Credit monitoring services are deployed primarily to keep an eye on your credit profile, including your credit report and credit score. It can be treated as an early warning system of any potential fraud that can prevent further damage.

Lately, monitoring services are becoming increasingly popular. Technology has embraced the concept with robust credit monitoring apps and software. So much so that it begs the question, do you need to pay someone to monitor your credit? That part is up to you. While consumers do have the tools needed, they don’t always have the time, or desire to monitor their own credit.

This is where credit monitoring services come in. Instead of spending your own time monitoring your credit, you can pay a company to do so. They’ll only let you know when something arises.

The question is, are they really worth the investment?

Can a consumer monitor their credit independently?

Credit monitoring services often showcase themselves as guardians of your credit profile. They are in a sense, but this protection comes at a cost. A consumer can absolutely monitor their own credit, and in most cases, for free.

A monitoring service may be ideal for elderly people, saving them the hassle of learning new software.

How to be your own credit monitor?

The first thing to know is that credit monitoring can be done completely free. Of course, there is cost involved, but that comes in the form of time and effort spent on your part to manage your credit yourself.

Request a credit freeze.

A consumer can request their credit be “frozen” at any time. This will block any requests or changes to your report or score during the freeze. Because there are three major reporting bureaus, this request needs to be made with all three.

Sign up for a service from a personal finance website or credit company offering free credit monitoring.

Companies like Credit Karma and Credit Sesame offer free tools so you can watch for fluctuations in your credit. These services even offer free advice and tips for specific credit situations.

Pull your free, full credit report once a year for a deep dive.

Once a year a consumer can pull their complete credit score and report. This is a great opportunity to deep dive into the past years credit history. You can take advantage of this consumer right by visiting freecreditreport.com.

What credit monitoring can’t do?

Here are some feature facts which the credit monitoring companies can’t do:

• Promise prevention of credit card or identity theft fraud.
• Avoid your receiving or opening phishing emails.
• Guarantee detection of fraud.
• Correct errors on your credit report.
• Stop taxpayer identity theft.

Paying for a credit monitoring service.

If you’re unsure the do-it-yourself method is for you, or just willing to pay for extra protection, look for a company that offers both credit monitoring and theft alerts.

If you find yourself in any of the below categories, you may be a good candidate for professional credit monitoring services.

• You are a victim of identity theft or if your SSN is disclosed in a data breach. This also applies if you lose your social security card.
• You don’t want to credit freeze your reports. You may have upcoming purchases you need your credit visible for. If this is the case, freezing your credit for protection won’t be an option.
• You don’t have the desire, know-how, or time to monitor your credit independently.

Be cautious when monitoring services are offered for “free”.

If you fall victim to a data breach or other security mishap, it’s common to be offered free monitoring services. But be cautious to read the fine print, and understand when the offered free service ends and how to cancel it. Even as a gesture of good faith, that free service likely has an expiration, and a monthly cost that follows.

For example, the free service you are offered might include monitoring from just one of the three major agencies, and only for one year. So, you’re now partially protected. True credit monitoring requires visibility into all three credit reports to be certain no discrepancies are present.

Credit report and credit scores from all three bureaus can be accessed for free by visiting annualcreditreport.com and from some other websites too, such as Credit Karma, Credit Sesame, and Quizzle.

Credit Karma: Best Free Credit Monitoring.

CreditKarma.com proves to be the best free credit monitoring service. They have built great credibility and offer an easy to use interface for any skill level.

Credit Karma updates your credit score – Vantage Score 3.0 – every time you log on to your account. It updates your credit report info weekly. Along with monitoring your credit score, you can also receive alerts when unusual activity is suspected on any of your two credit reports. While the service from Credit Karma is free, it’s only drawback is that you will not get access to one of your credit reports.

Credit Karma does not include Experian data, one of the big three credit reporting agencies. However, Experian.com offers their own monitoring. While this is an additional service to sign up for, it’s also completely free and quite simple. Bottom line is that you can accomplish most credit monitoring tasks on your own, for free or very close to it. Pay for credit monitoring only if you know you have been a victim of identity theft. Don’t let monitoring lull you into complacency.

It’s easy to hire a company and think your cares are over. The reality is, the safest way to maintain your credit is by monitoring it yourself. No one knows your financial situation like you. You’ll be much more in tune with discrepancies and mistakes on your own report than a company with no familiarity into your financial history.

The post Is a credit monitoring service worth the cost? appeared first on Consumer Credit News.

A strong foundation for financial health lies in maintaining your debts at a manageable level. The general idea being to keep yourself in a positive equity position when looking at your debt-to-income ratio. While your debt to income ratio doesn’t directly affect your credit score, it is an indicator of money management.

