length of credit history accounts for about 15% of your credit score. In this category, one of the biggest contributors is how long your oldest account has been open.

But should you keep your oldest account open even if you’re not using it? Experts say yes. If your oldest account is the one you opened in college and the next oldest is an account from your mid-twenties, you could jeopardize the length of your credit history by years simply by closing an old one. account.

2. Pay on time and in full

Of the five factors considered when calculating a credit score, by far the most important are payment history and amounts owed. These two categories make up about 65% of your total credit score and can make or break your reputation as a borrower.

By paying your debts on time, you can start building your payment history. Payment history is considered one of the strongest indicators of your likelihood of repaying future debt and is the primary factor in calculating your credit score. Payment history takes into account payments made on everything from credit cards to car loans and mortgages, and is highly sensitive to delays versus late payments. The process of building a strong payment history can take a long time, but paying bills on time is a huge factor in your overall credit score.

The second most important factor in calculating credit is the amounts owed. Having a balance on one credit card isn’t necessarily a bad thing, but having balances on many cards can signal to a lender that you’re overcharged.

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3. Know your limits

Another piece of the FICO puzzle is credit usage. Your credit utilization rate is the percentage of available credit that you use regularly. Generally, lower utilization reflects favorably on a borrower because it shows the lender that the borrower is not hitting their limit every month.

One way to keep usage low is to have a high limit credit card or to request credit limit increases on a semi-annual basis. As you continue to increase your available credit, your borrowing will take up a smaller and smaller percentage of your credit limit. You shouldn’t ask for a raise more frequently than every six months, which could indicate that you are expecting future financial problems and could have a bad effect on your credit.

When it comes to credit, getting into debt may not be the best strategy. Instead, consider keeping your oldest credit card, paying your bills in full and on time, and requesting a limit increase every six months. By using these three strategies and being patient, you can gradually increase your credit score.

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Sri Lanka’s Flawed Regulatory Framework Helped Generate Chinese Bad Lending – Analysis – Eurasia Review https://islandcrisis.net/sri-lankas-flawed-regulatory-framework-helped-generate-chinese-bad-lending-analysis-eurasia-review/ Mon, 05 Sep 2022 16:01:58 +0000 https://islandcrisis.net/sri-lankas-flawed-regulatory-framework-helped-generate-chinese-bad-lending-analysis-eurasia-review/ Special regulatory framework for unsolicited proposals was deeply flawed, says Verite Research While it is true that Chinese loans to Sri Lanka have tended to be non-performing and drain the island nation’s meager financial resources, Sri Lanka’s regulatory framework is also to blame for the dire situation. According to a report titled The lure of […]]]>
Special regulatory framework for unsolicited proposals was deeply flawed, says Verite Research

While it is true that Chinese loans to Sri Lanka have tended to be non-performing and drain the island nation’s meager financial resources, Sri Lanka’s regulatory framework is also to blame for the dire situation. According to a report titled The lure of Chinese loans prepared by Dr. Subhashini Abesinghe and colleagues for Colombo-based Verite Research (https://www.veriteresearch.org/publication/the-lure-of-chinese-loans/).

The report says that the special regulatory framework used in the case of Unsolicited Proposals (UPS) to execute development projects was not designed to facilitate effective and efficient use of incoming funds.

Sri Lanka had an improved and proven system with safeguards in the form of procurement guidelines (PG 2006). But between 2010 and 2016, this was replaced in many cases in an effort to secure Chinese funds for ambitious post-war infrastructure development. New programs had to be designed to attract funds as access to concessional finance from abroad had become difficult given that Sri Lanka had been classified as a lower-middle-income economy in 2004. Sri Lanka had to look for other financing options, with lower costs and longer terms. deadlines.

In this context, “export credit instruments” have proven useful. Some developing countries, such as China, have offered to provide funds for infrastructure investment through export credits. These were low-cost funds with longer maturities than trade credit, but required the borrower to purchase goods and services (including the contractor) in the lender’s country, Verite explains. This system has contributed to economic development in foreign countries while keeping industries buzzing at home. In a sense, it was a win-win system.

But the good in the system has been subverted by Sri Lanka’s weak regulatory system. Its loopholes have been cynically exploited by interested parties to the detriment of the economy. says Truth.

