The Easiest Way to Increase Your Credit Rating Before Submitting a Loan Request

It is now easier than ever to take out a loan, however, this accessibility usually only refers to how much the procedure has been simplified. You will still need a good credit rating in order to get a personal loan, especially if you are looking to borrow a large amount of money.

What most individuals are not aware of is the fact that their credit rating is an algorithm that consists of several types of information. Some of this data can be altered faster than the rest and knowing what to do in order to quickly give your credit rating a boost can make a world of difference when it comes to the cost of a loan.

This having been said, there are 4 easy ways through which you can increase the likelihood that you will get a lower interest rate and more money. Here is what you need to do:

Reducing your current credit usage can improve your score massively.

Reduce Your Current Credit Usage Ratio

One important component of your credit rating is determined by how much money you spend using your credit cards. This ratio is calculated by looking at the total amount of credit that you have at your disposal and then subtracting how much money you’ve already used.

For example, if you have a credit card with a £5000 limit on it and use it to pay for products that cost £2,500, you will have used 50% of the available credit. This results in a 50% credit usage ratio. It is important to keep in mind that a high credit usage ratio can not only increase the interest rates that you are offered by banks but may, in some cases, prevent you completely from getting a loan.

When it comes to preparing to take out a loan, it is not necessary to completely pay off your credit card debt. However, you should make sure that your ratio is under 30%.

Repay Any Outstanding Debt That You May Have

If you have money in a savings account, using it in order to repay any outstanding debts that you may have will increase your credit rating by a lot. Even if you cannot repay all of them, paying off smaller ones such as payday advances will make a big difference.

However, you must pay attention to any early repayment fees that you may be charged by lenders, especially when it comes to variable interest and quick payday loans. If the fees are too great, ask the lender about the possibility of making additional repayments each month, in order to shorten the term of the loan.

Do Not Submit a Large Number of Applications in a Short Amount of Time

Submitting a large number of loan requests to multiple lenders will reduce your credit rating. If you are interested in determining what terms and conditions each lender would offer you, it is better to use online calculators in order to establish what the interest rates and monthly instalments will be.

Consolidate Your Current Debt

One of the best ways to increase your credit rating is also one of the most useful. Your credit rating is calculated by looking at the number of loans that you are currently repaying, along with any other type of debt that you have. By consolidating that debt, you will essentially take out a larger loan that you can use to repay several other smaller ones that you have taken out in the past. In most cases, this will leave you with a single monthly payment to worry about that has one interest rate.

This also means that your credit rating will rise, considering that you will essentially remain with only one loan that you have to repay.

Cheapest Ways to Borrow Money in the UK

Borrowing money has become the salvation to many people who suffer from the current effects of a weak economy. However, when people need cash urgently, they do not run to family and friends. Instead, they use the internet to take an online loan, which is more convenient than approaching people to borrow money. Loans can be costly, but nowadays, one can have lots of options and finding a loan product that is cheaper than another is quite easy. Here are additional tips on how to find the most affordable way of borrowing money if ever the need arises.

Zero Percent Purchase Credit Card

This type of credit card offers zero-interest for all the purchases that you made using the card for 12 to 24 months. Instead of taking a loan to buy something that you cannot afford to pay in cash, you can use your 0% purchase credit card and save yourself the interest that would come with a short-term loan. To make the most of the 0% purchase credit card. Buy something the moment you have the credit card and pay for whatever you bought in a 12 to 24 months instalment plan so that you do not have to pay the interest. However, once the free interest period expires, you could expect high-interest rates on your purchases.

Transfer Money from Credit Card to Bank

You can transfer cash from your money transfer credit card instead of taking a loan, that is, if you have not yet used up the limit of your credit card. Depositing money to your bank account from your credit card is also fast and easy. You do not have to pay interest. The bank might charge a certain percentage of the amount that you transferred. Still, this is cheaper than taking a quick loan.

Personal Unsecured Loan

 If you need more than £5000, you can take a personal unsecured loan. As long as your credit score is right, you would never have any difficulties in securing this type of loan. You could expect a lower interest rate compared to borrowers that have bad credit. You might also get a manageable repayment scheme. An unsecured personal loan is also a short term loan so that you do not have to spend years to clear your debt.

Use Bank Overdraft

If you have a bank account, you could borrow money using the overdraft, which is an amount that the bank would lend you even if you have zero balance in your account. However, you cannot borrow beyond the overdraft that you have arranged with your bank. If you do, the excess amount might come with a high-interest rate.

