Bad Credit Loans Blog

Great Tips and Advice for Managing Your Money

Hello.  Hope everyone is having a relaxing holiday season.  Below, is a blog from The Phoenix Group, https://thephenixgroup.com, that has some interesting points for those looking for ways to improve their credit.

Millions of Americans deal with an incredible amount of debt. As of March 2018, American household debt alone reached $13.21 trillion. As the amount of debt rises throughout the country, credit scores are bound to sink. Which makes credit repair a must for some people. If you’re one of the unlucky individuals that are dealing with a sinking credit score, you’re not alone. Here are a couple situations that might have destroyed your credit score, along with millions of other Americans. credit repair with calculator

Foreclosure is one of the most prominent situations that significantly lower credit scores. Over two million homeowners have dealt with this unfortunate event since 2009. Also, you may have been one of the millions of individuals that claimed bankruptcy since 2009. There are also many other small situations many of us deal with, like delayed payment of a bill, that negatively impact your credit score. But, with the recession of 2007 to 2009 behind us, as a country, we are better equipped to repair our credit scores than we were ten years ago. If you’re looking to rebuild your credit score, then read on to learn more.

Monitor Your Credit Score

First off, the most important thing that you can do is be aware. Get a free copy of your credit score and analyze it. If you find any inaccuracies in your report, resolves those issues ASAP with the three most prominent credit monitoring bureaus: TransUnion, Experian, and Equifax. Then, once everything looks accurate, monitor it as much as possible.

Make Payments on Time

Over a third of your credit score is measured by how often you make payments on time. Even if you’ve had a spotty past with your payments, focus on making sure you get every future payment out on time. Each timely payment will positively affect your credit score.

Get Current on Delinquencies  erase bad credit

A third of your credit score surround your debt to credit ratio, so it’s incredibly important that you get current on those delinquent accounts.

Avoid Closing Accounts

When you close accounts, you damage your credit in two different ways. 15% of your credit is based on how old your credit history is, so the older your account is the more credit history they have to take from. When you close an account, you wipe out all the credit history the account is linked to.

Also with closing revolving accounts, it makes your debt to credit ratio smaller. Make sure that all your accounts, even those with minimal balances, are still getting used. If they’re not, your credit company might close it before you do.

Diversify Your Credit

Be sure to have a couple credit lines through your accounts. Relying on one credit line (i.e. credit cards) will do you more harm than good.

Always Pay Down Your Debt

Paying more than the minimum payment on your debt will inevitably help your debt to credit ratio. The less debt you have compared to your credit, the higher your credit score will be.

Think Before You Take On New Debt

Taking on too much new debt too quickly will negatively affect your credit score. For example, taking on three new credit cards in three months is probably not a good idea. excellent credit score

Being aware of your credit score and monitoring it is the first step to achieving your goals. By doing things such as paying down your debt, making payments on time, and getting current on your delinquencies will help your credit score in no time. Following these steps will help start building credit again for you & your future!

If you are looking for other tips to repair your credit, you may try this link with Top 20 Credit Repair Blogs, https://blog.feedspot.com/credit_repair_blogs/

Personal Loans are typically closed ended loans with a specific first payment date and maturity date.  If all payments are made on time, then the term will end as scheduled and everyone is happy.  As an attempt to keep making payments on time,  many people with Personal Loans opt to have payments debited automatically from their bank accounts on payment due dates.  To the borrowers’ benefit, having the payments debited automatically makes it less likely that an account will accrue late fees for non-payment within that due date grace period.  However, what happens after a payment is dishonored by the bank but I keep making all future payments.  It’s just one little missed payment.  How bad can the consequences be, right? debt on chalk board

What if I don’t make up the one missed payment but pay all future payments?

When a debit or payment is returned by the bank, most vendors will charge a Non-Sufficient Funds fee.  This is in addition to what the bank will charge the owner of the account.  So think to yourself two NSF fees.  As future regular payments hit the account and clear, that NSF fee will be paid first and late fees will begin to accrue with every payment.  The NSF fee and late fees will be paid first from the regular payments and whatever is left will be applied to interest and then principal. I know what you’re thinking, “so, I get charged one NSF fee and one late fee.”  To that, I have to answer “brace yourself.”  As time goes on, if future payments clear, by the end of the term, that single payment that came back NSF will have caused extra interest and many late fees to accrue with EACH payment.  Imagine if you missed the 10th payment on a 24 month loan schedule.  That translates into additional late fees for each of the future 14 payments.  At the end of the term, there will also be a principal balance due.  Remember, as mentioned above, that fees get paid first and what’s left over is used to pay down the principal.  This means the loan will not be paid in full as scheduled.  Also, keep in mind that the missed Insufficient funds check articlepayment may affect your credit score as it may show the account as being constantly one payment behind.

