Tips on how to improve your credit score

If you have a bad credit score, don't worry, you're not the only one. Thousands of Americans have bad credit scores and have a hard time getting approved for conventional loans. Read more: Tips on how to improve your credit score

Tips on how to improve your credit score

If you have a bad credit score, don’t worry, you’re not the only one. Thousands of Americans have bad credit scores and have a hard time getting approved for conventional loans.

While it’s a struggle to fix your credit score again, it’s not impossible. There are several things you can do to improve it.

Depending on what created your bad credit score, you can get as much as 100 points in a short time. It happens when you’re in the poor or fair areas of credit score ranges. However, is it possible to improve your score by 100 points? Yes. It’s true if you position yourself to make gains as quickly as possible.

So how would you do that? Here are two things you can do.

Paying Off Credit Card Debt

When consumers pay off their debts, they decrease their credit utilization rate. Your credit utilization ratio is calculated by comparing your used and available credit. If it’s more than 30%, it’ll negatively affect your credit score. However, if you pay off your credit card debt on time, the percentage will be lower.

For example, let’s say that Jane and John both have credit card balances of $2000, and both of their available credits are $5000. It means they both have a credit utilization of 40%.

Now, let’s say that they both get stimulus checks worth $1,200 each. Jane wants to put all of this to pay her balance, while John only wants to put $600 in his balance. It would decrease Jane’s credit utilization rate to 16%, while John would have 28%.

The lower your credit utilization rate is, the better your credit score will be. As a cardholder, you should aim to lower your credit utilization rate on all of your cards if you want to have a stellar credit score. Experts recommend that you should have less than a 30% credit utilization rate on all of your credit card accounts.

John’s credit utilization rate would only be below 30% in the above-given scenario, while Jane’s will be under 20%. This example is quite vague since your credit score is not only based on your credit utilization rate.

Your credit score also gets affected by different loan accounts, like personal or bad credit loans. Having a diverse profile also positively affects your credit score. However, you should maintain a credit utilization rate below 30% on all accounts to have a good credit score.

Your credit utilization rate makes up 30% of your overall credit score, so it should be in your best interest to pay off your credit card debt.

Be an Authorized Credit Card User

Being an authorized credit card user is very helpful while building your credit score. If the primary cardholder has a history of paying debts and monthly payments on time, it would also reflect in your credit score as an authorized user.

However, not all credit issuers report authorized user accounts to credit bureaus. So before you become an authorized user, you should check if the credit issuer of the primary cardholder reports authorized users.

Credit scoring models differ in how they weigh authorized users. In other words, the influence primary users have on their authorized users is based on different factors.

For someone just building their credit, the primary holder’s performance on paying back their debts and accounts will hugely impact the authorized user. It’s because credit bureaus will primarily base the authorized users’ credit history on the credit history of primary holders.

However, the difference won’t be much for someone who’s piggybacking on the primary holder to improve their established credit score since they already have a significant credit history.

Being an authorized user also has its risks. The primary holder’s negative performance will also reflect on your credit score, whether you’re just starting to build or looking to improve your credit score.

However, it mainly depends on the credit bureaus. For example, some credit scoring agencies include the adverse payment history of the primary holders when calculating the authorized user’s credit history, while some don’t. But even if that’s the case, a high credit utilization ratio on the primary holder will reflect on all authorized users. So before you ask to become an authorized user, check if the primary holder’s account has less than a 30% credit utilization ratio.


Improving your credit score isn’t easy. Although there are many things you can do to improve it, it still boils down to paying off your balance and ensuring that you don’t miss any payments. The tips mentioned above are just to put you on the right track, and it’s up to maintain that track.

Read more:
Tips on how to improve your credit score

Source : Business Matters More   

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Pros and cons of personal loans

The life of modern people cannot be imagined without additional costs. The World Wide Web has become so commonplace that now it is even possible to obtain borrowed funds without leaving home. Read more: Pros and cons of personal loans

Pros and cons of personal loans

The life of modern people cannot be imagined without additional costs. The World Wide Web has become so commonplace that now it is even possible to obtain borrowed funds without leaving home.

This allows you to solve many issues if suddenly you do not have the necessary amount of money on hand, and there is no one to borrow from, or you don’t want to do it at all. Various types of loans including personal loans always come to the rescue. Today we will talk specifically about the advantages and disadvantages of personal loans.