Sometimes we forget a lending decision isn’t simply based on your score. Other factor on your report are taken into account. Your debt-to-income ratio helps a lender determine if you can “afford” to take on new debt, whether you technically qualify for it or not.

This benefits multiple credit situations. Those with poor credit, good income, and a very low debt-to-income ratio may find themselves qualified with certain lenders.

Consumers with good credit and a low debt-to-income should have little to no problem taking on new credit. The situation to avoid is: poor credit, high debt-to-income ratio, and low income. This is a very high risk scenario to most all lenders.

What exactly is a debt-to-income Ratio?

The debt-to-income or DTI ratio refers to the comparison of the monthly debt expenses to the monthly gross or net income. It’s calculated by dividing all your monthly debt payments by your monthly gross income.

Here, your monthly debt payments include the sum of all payments towards your debt such as credit card payments, loan payments, car loans, and other debts. Your monthly gross income includes the income before deduction of taxes. The result is your debt-to-income ratio.

For example, if your monthly debt payments are $2000. This includes $400 in credit card payments, $200 in car loans, and $1400 in rent. If you earn $ 60,000 annually, the gross income would be $5000 per month. Your DTI is calculated by dividing $2000 by $5000, which gives you 0.4 or 40 percent.

In this particular example, a lender might see this as a risky debt-to-income. The ideal DTI is under 36%.

Why is Debt-to-Income Ratio important?

Your DTI is a benchmark which gives lenders an idea as to how much debt their borrowers can afford to take on. Lenders can use this information to determine if you can afford the payments of your requested loan. They may also use this ratio to determine the maximum amount they’re willing to lend you.

However, on its own, the DTI ratio will not affect your FICO credit score. With that said, it’s a critical part of your overall credit health and can have a direct impact in a credit decision.

Debt to income doesn’t contribute directly to a consumer’s FICO score but plays a role in your buying power.

Even though the DTI ratio is not used to calculate your FICO credit score, you should still pay close attention to it. DTI is a big factor deployed by lenders to decide whether to lend to you as it features your ability to take an additional financial obligation.

Because this number is a window into your financial obligations vs your income, it helps to determine buying power. Buying power is a consumer’s potential for credit approval. Your credit score itself is one factor used to determine buying power.

DTI effects lending of credit cards, car loans, mortgages, etc.

In addition to credit cards, lenders examine your DTI before lending you a mortgage. The maximum DTI required for a mortgage is 43%, but you should aim for a DTI of 36% or less. It also plays a key factor in whether you receive a credit card when you apply.

What happens when you have a high DTI ratio?

If DTI is more than 40%, lenders are likely to consider you a high-risk borrower, regardless of how good your FICO credit score is.

A high debt-to-income of 37% or more is an indication to the lender that your debt consumes too much of your income. Their concern is lending you more, raising your debt-to-income, and a disaster strikes. If your debt is more than 40% of your income, it’s difficult to handle an emergency while maintaining your payments.

Your DTI will pose too high of a risk for them to count on you paying a new debt as required.

Lenders use DTI in conjunction with FICO scores and report history to make lending decisions.

A high debt-to-income ratio can prevent you from acquiring any lines of new credit. DTI does play a more significant role in large purchase such as cars and homes. But, it’s also considered for credit card decisions and other personal loans.

Credit cards are generally high interest debts. They may be willing to lend to a consumer with a high debt-to-income ratio simply because of a good credit score. To a lender, this consumer wants to maintain their good credit, and is more likely to have a flexible budget for new debt. Of course, they also want that 25% interest rate 🙂

Conclusion

Your debt-to-income ratio in conjunction with your credit scores greatly affects lending decisions. This is true for credit card approvals, mortgage loans, car loans, and more. If you can manage to keep your debt-to-income ratio low, you may qualify for some lines of credit despite a low credit score.

The post How debt-to-income factors into lending decisions. appeared first on Consumer Credit News.

Times are tough for the general population’s credit. Even those who enjoyed easy approvals and low interest rates in years past are starting to feel the crunch. The reality is, your credit card or other unsecured debt always catches up to you. When this happens, we enter a rebuilding phase. There are many tools a consumer should be using to rebuild their credit, secured credit is a great addition.

Here’s a secret: It’s designed to.

Interest is the cash value of the credit extended to a borrower. Many people obtain credit cards and begin a vicious cycle of minimum payments. These payments do little to lessen the actual balance, and primarily pay the interest.

Shouldn’t their credit be great after all this time?

The “average” American credit score doesn’t change much between millennials and generation X. In addition, older generations have taken on more housing debt than their younger counterparts.