Unsolicited Proposals; No competition Bid

Sri Lanka has also found it convenient to receive Unsolicited Proposals (USPs). USPs are proposals put forward by an external entity of its own volition, that is, without the government requesting such proposals. Huge amount of money has entered Sri Lanka through USP to execute gigantic projects.

Chinese State-Owned Enterprises (SOEs) have created USPs with support from the Exim Bank of China. According to Verite, between 2005 and August 2010, six publicly funded infrastructure projects worth $1,558 million originated from USPs. These were implemented without going through a tendering process. Of these six projects, three were financed by the EXIM Bank of China. Mattala International Airport and Hambantota Port were among them Chinese projects. These three projects represented 88% of the value of the six projects. They were also implemented “without going through a tendering process” which was the rule in the previous system.

SCARC

To regulate and assess USPs, a Cabinet-Appointed Standing Review Committee (SCARC) was appointed in June 2010. The SCARC was required to independently assess the proposal, if necessary, with the assistance of a technical evaluation committee/project committee.

However, the weakness of the SCARC was in the list of reasons that could be invoked to justify a departure from the normal procurement process. “The reasons listed were much less strict compared to the general framework and were only vaguely defined. Additionally, the decision-making process was made much more lenient by stating that deviations could be justified even if the USP only met one of the listed reasons, and leaving discretion to SCARC to decide. whether the USP should be evaluated by an independent project. /technical evaluation committee.

“These weaknesses allowed managers to exercise a high level of discretion in decision-making, reducing the rigor of the decision-making process and making it prone to abuse/misuse,” says Verite.

Several of the listed reasons for the discrepancy were vaguely defined, the report points out. “For example, to proceed with a USP without going through the bidding process, the ministry/department’s initial assessment need only establish that the project “appears to be of exceptional benefit to the country in terms of funding or otherwise” .

Unlike the Procurement Guidelines 2006 (PG 2006), which describe “extraordinary circumstances”, the new rules do not provide any examples or illustrations of what would constitute “justifiable” circumstances to deviate from the call for tender. offers. “Therefore, these criteria were open to subjective interpretation, which could lead to arbitrary and capricious recommendations by SCARC,” says Verite.

Additionally, to determine if the financing is appropriate/favorable, “the only factors that need to be considered are the years of repayment (minimum 15 years) and the grace period (minimum 3 years). There is no reference to the interest rate to be paid or the grant element of the loan.

According to the IMF, a loan to be considered a concessional loan must have a grant element of at least 35%.

Verite points out that under the 2006 GP, when a deviation from a tender is requested, it is mandatory to appoint a Standing Cabinet Appointed Contracts Committee (SCAPC) to assess the proposal, which will be supported by a technical evaluation committee appointed by the Ministry of Public Finance. Thus, within the general framework applicable to public sector infrastructure projects, in the event of waiver of competitive bidding, the technical evaluation is carried out by a designated independent commission. The procurement guidelines set out the specific qualifications that members of a technical evaluation committee must possess.

In contrast, under SCARC, independent technical evaluation of an unsolicited/stand-alone proposal is not mandatory. For example, SCARC can make a recommendation on its own or with the help of a technical review panel, says Verite.

Water supply project

Verite’s report uses the China-funded and executed Gampaha, Attanagalla, Minuwangoda Integrated Water Supply Scheme (GAMWSS) to illustrate flaws in the SCARC system. The contract to implement the project was awarded in 2013 to China Machinery Engineering Corporation (CMEC), which submitted a USP without going through a bidding process but with SCARC recommendation and Cabinet approval ministers.

Despite concerns such as higher costs and a lack of experience and expertise identified early on by committees appointed to evaluate proposals, these were overlooked in the approval process, Verite says.

“Elements of corruption” were suspected in the decision-making process. As a result, the government failed to obtain the expected concessional loan from the EXIM Bank of China. The expected rigor of the assessment process was compromised by the Ministry and the SCARC, which completely ignored essential factors such as the completion of the feasibility study, the environmental impact study, the terms of financing, as well as than the experience and expertise of the company.”

Moreover, the project had been delayed for more than seven years, depriving 400,000 people of the promised water connections, points out Verite.

“Although the special framework has managed to tap into China’s vast pool of funding, in the process of securing these funds, the country has incurred many additional costs. The lack of visibility of these costs can lead to an overestimation of the benefits of such financing and an underestimation of the real costs,” warns the study.

