WILL PAYDAY LOANS HARM YOUR CREDIT SCORE?

Taking a payday loan might seem like a good idea if you’re in a financial bind.  You can get a payday loan regardless of your credit rating since no credit check is required. But that loan can make your bind a whole lot worse, and eventually damage your credit score. 

What’s your credit score?

Your credit score is a rating of your financial health, at a specific moment. It shows how big a risk you are for lenders, compared with other consumers. The credit bureaus Equifax and TransUnion rate you on a scale from 300 to 900. High scores are very good.  Low scores are very bad.  The higher your score is, the lower a risk you are for a lender.

Credit bureaus use a math formula to calculate your credit score. The formula takes into account such factors as:

●How much money do you owe? Have you ever missed a payment on your debts?

●Have you ever had a collection agency pursue you? Have you ever gone bankrupt? Or been in a proposal or credit counselling?

●What is the limit on your credit card? Is your spending always close to your credit limit? Are you only paying the minimum?

Many consumers worry that if they take out a payday loan, it will harm their credit score.   After all, the mere act of applying for a payday loan kind of screams desperation. However, taking out the loan will not hurt your credit score because pay day loan companies do not report to the credit bureaus. But what happens afterwards certainly could!

It can be very difficult to pay off these loans, because they are much more expensive than other kinds of credit.  For example, borrowing $100 for two weeks can cost a fee of $21, which is like paying an incredible 546% annually. You would never take out a bank loan that carried a 546% annual interest rate or use a credit card with that kind of interest rate on unpaid balances.

What if you can’t repay on time?   

If you don’t manage to pay on time – within a week or two -- interest begins to accumulate not only on the principal of the loan but on the unpaid interest. Your interest charges will skyrocket by hundreds and thousands of dollars, depending how late you are in paying. 

The difficulty of paying off the payday loan often results in taking out a second loan in order to pay off the first.  In the U.S., 76% of payday loans are repeat loans, or loans that are being used to pay off the original. 

If you debt spirals out of control and you default on your payday loan, you will be in serious trouble. The lender will pass the loan on to a collection agency. If you are unable to pay when the agency tries to collect, it will report your delinquency to the credit bureaus -- which will almost certainly lower your credit score. A damaged credit score will make it even more difficult to get credit in the future.

Here’s another downer: Payday loans, even if they are repaid on time, do not help repair your credit rating, because the payday lenders do not report to the credit bureaus exceptif you go into collections. 

Most finance companies, however, do report your loan payments regularly to the credit bureaus, and you receive the highest credit rating when you pay on time.  So at loan companies, you are re-establishing your financial credibility.
Prudent Financial offers the best credit repair services and the lowest-cost rates for people with bad credit histories in Toronto and the GTA.  For more information about PRUDENT FINANCIAL SERVICES, visit our web site: http://www.prudentfinancial.net

Here's Some Things You Need to Know about Bad Credit Loans

Sometimes, no matter what you do, you still find yourself in a bind with financial difficulties. Often the only to recover is to apply for bad credit loans. There are many offers on the market today that claim to be there to help you out of your troubles, but you have to always be cautious when you are trying to rebuild your credit. One of the first steps to take is to research all of your options to get the very best interest rate with and the longest repayment period. This will allow you to be able to better manage your current income.

You’ve already checked with your bank. They’ve indicated your current credit score is a problem. Even though many people believe there would be no way a bank would give them bad credit loan, if they are willing to work closely with the people who already know them, it is often possible to get the lowest cost bad credit personal loans right from the bank they are already doing business with. If nothing else, you can take the information you get from your bank and compare it with other offers you may obtain. It does take time to comparison shop, but it is well worth the investment of time.

If you are looking for bad credit loans to get you out of your current financial bind, be sure to look past the headlines in advertisements. Some lenders may seem to be offering incredible rates to all their customers; you have to remember that these may just be teaser rates to get people in their offices. Once you are there the old bait and switch tactics take over, and you may find the rates for loans after a proposal may be a lot higher than you expected. It is always the best idea to shop around, no matter where you are looking for a loan.

There is something else you must know when getting bad credit loans. When you take out a loan with a long term payback period you will be paying extra in interest and any fees that apply. If you can afford to do so, it would be a good idea to make that payback period as short as possible. Remember you are trying to save money no matter what you are doing. However, if you must keep the monthly payments low, more time to pay the loan may be the best option for you. That way you will be able to make the rent, car payment, and put groceries on the table.