The reality is, all generations are facing both credit and debt issues. Many of us will find ourselves rebuilding our credit multiple times through our lives. It’s important to know every tool available to you while rebuilding.

What is a Secured Line of Credit?

A secured line of credit is a loan funded by depositing money into a “credit” account to serve as full or partial collateral. It can be the most reliable option for a young borrower or post-bankruptcy borrower to build or rebuild a credit score.

This card has a fixed credit limit that is partially collateralized by funds in a savings account. Specifically, card-holder deposits a certain amount of money into savings account with the credit card company. This is used to protect the company from the card-holder’s security deposit.

Pertaining to the cardholder’s credit history, a deposit of 50% to 100% of the credit limit into the savings account. These funds truly belong to the card-holder only, and he can retrieve it if he pays off or cancels the secured credit card. Since it reduces the risk to the credit card company, they charge a lower interest rate. Secured cards especially prove useful to people with bad credit history.

Secured credit cards.

When you get a secured credit card, you “fund” it through your bank account. While credit score doesn’t play as large a factor in these types of loans, having a valid bank account does.

A certain amount is deposited in the account, and money can be borrowed up to that amount using the card. If the borrowed money cannot be repaid, the account can be accessed to cover the debt. The creditor can also charge substantial fees for a secured card.

Secured credit cards look just like any other credit card, so no one can identify it differently. If you have trouble qualifying for unsecured credit, you can use a secured card to establish a record of using credit responsibly.

A secured line of credit is a tool to help rebuild your credit.

Acquiring a secured credit card is useful in many ways like renting a car, reserving an airline flight and online payment of purchases. These cards provide a credit line that matches the same amount of cash you deposit with the lender as collateral. While it may not seem like true credit, it’s money being spent using the credit system. Because it’s flowing through the credit system, you’re receiving positive reporting by using it and paying it off regularly.

Benefits of using a secured credit card.

Re-Building your credit score: Banks that provide secured credit cards report any and all payment activities to the credit agencies. If your account is managed responsibly, it may be favorable to rebuild your credit score.

Getting a credit card under “impossible” conditions: Secured lines of credit are available to those with major derogatory items, such as recent collections, who would normally be rejected straightaway for a normal card.

Spending discipline: A secured credit card does not allow you to go on unlimited shopping sprees. Your limit is the amount available in credit at the moment. It basically forces you to live within your means.

Qualifying for an unsecured card: If you pay your payments timely every month, some lenders may convert your credit line to an unsecured one after a certain period of time.

Earning interest: Some lenders may pay a small amount of interest on the amount you have deposited to secure your line.

Disadvantages.

Small credit limits: While regular credit cards offer credit lines in the tens of thousands, most secured credit cards only allow credit lines of several hundred dollars, limiting your purchasing ability.

Higher rates and fees: These credit lines costs you more to own. A higher rate of interest and annual fees from most lenders is common. Some may charge a monthly fee also just to keep your account activated.

Deposits at risk: If you are not able to repay the balance, your lender may claim the money deposited.

Predatory lending: Many lenders offering secured lines of credit are legitimate, but look out for these warning signs: They offer terms grossly in your favor, or tempt you to purchase items as a condition for issuing the card

To conclude, a secured credit card may act as a tool used to improve your finances, if utilized responsibly. This type of credit is one of several tools all consumers rebuilding credit should have access to.

The post Rebuilding with secured credit. One of many tools consumers should use. appeared first on Consumer Credit News.

The task of landing in your dream apartment doesn’t end with just signing a lease notice, paying the rent, and shifting your things. You also have to set up some or all of your utilities. These include Electricity, Water, gas, sewer, and TV/Internet, etc. Are you prepared to pay a deposit to open these accounts?

When you create a new account with utility companies, they require you to pay a deposit in advance before they will turn on your utilities. As with the other security and pet deposits, utility deposits are meant to insure against losses that may result from your unpaid or underpaid bills.

The deposits are based on your credit score, which is checked during the signup process for most utilities. Often times, the initial deposit is equal to one month utility cost of the previous resident at that address. However, with bad credit it may be 2 or 3 times that amount.

When I moved into my first apartment, age 18, I remember paying a $350 deposit for electric in a 650 square foot loft. I had very little credit, and what I did have wasn’t good. This changed in later years, once my credit was back on track the deposits were lower or non-existent.

You have to pay a deposit on utilities, and other recurring services.

If you are a new utility customer, utility companies create a new account which means they are actually issuing you credit. Because you are going to use the utilities and services before their payments are made. A utility is much like an unsecured debt. Obviously, they can’t repossess used water or power, so they rely on your credit to determine trustworthiness. Therefore, individuals with a good credit history will be welcomed by them with little to no deposit.