Further, “although oversight institutions such as the Auditor General’s Department frequently report financial and other irregularities related to the project, there is no evidence of legal action being taken against those involved. This is a key factor contributing to the recurrence of these problems,” the report points out.

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Student loan forgiveness can hurt credit scores – Financial expert predicts ‘uphill battle’ https://islandcrisis.net/student-loan-forgiveness-can-hurt-credit-scores-financial-expert-predicts-uphill-battle/ Fri, 02 Sep 2022 22:13:20 +0000 https://islandcrisis.net/student-loan-forgiveness-can-hurt-credit-scores-financial-expert-predicts-uphill-battle/ © Bospar PR President Biden’s Aug. 24 announcement of student loan relief measures is good news for many of the 43 million Americans who have a large balance. But some financial experts and social advocates have expressed concerns about the accessibility of funding and its long-term ramifications. Cancellation of student loans: economists radically disagree on […]]]>

© Bospar PR

President Biden’s Aug. 24 announcement of student loan relief measures is good news for many of the 43 million Americans who have a large balance. But some financial experts and social advocates have expressed concerns about the accessibility of funding and its long-term ramifications.

Cancellation of student loans: economists radically disagree on future inflationary effects
Poll Results: Should student loans be forgiven? Americans are divided

One of them is entrepreneur and investor Raghunandan G (“Raghu”), who is also CEO and co-founder of Zolvéa cross-border neobank that helps people moving to a new country access credit construction based on their credit profile in their home country.

Raghu thinks one of the problems with student loan forgiveness is that it can impact a benefactor’s credit rating.

“Without a strong credit history and credit score, student borrowers will face an uphill battle for decades,” he said. “While President Biden’s recent actions will give borrowers additional time and resources to improve their credit scores in a positive direction, these gains do not guarantee a successful loan interest rate change.”

Part of the problem, from Raghu’s perspective, is that a student loan makes up a large portion of a person’s credit mix, impacting their overall score. And not having this type of regular installment loan could lower that score.

“A student loan is part of the credit mix. The credit cards that students have is another part of the mix. …And if they have good repayment behavior, it all adds up,” says Raghu. “Now if there is a student who only has a student loan [and no other debt], and then because of the forgiveness, right now they don’t have a student loan, their ability to build a credit rating stops immediately. And this is where the real challenge comes in, as they will want to keep improving their credit score. »

Raghu added that even if all of your student loan debt is not forgiven, canceling $10,000 will undoubtedly shorten the term of the loan. “When the term of the loan is shortened, it has a negative impact on the credit rating,” he pointed out.

And it’s not just the ability to get loans in the future that will impact students who aren’t able to raise their credit score. It could also affect their ability to find a job once they graduate.

“[Many] employers have a credit history check. Thus, a student’s job opportunities may also stretch a bit more, mainly if they are unable to improve their credit rating. And all the loans, all the insurance they take out later on, it all gets expensive if they don’t really have a good credit rating. In the long run, it hurts the students,” Raghu noted.

See: Credit ratings remain at all-time highs, but that could change when COVID-era stimulus programs end
Find out: can you have bad credit even with a good income?

Although he made it clear that loan forgiveness is a good thing, “When it comes to building a credit score for a student, it wouldn’t really help them at all. If they don’t have other credit products, they need to start looking for other credit products now He suggested opening up credit cards and lines of credit for things like cable, rent, smart phones and other items – but always spend within your means to pay off the balance each month.

“Funneling some of their regular expenses through some of these credit-building products, rent payments and things like that, would also help anyone build their credit history.”

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About the Author

Selena Fragassi joined GOBankingRates.com in 2022, adding to her 15 years of journalism with signings to Spin, Paste, Nylon, Popmatters, The AV Club, Loudwire, Chicago Sun-Times, Chicago Tribune, Chicago Magazine and others. She currently resides in Chicago with her pets and is working on a first historical fiction novel about World War II. She holds a degree in fiction writing from Columbia College in Chicago.

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Deep-Subprime and Subprime Auto Loans Miraculously Cleaned Up by Credit Score Inflation https://islandcrisis.net/deep-subprime-and-subprime-auto-loans-miraculously-cleaned-up-by-credit-score-inflation/ Mon, 29 Aug 2022 23:18:22 +0000 https://islandcrisis.net/deep-subprime-and-subprime-auto-loans-miraculously-cleaned-up-by-credit-score-inflation/ Credit score inflation throws a wrench into the calculation of credit risk. By Wolf Richter for WOLF STREET. A miracle of American consumerism has happened during the pandemic, the era of mortgage forbearance, student loan forbearance and rent moratoriums, and free money sent to consumers via stimulus checks and PPP loans: credit rating inflation. Of […]]]>

Credit score inflation throws a wrench into the calculation of credit risk.

