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Credit Scoring

Why is it Important to Have a Solid Credit History?

It is incredibly important for you to have a credit history for a number of reasons. Just having a credit history (even if it’s not great) can work in your favour. You should, however make an effort to improve your record and score as much as possible. The more positive items and fewer negative ones that are on your credit history, the better off you will be. This is something that everyone should take into consideration, even young people who are just starting out in the adult world.

What is Your Credit History?

You will first want to know what exactly your credit history is. Even a lot of older adults aren’t clear on exactly what this means. Your credit file is made up of personal information like your full name and date of birth. It also has a complete record of all bankruptcies, missed payments, defaults, and court judgments. All of these things can have a negative impact on your credit score. So your credit history is basically a complete record of all your financial missteps. The longer your credit history is, the more likely you are to get that loan you want. A long credit history with a few negative marks is better than a very short credit history with few negative marks.

Getting a Loan

One of the main reasons that your credit history matters so much is that it can seriously impact your ability to get financing for a new car or house. If you need to get a loan of any kind, it is very likely that the lender will run a credit check. The less negative your credit history is, the more likely you are to get approved. Lenders will also look at your credit score, which is basically a number that represents the overall health of your credit report. Maintaining a good credit history will put you in a favourable position with lenders.

Credit Cards

If you want to get a credit card, the company will look at your current credit history before deciding whether or not to issue you one. It will also determine what your interest rate is going to be like. Those who have a good-looking credit history usually get lower rates. While it is possible to get a credit card with bad credit, it can be difficult. You will also most likely have a very low limit to start off. The better your credit gets, the higher your limit will be. Just focus on making your payments on time and keeping your balance clear.

Finding Employment

These days a lot of employers take a close look at applicants’ credit history before deciding whether or not to hire them. While this is probably not the only factor they consider, it could be one. This is usually the case with more serious jobs that you get with a college degree. It is, however, still something you should keep in mind.

Landlords

If you are looking to move into a new flat, your potential landlords will most likely run a credit check to see if you are a reliable person to rent to. Those who don’t have a very solid credit history could have major problems with getting into a decent place. You will probably be able to find a flat to live in, but it might not be a very good one. A good credit score can make all the difference when it comes to getting into a nice place that is safe, clean and matches all of your needs.

How to Improve Your Credit

Now that we have established why your credit matters so much, you will need to start doing everything you can to improve it.

Some of the best ways to raise your credit score include:

  • Make payments on time: Always ensure that you pay your bills on time. Whether it is your rent or a credit card, you don’t want to be late on your payments. Each late payment will go on your credit report and work against you.
  • Get a credit card: If you are able to acquire a credit card, it can really help you improve your credit. Those who manage to keep making payments on their card before the due date will have a much better-looking credit history.
  • Change your spending habits: If you have bad spending habits that have gotten you into trouble in the past, it’s time to start making some changes. Establish a budget for yourself and learn how to live by it.

Always Check Your Credit History

Make sure that you take the time to check your credit history by getting a copy of your credit report from the three major credit bureaus. This way you can spot any errors and track your progress as you try to raise your score.

Breakdown Cover

How to Save Money on Breakdown Cover

While it’s true that breakdown cover policies usually aren’t very expensive, there are always ways to save a little extra. This type of policy can really help you out if your car breaks down while on you are on the road. Whether you need a jump start or help changing a flat tyre, these services can be a real life saver in a number of situations.

Choosing the Right Breakdown Cover

The most effective way to save money on breakdown cover is to compare breakdown cover options and then choose a policy that matches your needs. The last thing you want to do is to pay more than you have to for an unnecessarily comprehensive policy. Take the time to think about what your personal requirements are for this type of cover.

If your car is older and more likely to break down, you should choose a policy that allows for quite a few callouts per year. Those who have a newer car can save some money by choosing a provider with a lower maximum number of annual callouts. If you only drive locally, you can get a policy that only allows for towing to local garages. It is significantly more expensive to get breakdown cover for towing to anywhere in the UK.

Number of Drivers

Breakdown cover can apply to an individual, a certain car, or multiple drivers. You will find that personal breakdown cover can be quite pricey because you can take advantage of it with any vehicle you drive. If there is just one particular car you drive, you should opt for a policy that is vehicle-specific. A multi-vehicle policy can sometimes be cheaper than personal breakdown cover, so you will need to keep that in mind as well. Those who have an entire family to cover should try to get a family policy.

Consider a Pay and Claim Policy

Sometimes a pay and claim policy is a better option than just regular breakdown cover. You will be required to pay the provider a fee each year. These providers subcontract the work out to local businesses for handling breakdowns. You will need to pay for the service upfront, but your provider will reimburse you after you file a claim. This is a bit more complicated, but it can be cheaper for some people. This is an option that you should at least look into before making a decision.