There are utility deposits to be paid on almost all utilities and recurring services like Electricity, Water, Telephone, Sewer, Natural Gas, etc. Moreover, Service connection fee is also applied to newer, transferring or reconnecting after disconnection for non-payment residential utility accounts.

These reconnection fees are typically $30 to $40 and add up quickly if you’re habitually behind on your payments.

What factors contribute to deposit amounts for consumers? How can I avoid deposits?

Your utility deposit may be reduced or waived if your credit history is good. If you have a bad credit history, you may have to pay a higher deposit amount. The good news is, unlike a car loan, the utility company is not going “turn you down” – they are just going to impose higher deposit amounts on you.

Also, utility companies may ask new customers to provide a “letter of guarantee,” a letter from a person who agrees to pay the bill if their customer fails to do so.

Utility deposit amounts vary widely

The amounts for utility deposits vary widely, as there are no strict regulations on what service providers and landlords can charge. For example,

According to Duke Energy, which covers several states across the Southeast, electricity deposit may range anywhere from $100 to $250 depending on the user’s monthly bill.

Other utility companies require a lump sum deposit of $300 or more for residential electricity service agreements. If your cable or Internet provider requires a deposit, it may also cover equipment usage. Some utility companies will charge new customers a deposit amount equal to the cost of a month’s service.

Security Deposits.

A security deposit is a deposit of money deferred to the landlord to ensure that rent will be paid and other responsibilities of the lease performed (e.g., paying for any type of damage caused by the tenant). The laws pertaining to these deposits vary from state to state.

Security Deposits: Receipts and Interest

On receiving a last month’s rent and/or a security deposit, the landlord should give the tenant a receipt for each prepayment. If he or she does not, it is perfectly advisable for the tenant to claim one. In many states, the landlord is required to give the tenant a receipt.

What can I do to improve my credit and not have to pay a deposit?

Your credit score numbers give an impression of your financial management. Hence, a good credit history will tempt utility companies to create your new account easily. Adversely, a bad credit score will end up in higher deposit amounts due to lack of faith and trust on your money management. Here are a few tips to improve your credit score.

Accurate credit reports

Check your credit reports from each of the three major credit reporting agencies. Free credit reports can be accessed via AnnualCreditReport.com – Ensure they are correct. You don’t want any mistakes on there costing you money and credit score points.

Avoid your late payments

Set up payment-due date alerts and get organized with all your credit cards and loans. Even better, use auto-draft payment options for some or all of your bills. This ensures you’re never late, and keeps your credit score healthy.

Clear off any outstanding debts

It’s important that you clear off all outstanding dues to get a good credit score. Old collections, debts never paid, forgotten credit cards don’t go away just because you’ve forgotten them. Review your credit report and make a plan to pay off each outstanding debt. This may take some time, but will raise your score significantly once complete.

Use a credit card wisely – Good credit means you wont have to pay a deposit for most things.

If you qualify for a credit card, and don’t currently have one, consider getting one. Now, the card you’re going to qualify for will have an outrageous interest rate.

This is the cost of poor credit. However, if you use the card wisely, you can build your credit and not feel the impact of the APR too severely.

One of the best ways to use a credit card for rebuilding is what I like to call “the gas card” – Put you weekly gas fill up on your card, take the money you would have spent on it and set it aside. At the end of the month, pay your balance in full. This will lead to very little interest paid, because your debt has not sat with the lender for more than a month. And, it will build your credit as lenders will view you as a consistent payor, always good in the banks eyes.

The post I have to pay a deposit on everything: What can I do to improve my credit? appeared first on Consumer Credit News.

Secured loans with negative equity

An example of a secured loan would be a title loan. Title loans use your automobile title as collateral. In case you don’t repay the initial loan amount the lender will take ownership of your vehicle. This is known as repossession.

Real estate property that is valued below the current amount owed is also considered to be a negative equity loan. Negative equity essentially refers to any asset which is valued at below the amount owed on said asset. You can have a negative equity loan with pretty much any physical asset if the value has decreased over time.

So, how is it affecting my credit?

Having an outstanding negative equity loan doesn’t necessarily directly affect your credit score, however you want to clear up any issues as soon as possible. You may have heard the phrase “upside-down” mentioned before in relation to auto loans. This is another term for negative equity. Having an upside-down loan can happen to anyone if you aren’t paying attention. Automobiles are the most common asset that people have negative equity on. This is because cars depreciate in value quite quickly.