By Wolf Richter for WOLF STREET.

A miracle of American consumerism has happened during the pandemic, the era of mortgage forbearance, student loan forbearance and rent moratoriums, and free money sent to consumers via stimulus checks and PPP loans: credit rating inflation.

Of the total number of auto loans and leases outstanding in the second quarter, the share of borrowers with “deep subprime” credit scores (credit scores of 300 to 500 on Experian’s credit rating scale) increased fell from 4.3% in 2017 to a share of just 1.9%, according to Experian’s report on the state of the auto finance market for the second quarter of 2022.

This means that the majority of high-risk borrowers with auto loans have improved their credit ratings and moved to higher categories. For example, a deep subprime borrower might have upgraded their credit score from 450 to 520, moving into subprime.

Of the total number of outstanding auto loans and leases, the share of borrowers with subprime credit ratings (credit scores of 501-600) fell from 18.5% in 2017 to a share of 14, 5% in Q2 2022 (red line in the table below). This means that many subprime borrowers have improved their credit scores and moved on to higher categories.

As expected, the share of “near-subprime” (credit score of 601-660), which many subprime borrowers and some deep subprime borrowers settled into, increased from 17.5% in 2017 to an 18.4% share in the second quarter, according to Experian (green line in the chart below).

Of the total number of outstanding auto loans and leases, the share of borrowers with “prime” credit ratings (credit scores of 661 to 780) fell from 40.2% in 2017 to a share of 45.7 % in the second quarter of 2022, when many quasi-subprime and subprime borrowers moved into this category.

But the share of “super prime” borrowers (credit scores of 781 to 850) remained roughly stable with 2017:

An incredible marvel. But how did this happen?

Student loan forbearance. Starting March 2020, all federal student loans were automatically enrolled in forbearance programs. Loans pending forbearance are no longer considered “delinquent”, regardless of their degree of delinquency. And the federal student loan delinquency rate plunged from around 10% in 2019 to 0%.

In other words, when it comes to credit scores, these delinquencies among federal student loans have been corrected and this has improved borrowers’ credit scores, although they have actually made no payments.

Private student loans did not participate in the forbearance, and the remaining delinquencies are concentrated among them.

Additionally, since these forborne student loans were frozen, earning no interest, and borrowers were not making payments, borrowers could use the money from unmade loan repayments to catch up with d other bills, which would further improve their credit scores. .

The federal student loan forbearance program has been extended through December 31, 2022.

Mortgage forbearance. Same principle here. Millions of home loans have been taken out under forbearance programs. Delinquent mortgages in forbearance did not count as delinquent, which cured the delinquency on credit reports.

Also, borrowers didn’t have to make any mortgage payments during the forbearance period and could spend the money on other things, like getting caught up on their other debts and fixing those defaults.

Most mortgages have now come out of forbearance and given the surge in house prices over the period, as a last resort borrowers could generally sell the home and pay off the mortgage.

Moratoriums on rents allowed tenants to divert funds from rent payments to other causes and catch up on bills and car payments.

Plus waves of government moneyfrom stimulus payments to PPP loans, have spread across the United States, allowing people to catch up on their debts.

As a result, crime rates have plunged to record highs during the pandemic for car loans, credit cards, mortgages, student loans and other consumer loans. Third-party collections and bankruptcies also plunged to historic lows. And credit scores began to rise.

Credit score inflation throws a wrench into the calculation of credit risk.

But credit scores haven’t improved because American borrowers have suddenly become far more responsible. They have improved due to the momentum that has cured delinquencies on credit reports.

But those dynamics were pandemic promotions that cleaned up the credit reports of millions of Americans who now appear to have made their payments on time and appear to have caught up on their payments, when in fact it was mass forbearance that produces this effect. , as well as stimulus payments that aren’t supposed to recur.

And that’s a problem for lenders. Lenders use credit reports and credit scores to assess a borrower’s credit risk, that is, their likelihood of defaulting on their debts in the future. The assumption is that past defaults are predictors of future defaults.