 

I got it!  What if I make up the missed payment but not the NSF or late fees?

Even with an extra full payment made to make up the one missed installment, if you do not also pay the extra NSF Fee and late fees, this will still cause extra interest to accrue by the end of the term.  But, the good news is that no more late fees should accrue.  Also, the credit report will show that the account is current on payments.  But, towards the end of the term, not only will there be a principal balance, there will also be extra interest accrued.  The loan will not be paid in full as scheduled.

Alright, bottom line it for me.

The best way to deal with a missed payment is to immediately make up the payment with the NSF fee before a late fee accrues.  This will save a significant amount of money towards the end.  If that’s not possible, try appealing to the lender’s need to keep a good customer and ask to have some of those fees reduced or waived.  This will work particularly if you have a good payment history.  After all, you have other choices.  If all you did was miss one payment, there will be other lenders who may refinance your loan.  Another option is to save up a little bit of cash.  As soon as there is enough to make up the missed payment, pay it.  At least that will reduce the damage at little, even if few late fees have accrued.  However, the longer you let an account stay behind, the more disappointed and surprised you’ll be towards the end of the loan. credit score pic

As a side note, if you are interested in tips on how to repair your credit check out this link with top 20 credit repair blogs, https://blog.feedspot.com/credit_repair_blogs/

We received this blog below from The Phoenix Group, https://thephenixgroup.com/.  Thought it would be good to share for those interested in improving their credit score.

Many Americans who have bad credit still need to get a loan. Having a FICO score of 620 or lower is considered in the bad credit territory. A score this low prohibits one from getting a loan under reasonable terms, but that doesn’t mean it’s impossible.

It’s vital to know your score before you apply for a loan, and if it’s not where it needs to be, consider working to raise your credit score before you apply.credit score pic

What Does Bad Credit Mean?

Our consumer culture encourages people to buy now and pay later, and many people are happy to do just that. And, unfortunately, many people aren’t adequately educated on responsible financial practices and end up ruining their credit rating, which makes it tough when applying for a car or home loan. Being smart with credit, and knowing how to fix bad credit, are essential for your financial well-being. As stated, bad credit is a FICO score of less than 620. A score of 630 or higher is considered fair, and 720 and up is deemed to be good to excellent.

What is a Bad Credit Loan?

A bad credit loan is a loan given to those people who have lower than average credit scores. These loans are typically high interest and come with many fees, but if you need a loan and have bad credit, you’ll have to take what you can get. The key to a bad credit loan is to repay it quickly and never miss a loan agreementpayment; doing these two things significantly improve your credit score.

What’s the Difference Between Secured and Unsecured Loans?

There are two main types of loans for which one can apply: Secured and unsecured loans. The secured loan requires the borrower to put up some collateral such as a home or vehicle to guarantee payment. Lenders typically give unsecured loans to people who have proven themselves trustworthy with credit, and who have good to excellent credit. Both of these loans can be helpful to build up your credit, but the key is to be vigilant about making payments and to pay them off quickly.

Types of Secured Loans

A payday loan gives a person fast cash. The borrower writes a check that they give to the lender who cashes it on the borrower’s payday. Another type of secured loan is a Title Loan. This loan uses your property as collateral to guarantee repayment. Property can be real estate or a vehicle. If you default on the loan, the lender gets the title to your property. Both of these loans are helpful for building credit but beware of the high interest and fees that come with them.

Types of Unsecured Loans

If you have bad credit, you may still qualify for an unsecured loan, but be prepared for interest rates from 100 to 300%. Most of these loans require a credit score in the mid to upper 600s.

Two important keys to rebuilding your credit are to be on time with your payments and to carry a low credit to debt ratio.

If looking for other tips to repair your credit, you may try this link with Top 20 Credit Repair Blogs, https://blog.feedspot.com/credit_repair_blogs/
 

At America’s Loan Company we focus on consumers with less than stellar credit scores.  The “Bad Credit Personal Loans” is all over our website.  This does not mean that our loans are guaranteed regardless of credit score.  We have certain standards to follow.  Is just that, we are willing to loan to Ohio debt signsconsumers who may not be able to get a loan from a bank or credit union.  Historically, we have not found it difficult to find applicants with bad credit whom we felt were “acceptable risks.”  However, in the past two years we are finding it more difficult to find qualified applicants.  The underlying reason in our recent experience is that people are acquiring too much debt.  Here’s some of the negative trends we have noticed.