Negative equity in real estate

For real estate owners, a significant drop in property value or market rates can seriously impact the value of your property. This leads to the initial loan becoming a negative equity loan. The really tough part to deal with when it comes to negative equity is that you don’t really have many options for resolving the situation besides simply paying it off. You can also wait for the asset value to increase however this very rarely happens in a sufficient amount of time that would provide any immediate benefit to you.

if you have an upside-down loan, it can affect the interest rate at which you pay the current loan amount. This puts the lender at a larger risk for losing money if you default, which leads to increases in interest rates over time. While your credit won’t be directly impacted by this situation, it can certainly become affected if the negative equity loan defaults or goes into collections.

Having a negative equity loan on your credit history can also affect how potential lenders will process your applications in the future. Seeing that you have a history of upside-down loans, many lending companies will charge you more interest upfront so it’s wise to always stay on top of the status of your loan.

Many people have negative equity loans

Negative equity is never a good thing to have. This is due to the possibility of loan inflation, credit denial, increased interest rates and a wide range of other potential hazards. The best way to avoid a negative equity loan is by contacting the initial lender to see if they offer refinancing options. By refinancing your initial loan, you’ll receive a new estimated value for the asset in question based on current market conditions and its value.

Refinancing your loan is basically like getting a new loan at current market value instead of being stuck paying the amount you were originally financed for. Banks, loan companies, mortgage lenders, and more offer refinancing services so if you suspect or know that you’re in a negative equity loan situation, you may want to consider contacting them to see what options are available to you.

The post What is negative equity? How does it affect my credit and buying power? appeared first on Consumer Credit News.

If you are planning to buy a home but your income leaves something to be desired, don’t despair. There are certain ways you can still own a home, though they’re not as straightforward and conventional as a traditional mortgage. Rent to own, which is also known as lease to own, permits you to rent a residence with a choice to buy the home within a defined period. A share of your monthly rental costs will go toward a down payment.

In short, Rent to own is a legally documented transaction with which a tangible property, such as consumer electronics, furniture or home appliances, is rented in exchange for a monthly payment. Along with your monthly payment and agreed upon terms, you have the option of purchasing at some point during the contract.

Tip: Renting to own provides you extra time to work on your credit score which results in increasing funds used for a down payment. This also permits you to use the property/product before deciding if you actually want to own it.
Understanding Lease Option vs. Lease Purchase

While making a rent-to-own agreement, there are two available choices: a Lease Option or a Lease Purchase agreement. A lease option provides the renter the choice of whether to buy the property/product, or not. A lease purchase agreement requires the renter to purchase the property/product at the end of the lease term.

Note: Make sure you understand all aspects of the agreement before signing any paperwork.

How it works:

The details of rent-to-own depend on the renter lease agreement. This agreement should state the final purchase price of the property/product. But be cautious, the agreement may also state that the price can increase each year.

In a nutshell, a renter pays a set monthly price for a product or property. A portion of that monthly payment is going towards a final purchase price, or a down payment for very large purchases. Once your payments are complete, or if you choose to payoff earlier, you will own the product you’ve been paying on.

Most agreements contain a condition that the renter may buy the property/product at any point during the lease. Often times consumers choose to rent-to-own because they’re not in a stable position. This type of lease can help you when there’s items you need, but don’t have a lump sum to spend. If your situation changes during this time, such as getting a pay raise or a better job, you can always choose to purchase.

Let’s understand it with an example:

n this example we’ll look at at rent to own housing situation. This is very common these days, especially with younger generations who aren’t making as big of purchases as previous ones.

Suppose, a monthly payment of $2,000 may designate that $300 of the money goes to your down payment. At the end of a two-year lease, you should have $7,200 in money directed to a down payment. The $300 monthly payment, which is also known as the rent premium, is placed into an escrow account by the owner.

Does “Rent-to-own” have any effect on consumer credit?

You can purchase TVs, furniture, cars and even houses by rent to own agreement. As with a mortgage or payday loan, you usually make a monthly payment for a fixed period of time. Still, while timely mortgage payments may aid your credit, your rent-to-own expenses typically have no effect on your credit score at all. If a rent-to-own contract does appear on your credit report, it’s typically going to hurt instead of helping your scores.

To make it simple, a rent-to-own organization isn’t a lender, so they don’t report your good payments to credit. This means you’re not accruing good credit for on time or early payments. But rest assured, if you stop paying and face repossession, lawsuits, or other legal actions, this could show up on your credit.

Considerations

Any kind of rent-to-own agreement could make its way onto your credit report only if you end up breaking the lease. After breaking a lease, you could end up going to court. Credit bureaus frequently check court records for decisions and that information can be added to your report.

The post What is rent to own, and does it affect my credit? appeared first on Consumer Credit News.

You know the story: You visit a store, find exactly what you’re looking for, and immediately sign up for a store credit card. Later you find out that agreement came with a snag: an astronomical interest rate. Most of the retailer stores offering credit cards will cost you an interest rate from 15-23 percent, or more. A lower credit score often causes even higher interest rates, which are on top of annual fees.