Shop Around

One of the best ways to get the breakdown cover you need while keeping extra money in your wallet is by shopping around. Take the time to get quotes from numerous providers before choosing one in particular. The more time you spend doing this research, the better your chances will be of getting what you need at the right price. You should compare at least a few different providers before deciding which one to go with. When you are comparing these companies, make sure each one offers the same cover options.

Go with a Smaller Provider

Some of the smaller breakdown cover providers offer better deals than the bigger companies. A lot of people feel more comfortable with the more well-known companies, but they don’t always provide the best service or offer the lowest prices. There is of course some risk involved in doing this, but it could be worth it if you save enough money. Just make sure that you take the time to research the smaller providers so you can find the right one to match your needs.

Does Your Car Insurance Policy Offer Breakdown Cover?

If you have a comprehensive car insurance policy, there is a good chance that you will also have breakdown cover. Take a close look at your current policy to see what exactly it covers before doing any more research. Insurance policies that include breakdown cover usually cost more, so you should check prices for it with and without it.

Get Your Breakdown Cover Through a Bank

There are quite a few banks that offer breakdown cover when you sign up for a certain type of account. Take some time to look into these deals so you can find out how much money you will be able to save. It might even be worth closing out your current bank account and moving to another bank if you find a good enough deal.

Don’t Opt for Any of the Extras

When you are looking into breakdown cover, you’ll find that there are lots of extras you can pay for. Some of these things include key cover or repair cover. While it’s true that these can be good things to have on your policy, they will cost you. These aren’t essential components of a breakdown cover policy, so you really don’t need them at all. Don’t let anyone try to sell you the extras, especially if you are on a tight budget.

Mortgages

Where to get the Best Mortgage

Choosing the right mortgage is really important. The cost differences between some mortgages are really significant and so choosing one that will keep the cost low for you in the long term could make a huge difference. There are also different types of mortgage and which of these you choose will make a huge difference as well.

The problem with lenders is that they vary their terms, products and rates over time. This means that you cannot know for sure which will be the best. There is not one that always offers the best products but also different borrowers have different needs and so it all depends what you want out of a mortgage. You can really only compare the lenders at the time that you need to borrow and hope that you pick the one that has the best deal. However, you can change lenders part of the way through your mortgage term in most cases, although there will be costs associated with this.

It is therefore wise to start by considering what is most important to you from your lender. You may think that the cost is the only thing that matters. Although this will be a big factor, as no one wants to pay more than they have to and many people cannot afford to pay that much, there are other things you need to consider. You need to think about whether they offer the type of mortgage that you want, how flexible they are if you need to miss a payment, how good the customer service is and whether they have a local branch. Some of these things may not be important to you, but it is worth thinking about what might be.

Even if you have had a mortgage before it is worth doing some research to find out more about what is available. The marketplace does change, for example ten years ago interest only mortgages were common but these days most lenders will not offer them as they are concerned that the home buyers will not put enough money by to pay off the balance when it is due. There has also been a tendency to move away from tracker mortgages as the interest rates are so low.

With there being so much choice it can be confusing. Some people would rather pay for an independent financial advisor to help them. The advisors will know all about what is currently available as well as what lenders have offered in the past and help to explain what would be best. Sometimes they even have access to deals which are not available to the public. They can be expensive but if they can save you a significant amount of money or find you the precise mortgage that suits your needs then it could be worth it.

You may choose to do that research yourself, maybe because you would rather be in control of your choice or because you cannot afford to pay a financial advisor. Make sure that if you do this, you take a lot of time and make sure that you have a full understanding of what is being offered. If you choose to use comparison websites it is important to make sure that you are aware that they do not compare prices from all lenders. They will usually only list those which pay them a good commission if you sign up through the link on their comparison website. Not all comparison sites work like this so it is worth comparing them and using one that you trust. Not all companies are listed on comparison websites either, so you need to keep this in mind and do your research beyond thesesites if you want an idea of what is available across the whole mortgage market.

Overall it is worth bearing in mind that a mortgage can be a long term commitment and it is important to spend time understanding about the different types available and what you need out of a mortgage. Compare the different lenders and consider which will suit your needs the best. Decide whether you think paying a financial advisor will help you to save money and find a product better suited to you or whether you can take the time yourself looking at what is available, looking at comparison websites and lenders websites to get an idea of what is available.

Lending

What is Peer to Peer Lending?

Peer to peer lending is quite a new lending process and this means that many people have not heard of it. Some may just know the name but not have much idea of what it means. Others may be worried that because it is not something they know well, they would not want to try it. However, it is worth knowing more about what it is so that you can decide whether you should really ignore it.