A Loan from Your Bank

If you have been using a bank for many years, you might get a loan at a lower rate. Some banks provide privileges to their loyal customers, such as cheap loans. You may contact your bank to ask about their loan products as well as to inquire if they give preferential rates to their loyal customers. If the bank refuses, t might be best to move to another bank with more desirable and affordable loan options for existing customers.

Secured Loan

If you have a property and an excellent credit rating, you can enjoy low-interest rates when you take a secured loan. Nevertheless, you must have a stable source of income to pay back your debt and prevent the lender from seizing the property you used as security.

There are many cheap loans that you can take if you have an excellent credit rating. Knowing that you are a good payer might convince lenders to give you some favours such as low-interest rate and easy repayment plan.

The Most Flexible Type of Loan in the World

Banks are making it easier and easier to borrow money from them, however, a large number of their services are still locked away behind walls of restrictions. Whether you need a near-perfect credit rating in order to get a loan or have to have a large monthly income, the fact that not individuals can get any loan that they want is undeniable.

This having been said, what is the easiest loan to get? Incidentally, the easiest to get loan also offers the most flexibility in terms of what you can do with the money. Designated as a “Personal Loan” by lenders, this type of loan can be used for any type of personal need that you may have. The money can be used to pay for a home renovation project, for a car, to buy a laptop, a phone, and even to go on a trip abroad. Once your loan request is approved, the bank or lender is no longer concerned with what you intend to do with the money.

How Easy Is It to Get?

Getting personal loans can be more or less difficult, depending on whether you get them from a traditional lender or from an online one.

Regular lenders will not require that you have a great credit score, even if you want to take out an unsecured loan. In most cases, you will simply have to have a good relationship with the bank and have a history of always paying your debts on time. The amount of money that you will be able to borrow will depend on your income or on the collateral that you are willing to offer as part of the deal.

Most banks will give you a personal loan in a couple of days and only require that you submit proof of employment, proof of residence, and proof of income. Processing the request can take as little as 24 hours.

On the other hand, if you decide to take out a loan using an online lending service, you will be able to submit the same information online, through a website, and may receive the money in under 24 hours. It is also important to keep in mind that most platforms will not perform a credit rating check or report the loan to any credit register. The downside with these websites is that they offer higher interest rates than banks and the loans will be more expensive.

Can You Take out Secured Personal Loans?

Personal loans are generally extremely flexible when it comes to how you use the money, however, they are limited in value and term by your credit rating and income. If you want to borrow more money than what the lender is willing to give you, consider taking out a secured loan. This loan will still have the same flexibility as before, but you will have to offer collateral. This is usually in the form of your house, your car, or another piece of property that the lender considers of equal value to the loan.

Read the Terms and Conditions and Pay Attention to the Interest Rate

Where most people tend to make poor lending decisions is the interest rate. Individuals typically ask what the interest rate is, but do not ask if it is variable or fixed. Having a fixed interest rate attached to your loan means that all the monthly payments will be the same. On the other hand, if you get a variable interest rate loan, the cost of the debt will change with the interest rate, which may rise or fall from one day to another.

8 Ways to Improve Credit Score

One of the reasons that a lender rejects loan application is low credit score. But, what is a credit score and how do you get a low or high score? A credit score is a numerical value that describes the likelihood that a person would pay back what he or she owes. In the UK, one can check his or her credit score at Experian, TransUnion, and Equifax. These agencies collect credit data that they use to come up with a credit score. A low credit score shows that one may not be able to pay back credit while a high score indicates that the person would most likely pay back a loan or a credit.

Lending and financing companies refer to these agencies to see the credit score of loan or credit card applicants. Aside from quick approval, those with high credit rating can enjoy low interest rate and easy repayment scheme. However, short term lenders are not strict when it comes to credit score or rating. Nevertheless, banks and other traditional lenders are strict when it comes to meeting the credit score requirement.

If you are planning to borrow from a bank or finance company, improving your credit score is important. Here are 8 ways to give your credit rating a boost.

Register as a Voter

Why is being a registered voter important in improving your credit rating? Your registration is proof of who you are and where you live. To lenders, a real name and address is guarantee that you cannot deny your debt or run away from it. Working on the same job, employer and having the same bank account that you used during the registration would do wonders to your credit score or rating.