Millions of Americans are adversely affected by bad credit. In fact, more than 42 million Americans have a credit score of 598 or less. The number grows even higher with time. It’s difficult to secure traditional financing with poor credit conditions. This is problematic for consumers who need a new HVAC system, kitchen appliances, vehicle loan… the list goes on.

No credit needed loans to the rescue?

The Good News (or perhaps bad news) is that some creditors offer No Credit Needed financing. No Credit Needed (NCN) is being promoted virtually everywhere these days. This kind of messaging is being targeted at consumers who have poor or no credit at all. Though, as a consumer, you have a choice to make.

Obviously, the ideal scenario is to avoid no credit needed everything. If you find yourself in the position of needing one of these lines of credit, there’s a smart way to do it. You have to decide which No Credit Needed offer is best for you and even more importantly, which choice is best for your credit and repayment ability. These decisions shouldn’t be taken lightly.

Applicant’s Qualifications for NCN?

It’s easy to get No credit needed financing in terms of payday loans, auto loans, or high-interest credit cards. There are few qualifications needed for such financing as compared to typical standards for a traditional loan.

• The applicant must be 18 years old in order to use this service
• An active checking account of the applicant is also a must.
• The account must have been open for at least 60 days.
• The income verification is also important and needed. The applicant needs to prove that he earns $1200 or more per month.

This relatively easy checklist makes obtaining these lines of credit pretty simple. But, they come at a price. The extremely high interest rates of these loans will likely double the original cost of the goods. They will also take exponentially longer to pay off due to the sky-high interest rate.

Does Your Credit History Impact the Lender’s Decision?

One of the best advantages of NCN is that credit history is not needed. This eradicates many steps involved in the application of a traditional loan. These loans are based on the factors mentioned above. Specifically, if you can prove your income and provide a valid bank account for payments to be auto-drafted from. These lenders are basing their decision on your assumed ability to repay, rather than your credit score.

The only real advantage here is that you can obtain credit without a standard inquiry on your credit report. Not nearly enough reason to sign one, but a positive if necessary.

Advantages of No Credit Needed Financing

We’ve talked a lot about the potential negatives of these loans, but there are some benefits. Specifically to those in a pinch, or beginners with good money management skills. Obviously, if you suffer from a bad credit score, this may be one of your only options.

The first and foremost advantage is that the credit report/check is waived. There are a number of other benefits such as:

• For beginners, the process is much faster, and approval is easier as compared to a traditional loan.
• The average time in filling an application for this type of credit is 20 minutes.
• You don’t need surety to get approved for the loan. It means that there is no need to risk the title or your home or car in order to get approval.

How to Find no credit needed loans?

This is not a kind of loan you get from the bank. Also, while in the past many box retailers offered no credit financing, most have switched to offering their own credit card.

Nowadays, it is easy to find No-Credit-Needed loans on the internet. There are many creditors that deliver no credit required loans for payday and auto loans.
This sounds too good to be true

The payday NCN loans can be both good and bad for the borrower. The main point is to manage these types of immediately approved loans. As a consumer, you should do your homework and use these tips when choosing the right company.

When do I need one and how do I choose?

As a borrower, you should follow these rules before signing:

• Use these loans only in emergencies. These include house repairs, car repairs, or accident, etc.
• Make sure that the lending company has a business permit to work in your area.
• Always choose lenders with a good track record or reviews.
• Use the internet to research the company, see what other consumers are saying.
• Similarly, make sure that you have a handsome running income that can refund the loan within the timeframe allotted.

Will a no credit needed loan affect my credit?

While this type of loan may not require a credit check to receive, it can certainly have an adverse effect on your credit. You’ve accepted the loan terms, signed the paperwork and have your money. The time comes to make the steep repayment conditions, and finances are short. If payments aren’t made, this debt can be sent to collections which appears on your credit report.

So, yes, it can. If you have good money management skills and are able to repay these loans quickly, you’ll likely be okay. Our best advice is to avoid this type of situation if possible. But, when it’s necessary, research your offers and choose the one that benefits you the most. And, as always, pay your bills on time 🙂

The post What does No Credit Needed really mean? appeared first on Consumer Credit News.

Many Americans are asking questions like, what is a good credit score or how to rebuild a credit score? Chances are if you’re asking these questions, your credit score could use some work.

According to Lexington Law; 12% of the U.S. population has a credit score below 550. This group of people will face a lot of restrictions on what they can do financially. This guide is meant to help you understand how your credit score affects your purchasing power. We’ll also cover the advantages of good credit, and the drawbacks of a bad one.