Lenders charge higher interest rates to compensate for higher credit risks. Subprime-rated customers borrow at higher rates than prime-rated customers because lenders face a higher risk of credit losses – similar to corporate junk bonds. But credit score inflation now throws a wrench into the equation and turns the already dodgy credit score system into an even less reliable predictor of credit risk.

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Do you have a low credit score? Tips to increase your score and be ready for credit https://islandcrisis.net/do-you-have-a-low-credit-score-tips-to-increase-your-score-and-be-ready-for-credit/ Fri, 26 Aug 2022 11:17:00 +0000 https://islandcrisis.net/do-you-have-a-low-credit-score-tips-to-increase-your-score-and-be-ready-for-credit/ Most lenders check the CIBIL score or a credit score assigned by other bureaus when evaluating your credit application. If your score is low, they may be hesitant to offer you credit. Indeed, a low credit rating makes you a high-risk borrower. However, some lenders will offer you credit even if your credit score is […]]]>

Most lenders check the CIBIL score or a credit score assigned by other bureaus when evaluating your credit application. If your score is low, they may be hesitant to offer you credit. Indeed, a low credit rating makes you a high-risk borrower. However, some lenders will offer you credit even if your credit score is less than ideal. For example, a good CIBIL score is considered to be 750 and above, but you can also get a personal loan for a CIBIL score of 550. Sometimes called bad credit loans, these loans are exactly what the name suggests – loans you can get with bad credit.

However, you should exercise caution when applying for a loan for bad credit. Relying too much on these can put you further into debt and hurt your creditworthiness for future needs. It can also make repayment difficult, as these loans usually come with a higher interest rate. To avoid having to resort to a bad credit loan, you can improve your credit score and boost your creditworthiness. Soon you will be eligible for a loan with attractive terms that make borrowing easy and affordable!

Here are some of the best tips to help you improve your credit score and creditworthiness.

Repay dues on time

To boost your credit score, make timely repayment a priority. This will help you create a disciplined balance sheet that strengthens your creditworthiness. Automatic payments and alerts can ensure you don’t miss any of your loan or credit card bill payments. If you have a large debt and you do not have the funds to meet this obligation, consolidate all your debts into one. This eases your task of managing different due dates and makes repayment more manageable.

Check your credit score frequently

Checking your CIBIL score or your credit score at regular intervals is one of the easiest and simplest ways to keep tabs on your credit health. This is an overall rating assigned by rating agencies after taking into account certain key factors. The score is based on a credit report that contains a summary of all these factors and can help you change your habits or decisions to improve your score. Plus, checking the CIBIL score and report helps you spot and report inaccuracies. Since unresolved discrepancies can also hurt your credit score, be proactive.

Limit new apps

Try not to apply for new loans or credit cards multiple times in a short period, as each application will result in a thorough investigation of your credit score by lenders. Too many inquiries in a short period of time can make you look like a high-risk borrower because it involves credit-hungry behavior. So only apply if you meet the lender’s eligibility criteria, need the funds, and have a repayment plan based on your current debt. Also in this regard, checking the CIBIL score regularly is a good way to go. Your credit report contains information about the number of inquiries on your profile, and by viewing this and your current load, you can decide if it’s a good time to apply for new credit.

Keep an eye on your credit limit and its usage

Having too much debt in a short period and using it to the maximum reduces your creditworthiness. So don’t max out your credit cards every month. Likewise, keep an eye on your credit utilization rate, which refers to the total amount of revolving credit you use each month. Although you should strive to maintain this ratio at 30%, start by reducing it to at least 50% to increase your credit score. Here too, checking your CIBIL score at regular intervals can help you better plan your use of credit.

Keep in mind that if you have a low score, getting new credit can become extremely difficult. Although you can get a personal loan for a CIBIL score of 550 or even lower, its terms and fees may not be in your best interest. By checking your CIBIL score before applying for a loan or a new credit card, you can make informed decisions. It also helps in case you want to see how your new improved credit behavior actually improves your score.

CIBIL score verification is easier and faster with the digital services offered by Bajaj Finserv. Here you can check your CIBIL score for free online using your PAN card information and some other basic information such as your mobile number and your monthly salary. With this simple process, you can not only see your credit score, but also get your credit report in minutes. So get started today and get insights to improve your creditworthiness.

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