Personal Loans Are In Demand

So, what is some of the cause for the increase in personal debt?  Personal Loans have increased in popularity recently.  According to a TransUnion blog dated 6/1/18 by Matt Komos (follow this link to read this blog https://www.transunion.com/blog/consumer-credit-origination-balance-delinquency-trends-q1-2018) comparing first quarter of 2017 to the first quarter of 2018, Personal Loan debt rose by 7.8% among Subprime Borrowers. Credit card debt also rose 3.3% within that same group.  As Subprime Borrowers are the ones we tend to serve, the effects of this increase are evident.  Now we are seeing applicants debt on chalk boardwith debt to income ratios above 45%.  Debt to income ratio is calculated by taking the minimum monthly payment on debts divided by gross monthly income.  America’s Loan Company aims to be a responsible lender.  So once an applicant’s debt to income ratio reaches 45% it prevents the application from being approved.

To Make Matters More Difficult, No All Loan Companies Report To Credit Bureaus

Another somewhat invisible cause of increase in personal debt and dare I say it, defaults, are loans from companies that do not report to any credit bureau.  After applications are received and reviewed, documents are requested, such as bank statements.  Years ago we started doing this looking for any inordinate amount of non-sufficient fund (NSF) fees, which to us is a red flag.  However, now we not only look at NSF’s, we also look for lenders that appear on the bank statements.  It amazes us how often we find bank statements with four, five, six payday or title loan lenders as either depositing or debiting the bank accounts.  Payday lenders and Title Loan lenders do notheavy debt loadtypically report to the three major credit bureaus.  This is the reason for which we refer to these types of debts as “invisible.”  As these types of loans have loser underwriting standards, combine that with the rise in credit card and Personal Loan debt, it is our observation that consumers seem to be getting into more debt than they can handle.  We can no longer depend solely on credit reports to determine how much debt a person is responsible for.

It is our most recent experience that consumers seem to be acquiring more debt than they may be able to handle.  We don’t have a solution for that, except that consumers need to start treating debt as a “use only when needed” service.  Also, we believe lenders need to be more responsible, not only for the consumer’s sake but for their own also.  Too much debt can only end in credit default.  No lender likes financial loss and no customer likes receiving collection calls and having their credit scores negatively affected.  As a side note, for those consumers who are looking for ways to repair their credit you may visit this link with Top 20 Credit Repair blogs: https://blog.feedspot.com/credit_repair_blogs/

America's Loan Company offers Personal Loans for people with bad credit.  However, our loans can help improve your credit score.  The reason for this is that America’s Loan Company reports credit histories to one of the three major credit bureaus, TransUnion.

You Mean A Good Payment History Can Improve My Credit Score?

credit score picIn short, yes.  According to a blog by Experian, another one of the three credit bureaus, “Paying your bills on time is the most important contributor to a good credit score.”  You can read more at Experian’s blog by clicking here https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/.  So, getting a bad credit personal loan from us may help improve your credit score as long as loan payments are done on time.  Even if one of your payments is dishonored by the bank, immediately taking care of that payment should help to keep improving your credit score. 

Don’t Ignore Other Debts, however.

Even if you paid your loan with us faithfully, not paying on other debts will have a negative effect on your credit.  Other debts include credit cards, student loans, phone, gas, electric bills, etc..

So Should I Get A Loan Just To Improve My Credit Score?

No.  No one should.  Having too much debt can work against your aims of improving your credit score.  The same blog from Experian mentioned above advises against such practice.  Borrow only what you need and when you need it. 

Should I Get Loans From Many Other Lenders To Improve My Credit Score?

According to the same Experian blog, this is a bad idea.  When the need comes to borrow funds for an unexpected bill, America

credit card approved

’s Loan Company does offer bad credit loans.  However, if the credit bureaus see that you are borrowing from too many lenders, this will work against your credit score.  New inquiries from other lenders for instance, will show up as hard inquiries, which have a negative effect on the credit score. 

So, As Long As I Make My Minimum Payments, It Is Okay To Max Out My Credit Cards? 

That also does not work well to help improve the credit score.  Credit bureaus do look at what balances your carry compared to the available credit.

Rebuilding your credit score can take some time.  However, following some of these simple rules above can help you start on the right path.  Do click on the link above for more details from Experian.

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