The personal ones owe their demand to the fact that they have many advantages. They play an important role in the frantic pace of life of a modern person.

Personal Loan Advantages

  • the speed of processing an application for receiving funds: it takes from 5 up to 15 minutes, less often up to half an hour;
  • the decision comes either in the form of an SMS, or it can be a call from a bank or a microfinance organization offering a personal loan;
  • the minimum required package of documents: as a rule, it is a passport. Sometimes they ask to write a number or take a photo of a bank card;
  • no need to go to the office of a banking institution or MFO if the loan is taken online: it saves your time and you do not need to stand in lines.

Minimum requirements for potential borrowers:

  • US citizenship, age 18+;
  • Permanent residence permit;
  • Sometimes you may need a source of stable income. Still, microfinance companies are not always interested in this in order to give you a personal loan;
  • A large percentage of application approval: personal loans online are given to very many even to people with a tainted credit history;
  • Many convenient ways to get a personal loan: money transfers, bank cards, e-wallets, and sometimes a phone number.
  • Transparent and understandable terms. Only in an MFI, you will immediately know how much it will cost to get a personal loan. Nothing could be easier to think of. You enter the required amount and term on the site to see how much the overpayment will be. Even before the loan is issued, you will know the amount of all payments;
  • You can get a loan or instant cash from even with an imperfect credit history. The most common reason for refusal is information from the credit history. Many citizens in the past had problems with paying off loans and borrowings. Banks often refuse such clients. MFOs, on the contrary, know how to work with them by issuing a personal loan without any questions.
  • The ability to correct bad credit history. Another advantage of MFIs related to credit history is that small loans can be used to correct it. If you have an imperfect credit history, you will most likely not be able to get money from a bank but from an MFI. After you receive and repay several loans on time, the chances of getting a large amount from the bank will increase and this will positively affect your credit history.
  • Simple repayment scheme. For personal loans, the repayment schedule is as simple as possible: after the expiration of the term when using a personal loan, or earlier, you need to return the entire amount at one time. That is, what the client received from the MFI and the accrued interest. In verified MFIs with good lending conditions on the first personal loan, there is no such interest. The borrower returns the same amount that has been received.

It is difficult to disagree with the importance of the advantages of lending including a personal loan. However, everything has a flip side to the coin. This has not spared personal loans issued online.

Personal Loan Disadvantages

It should be said right away that the presence of shortcomings in personal loans is not so critical provided the correct and reasonable approach. Indeed, with a rational attitude, they can sometimes help a lot. For example, if there are several days left until the salary, and the stock of finances is close to zero. Another similar situation can be attributed to a sudden illness or car repair. However, if you want to apply for a personal loan, you must remember several significant disadvantages.

These include:

  • increased interest rate. In terms of benefits and overpayment, personal loans are much inferior to other types of lending. It will be much cheaper to apply for a personal loan in a bank than in micro organizations (especially if you provide a certificate of income). But this requires much more time and effort;
  • possible technical failures in the work of the sites of lending companies: sometimes it is impossible to enter your personal account or there is an error in the system when paying for a personal loan. This can also cause a lot of inconveniences when it comes to online lending;
  • hidden commissions or the imposition of unnecessary services: often in a hurry people inattentively read the contract or do not do it at all. There may well be hidden commissions in it and the final amount will be much higher than the originally declared one. This entails delays and the formation of a large amount of debt;
  • they can also impose services: most often it is some kind of insurance or improvement of credit history on a paid basis. When closing a debt, all banks and MFIs are required to send information about this to the credit bureaus free of charge.
  • small loan amount. Indeed, if you need hundreds of thousands or a million dollars, personal loans will not work for you. The essence of microfinance is to deal with urgent tasks that require small amounts of money.
  • short term. The same applies to the period for which the money is issued. Usually, it is up to 30 days, and in some cases, it can be up to 4 months.

In general, there are serious advantages and disadvantages. But it is obvious that when you weigh the pros and cons, a financially literate client can benefit from personal loans.

Making a personal loan in micro-organizations requires no less reasonable and careful approach than lending in banks. Personal loans have their pitfalls. In addition, the electronic format of the loan agreement and the code sent (received in SMS) are analogous to the usual ones. Still, they have the same legal effect.

Read more:
Pros and cons of personal loans

Source : Business Matters More   

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