How Your Buying Power is determined by Credit Score.

Your credit score summarizes your whole financial history in numbers, with an algorithm used to calculate your score. This calculation factors in things like your debts, payment history, credit history, credit types and loan applications.

With a low credit score your buying power is reduced as a creditor can’t confidently extend you credit. This is especially the case if you’re looking to buy a home, which has the most rigid credit requirements. And, you’ll likely be paying higher interest rates on credit you can get approved for. This can result in thousands of dollars of loss throughout your lifetime, all because of a poor credit score.

Furthermore, there are some things other than loans that your bad credit score can impact. For instance, the cellular phone company first looks at your credit score before considering your one or two years of the contract.

Benefits of a Good Credit Score:

So if you’re wondering what is a good credit score? Well, a score over 700 is considered a good score, and a score over 800 is considered excellent. If you’re one of the lucky ones to be in this range with your score, you’re likely able to enjoy these benefits:

Better Chances of Approval: You can easily get approval on a new credit card or a loan.

Get More Negotiating Power: A good credit score will enable you to negotiate a lower rate of interest on a new loan or a credit card.

Higher Limits: You can get approval for higher borrowing capacity if you have good credit.

Approval for Rental Properties: More and more landlords are checking credit scores to screen potential tenants. Having a good score means more chances of getting approved.

Auto Insurance Rates: Another perk of having a good score is to get better rates on your car insurance.
No Security Deposit: With a good score, you can also avoid security deposits on cell phone contracts or utility services.

Disadvantages of a Bad Credit Score:

If you have bad credit, you’re more than likely going to face some struggles with finances. Obviously, you also won’t be enjoying the benefits outlined above. But, besides the aforementioned ones, here are a few more things you may not be able to do:

Business Franchise: You will not be able to get financing for an established franchise like Baskin Robbins or Subway with bad credit.

Cosmetics Surgery Financing: Not covered by insurance, which means you will either have to pay from your pocket or get ridiculously high rates due to bad credit. Or, they can also deny doing the surgery.

Dental Care Financing: Also not covered by insurance in case of major dental work which means you will not be able to get a loan for it due to bad credit.

Jewelry Financing: Jewelers sometimes allow the customers to pay for a piece of jewelry on installments. But a bad FICO score won’t let you have it either.

Some Jobs: The government jobs especially check your credit when doing background research and bad credit may only make your chances slim.

Marriage: When you marry, your debt and your partner’s debt become one, which means your bad credit will reflect on their finances too. This may discourage them from taking the plunge.

Higher Insurance Premiums: Besides auto insurance, you may also get higher rates for other insurances including homeowner’s insurance.

Clearly the benefits of a good credit score make life easier. Even if you have a bad score now, it’s a good idea to start thinking about how to rebuild your credit score. Make sure to spend less, save more and pay your bills on time. This is the simplest formula for slow but steady credit growth.

The post How Does My Credit Score Affect New Purchases? appeared first on Consumer Credit News.

It can be tough to get approval for loans or credit cards for someone who doesn’t have a good credit history. However, businesses still approve such applicants if  someone with good credit agrees to co-sign for them. If your loved ones ask you to co-sign and you agree to help, they will get most of the benefits. You, however, may face lawsuits, broken relationship, and burned up savings.

Now, we’re by no means advising you to leave a close friend or family member in a lurch if you have the means to help. I’ve personally co-signed a loan for a family member in dire need of help. In my case, the family member made their payments on time and no negative impact occurred for me. In fact, they raised their score enough to refinance the vehicle into their own name just a couple years after purchasing.

With that success story in mind, it’s not often the norm. More times than not, co-signing ends with someones credit in shambles, or worse, the co-signer is left with a huge debt that they are legally bound to repay. This guide will tell you a few reasons not to co-sign a loan, and how it can truly affect credit:

Well, should I co-sign? Here’s some things to think about.

You Can Get Sued:

If you are co-signing a loan, then you should remember that instead of suing the borrower, the lender can sue you. Granted, you didn’t take the money for yourself, but by co-signing you extended your good credit to someone else. So if you co-sign and the borrower is not making the payment, you might end up paying hefty fees coming out of a lawsuit.

You Will Be Responsible For Payments:

When you are co-signing a loan, you are accepting the responsibility for making the payments if the borrower defaults. So if the payments are delayed, the 3rd party collector will come to you for collection. Now you may go to your loved one to tell them to make the payments, but, if they fail to do so, you will end up stuck with the bill. It’s rare this extra bill fits into our already tight monthly budgets, thus causing further debt for the co-signer.