Close Credit Cards, Debit Cards, Mobile Contracts, and Store Cards Not In Use

Close all credit cards, store cards, debit cards, and mobile contracts that you do not use anymore. To make sure that you get rid of all this baggage, visit the office or store personally. Making a phone call or doing the task online is not an assurance that the company involved has closed your accounts. Having a clean slate regarding unused credit cards and accounts would contribute to the improvement of your credit score.

Cut off Link with Former Business Partners 

If you have had a joint bank account or a mortgage with your former spouse or business partners and you have stopped getting involved, you must inform the credit reference agencies that you are not anymore connected with the other person or persons. Taking this step is important because if you are still linked with these people, their credit rating could affect you. Their unpaid debts and financial responsibilities are also yours, and if they fail to pay them back your credit rating could also suffer.

Always Make Prompt Repayments

If you have a loan or credit card, make sure to always pay on time until it is fully paid. All your payments and your behaviour would be reflected in your credit history. Being a good payer would help improve your credit rating or score.

Use a Credit Card to Build Your Credit History

You can use a credit card to build and improve your credit history. Get a credit building credit card and use it to make small purchases. Always pay fully the balance at the end of the month. It won’t take long before you can have an excellent credit rating.

In the UK where taking a loan has become a way to get funds for an emergency or to purchase a car or a house, improving your credit score or rating is of utmost importance. Take note of the ways to improve your credit score and observe them. The next time you apply for a loan where a credit rating is part of the requirements, you would never fear rejection.

What Are the Main Money Lending Services Around and How Safe Are They?

Online lending services are relatively new, having been around for 10-15 years. Despite this fact, they have remained unpopular among borrowers, up until 2015. This is mostly due to the fact that most of the companies that have offered lending services in the past were very poorly regulated by the government. However, this has changed and they are now subjected to harsh laws that are designed to protect both borrowers, as well as the lenders themselves.

So, how safe are lending services?

Legal Safety Nets and Regulations

All online lenders that currently operate out of the United Kingdom are subjected to the same laws that banks must follow. As a result, online lending platforms are extremely safe, especially when considering that you, as a borrower can file a suit against them if they do not follow the agreement that you’ve signed.

Keep in mind that the companies behind these services are real-world registered businesses that have the same accountability as banks. Generally speaking, the only difference between traditional and online lending services is the medium through which they operate.

What Types of Online Lending Platforms Are There?

There are currently three main types of online lending services, each one designed to cater to different types of borrowers:

  • P2P Lending Platforms – These websites only act as caretakers and supervisors, overseeing the transactions between lenders and borrowers. The platforms themselves do not offer any money but put lenders in contact with individuals looking to borrow money. For example, if you need to borrow £1,000, once you create an account on the platform and enter your request, you will be placed on a list until another user, a lender, will agree to give you the loan. The platform will only get a commission for its services and a portion of the interest that you have to pay;
  • Online Lenders – Online lenders are essentially the online counterparts of traditional private ones. They offer the same services as banks and regular lenders and have the same financial structure. The only difference is that you can get a loan by submitting your request online and you get the money faster than if you were to go to a bank;
  • Crowdfunding Platforms – Although these are not lending platforms in the traditional sense, they do allow individuals to request funding for business ideas. Through a platform account, users can create a portfolio for their financing request after which other individuals may contribute with fixed sums of money. These, however, require that you set a goal and the users that finance you have to receive something in return.

As an example, if you want to start a certain type of business, you can explain your idea to potential lenders, through your platform account. You also have to set a financial goal, such as £80,000. If other users consider that your idea is worth investing in, they can contribute to your goal with various amounts of money;

What Are the Risks That You Need to Be Aware Of?

There are only a few things that you should keep in mind when using online lending services. The most important one is that you must ensure that the company that you’re borrowing from is regulated. There are still a few scammers online that aim to steal your personal information.

Next, you have to keep in mind that most online lenders will have higher interest rates than banks. This is due to the fact that the majority of them do not check your credit rating before giving you a loan and usually ensure that you get the money in 1-2 days.

Lastly, secured online loans have much more strict terms and conditions, making them more dangerous if you are ever unable to repay the money on time.

Use Them Only If You Really Need Their Services

Overall, you will be made aware of all the risks of borrowing money from an online lending service when you take out a loan. These platforms are heavily regulated by the government and always play by the rules. However, you can still lose your home to them if you are not careful. Only use them if you absolutely need the money and doublecheck the agreements before signing them.