A peer-to-peer lending company will bring together lenders and borrowers without using a bank and therefore cutting out the middleman. Savers will often be happy to tie their money up for a while and be willing to do this if they can get a good return. This money is then used to lend to those who need money. The company will do a credit cheque on those who want to borrow money and assess their risk. The cost of the loan will often be determined by the risk level as lenders will only be prepared to take risk if they have the chance of getting a good return on the money that they are lending.

There are different companies that run peer to peer lending schemes and they do things differently. This means that there is no exact way to explain how it works. The details will all be different and the interest rate that you pay will also vary. It can be worth comparing them to other lenders though, find out if they will lend to people like you and compare the rate to other lenders and see whether you think that it is worthwhile. It is really important to find out exactly how it works, how much it will cost and what might happen if you do not make a repayment.

Interest rates can often be lower if you have a good credit rating. It could be worth checking your credit record before applying or any type of loan to make sure that it is correct as you will struggle if you have a bad credit rating. Sometimes. If you do have a bad credit rating, it could be due to incorrect statements on your credit report so it is worth checking. You may also be able to make a few changes, perhaps by paying off a debt or registering to vote, which could make a difference to your rating. Someone with a poor credit rating could end up paying more in interest than other lenders. So again it will be worth checking that credit report.

Another advantage with some lenders is that there is no minimum loan amount. Many lenders will only lend you specific sums of money and the lowest amount that they are willing to lend could be a lot more than you need. This means that you will take on more debt than necessary and you will end up paying for money that you do not need.

One problem with this type of loan is that you will have to pay a fee to the company for setting up the loan request. If no one agrees to lend you money you will still have to pay the fee. Alternatively, you could try Omacl.co.uk. You may be able to raise some of the money, all of it or none of it and you will not know until you apply. There will be different protections in place than with traditional lenders and so you need to find out what these are so that you know exactly where you stand.
If you cannot make a loan repayment then the company may pass you to a debt collection agency who will chase the money on their behalf. If you still cannot pay it may go to court. By missing a payment you will have an entry on your credit report, just like other loans which will reduce your credit rating.

If you are considering borrowing some money then this could be an option for you. It is worth doing your own research and find out specifically about the main companies in the market, what their rates are, how they work and what their charges are. It is important to be confident that you know as much as you need to know about them and the way that they work before you borrow from them.

Credit Cards

How to find the best Credit Card Interest Rate

Credit cards can be extremely useful. Many people like to use them for online purchases, for example as they often have insurance which can protect you if goods do not arrive or are faulty. People also use them so that they do not have to pay for goods immediately after they have purchased them. They can be a good item to fall back on if you are short of money.

However, credit cards do have charges. Each month you will get a bill which will give you a selection of repayment options. You can pay back the minimum amount which will usually be just the interest or a very small amount. This is usually very affordable and some people will take this option. However, if you do this, then you will be charged interest on the outstanding balance. You could pay back more than the minimum balance, but unless you pay off the whole bill, you will still have to pay some interest. If you do choose to pay off less and be charged interest, then you will need to look for a credit card which has an interest rate that is as low as possible.

There are some credit cards which have a zero interest rate. These are very useful, because you get a chance to pay back the outstanding balance without interest being added. Therefore it will not go up unless you actually spend on the card. The disadvantage with this sort of card is that the zero interest does not last for long. You may find it only lasts a few months and probably a year maximum. Once this happens it will move onto a variable rate and this could be a lot dearer than other cards out there. You could transfer to other cards, but there is often a fee for doing this and so you may lose the advantage you had over other cards which have no interest free period.

Most credit cards have a variable rate and so you can only compare which will be the cheapest at a certain time. As time goes on rates will change and the card that is the cheapest will change as well. However, unless you think switching cards will save you money, it is best to find a card that is likely to stay at a competitive rate. This could be pretty tricky to find, but you could find information which will show you the average rates of credit cards from certain financial institutions.

However, if you go with well-known lenders you may expect that the rates will stay competitive. However, because the well-known brands have plenty of customers based on their reputation, they do not necessarily need to compete with having good rates.

You can use a comparison website to compare the rates of some current lenders. This will give you a snapshot idea of who is charging what and you will be able to compare them. It is worth being careful though as not all lenders will be listed on these sites and not all sites will compare the same lenders. You may also find that some comparison websites will only list the lenders that give them the highest commission and therefore there could be a lot of cheaper lenders out there that you will not see the rates of.

Using a financial advisor could be a better idea. They have a lot of knowledge of the market and they may even have access to deals which you may not. They will be able to not only tell you where the best rates are at the moment but also who is likely to stay at a good rate into the future as well. You will have to pay for financial advice if you want to use an independent advisor but if they can find you a really good rate you could save a lot of money and therefore it could be well worth the investment. If you cannot afford to do this or are not sure that it will offer good value for money, you could always get free financial advice from branches of banks and building societies but they will only be able to tell you about their own products. It could give you a better idea of what they have available though.