May Affect Your Relationship:

It is not just your credit or your finances that would suffer, your relationship with the borrower (who is definitely someone close as you have co-signed for them) will also be damaged. If the borrower is not making the payments, what would you do? Will you sit back and handle the lawsuit filed by the lender or make the payments by yourself? You could of course confront the borrower, or worse yet, sue them for not making the payments, and that’s a sticky situation when it comes to personal or family relationships.

The Co-Sign Credit Card Problem:

By co-signing you are also increasing your debt to income ratio which simply means an addition to your existing debt(s). Because of this, you may fall victim to what we call the ‘co-sign credit card problem’. This simply means that by increasing your debt, you may not be able to get approval for credit cards or loans. This is because lenders and creditors first look at your debt to income ratio and then decide if you are worthy of a loan or a credit card. So this means by co-signing, you may find yourself unable to enjoy the benefits of your own good credit, as your debt to income has risen to help the co-applicant.

Does Cosigning Affect Credit?

Yes! It does, and in a positive way if paid on time. Remember, both parties are now showing a new loan on your credit reports. BUT, since you are qualified for co-signing, your credit may not need much help anyway. And on the other hand, co-signing for someone is a much bigger risk to take than getting a few points of increase in your credit score. So the answer to ‘does cosigning affect credit’ is obviously yes but at a risk of increasing your debt, facing co-sign credit card problem, and getting a lawsuit if the borrower defaults.

Over to You:

If you are still thinking of co-signing for a friend or family member, it is suggested that you keep aside the monthly payments of the borrowed amount for 12 months. This way, if the borrower defaults, you will be able to make the payments without getting burdened financially.

It’s very difficult to see a family member or friend in need and not feel compelled to help in any way you can. But, it’s also important to think about your own future, and the potential negative impact this decision can cause. It’s always recommended to explore other options with your co-applicant before signing your name on the dotted line.

The post Should You Ever Co-Sign on a Loan? appeared first on Consumer Credit News.

According to The Balance; the average credit card debt of a U.S household in December 2018 was $8,187 which means a total of $1.045 trillion. This clearly depicts how common and serious a problem credit card debt is, especially when it comes to having financial freedom. With an outstanding debt, you are not as free to make financial decisions as a significant chunk of your income goes to paying existing debts. So if you want to know the most common debt causing factors, have a look at the list below:

Medical Expenses:

The fees of doctors alone can be pretty hefty. Then, you need to purchase costly medicines that further the cost. But, the more significant debt causing problem occurs when someone goes through a major procedure like surgery. Often, the full costs of these procedures are not be covered by your insurance, forcing many consumer to use credit cards.

Overspending:

The most common cause of debt is overspending, or spending money on things you might not even need (impulse buying). You may not notice that you are recklessly spending money when you are leveraging the benefits of a credit card, but when one day you look at your finances, you notice the massive debt accumulated over time.

Inflation:

The cost of living rises every year on things like housing, gas, food and so on. This one may not directly be your own fault, but if you track your expenses, you will not fall victim to the debt due to inflation.

Employment Loss:

Another very common reason that makes one fall into the pit of debt pretty quickly. If your unemployment duration is long enough, you will burn all your savings and will rely on your credit card for daily expenses. This is an all too common scenario in the US currently.

No Debt Management:

Some people just refuse to look at their accumulating credit card debt, and instead keep on spending. Eventually, their credit card sticks out its tongue saying “you have reached your card limit.” Don’t stick your head in the sand like an ostrich; work on your debt management.

Keeping up with the Joneses:

This is the problem of every other individual who seeks appreciation from society. They will buy houses, cars, jewelry or other expensive things just to maintain a ‘standard’ in society, not realizing they are going deeper into debt.

College Expenses:

According to Student Loan Hero; there is a total of $1.56 trillion student loan debt in the U.S. This stat says a lot about the commonness of student loan debt. Granted, the study is crucial for your career, but if you work on debt management from day one of college, you might get out on time and spend your life debt free… might.

Lack of Financial Literacy:

People who simply do not have any financial education or experience in making good financial decisions may end up solely relying on their credit cards. They may make bad investments and ultimately find themselves under the heavy rock of debt.

Expanding the Family:

Many couples who are struggling financially decide to expand their family. And when they do, they realize that the hospital expenses of childbirth, daily expenses of the child and daycare can cost a lot in the long run. This also results in increasing debt and a credit card seems like an easy way to handle it.

No Insurance:

Another major cause of debt is not having insurance, especially health insurance. Many people struggle financially when an emergency happens, and if there is no insurance in place, they might have to use their credit cards.

So these are the most common and overlooked reasons for debt that result in people taking more credit card help instead of working on debt management. If you are also struggling with debt, a good debt management company might help you get out quickly.

The post 10 Causes of Credit Card Debt appeared first on Consumer Credit News.