For more valuable information, visit www.prudentcreditrepair.ca

The Cost of Bad Credit

A good credit score is an important thing to have but it’s difficult to maintain. Living without credit or bad credit is becoming more common and most wonder what the big deal is if I have a low credit score?

Credit card payments and the level of debt have the most impact on your credit score. The information contained in your credit report is also used by many financial calculations. This means that a lender will not only view your credit score but will combine your monthly minimum payments reported by your creditors and compare it to your monthly gross income. This is known as a debt to income ratio and is as important as your credit score.

If you’re deep in debt, living paycheque to paycheque or are constantly charging things on your credit card, this will make your life extremely difficult from getting a job, your children following in the same footsteps to getting a place to live.

Here are some of the costs of living with bad credit:

1. A big consequence with having bad credit is the denial for a loan. Being denied for a credit card or being denied for a home mortgage when you need it will not only cause you to get denied but it will also be embarrassing for you and affect you emotionally.

2. Creditors and lenders will view you as a higher risk and because of this you will be paying for that through higher interest rates. Over time you’re paying a lot more than if you would have should you have had better credit.

3. When you want to rent a home or apartment, you may be refused as most landlords will check your credit prior to offering you the lease. If you have poor credit, the landlords will think you’re less likely to pay them and will refuse you.

4. If you have a history of living without credit that is good, you will require to pay a large security deposit for things such as utilities and cell phones.

5. The decisions you make will affect your children. They watch what parents do and financially and there is a great chance that they will follow suit.

6. Another big consequence that will directly impact you and your family is worry and anxiety. This kind of stress can lead to all sorts of health issues for you and even cause problems in your family life.

Poor financial decisions can ruin your credit fast so if you want to maintain an impressive credit score or you want to improve it, make your payments on time and include a little extra each month to help pay down your debt. Keep all your accounts open as an open account without a balance is more beneficial than a closed one and also don’t open any new accounts.

For more valuable tips and information, visit www.prudentcreditrepair.ca

What Should Your Credit Score Be?

Most of us depend on credit for many things such as buying a car, house or getting a loan. Your credit report is your credit history wrapped up in three digits. It measures your ability to make payments on time and is designed to help lenders determine your credit worthiness.

Credit scores in Canada can range from 300-900. The higher your score, the healthier your financial record is and lenders will view you as less of a risk to them. The interest rates you receive will be determined by your score. Maintaining a good credit score is essential to your financial well being.

What is a good credit score?

You are considered to have good credit if you have a number of 700 and up on your credit scale. This score will allow you to have fewer problems applying for loans and getting better interest rates.

You are in the okay range if your credit score is between 450 and 650. You may be viewed as a risk but one that is acceptable to most organizations depending where you fall between these 2 numbers. The closer you are to 650, the better.

Anything under 450 is considered bad credit. You will be looked at as a high risk to the lenders. You will have significant trouble acquiring loans. Nowadays, there are plenty of places that will approve you for a loan but the downfall is that your interest rates will be sky high.

There are other factors that contribute to your credit score. The major factors contributing to your score is made up of the amounts that you owe and your payment history. The lesser factors are the type of credit you are using, the percentage that is new debt and the length of your credit history. These are all factors that are considered when determining your credit score.

You have a right to see your credit report. No one can have access to your report unless you allow it. Remember that every time you apply for a loan or credit card, you are allowing the company to check your credit report.

Knowing your actual credit score is a great start. You should understand the key factors that affect your score and learning how to increase and/or maintain your score over time is also important.

For more valuable tips and information please visit www.prudentcreditrepair.ca

What Information Appears On The Credit Report?

Your credit report contains lots of information about you. It contains your name, date of birth, address, employer, where you have applied for credit and who you have credit with. Your credit report indicates your past and current payment habits and how you manage accounts with your creditors.

Those who have had problems with credit in the past can have a difficult time getting re-established. When looking to re-establish credit, it’s important to only obtain credit from places that report to the credit report.

Believe it or not payments made on time to utility providers like your phone and cable don’t report to your credit, nor do accounts with gyms and other service providers. The only time these accounts can impact your credit, is if you don’t pay them and then they send it to a collection agency. There is a special place on the credit report where collection agencies can report money that they are collecting on behalf of a private third party company, creditor or service provider.

Payday loans and pre-paid master cards also do not report to the credit report. Many consumers fall into the payday loan trap thinking that they are re-establishing credit. This can be an expensive lesson.

Secured credit cards, secured and unsecured loans do report to your credit report. Companies like Capital One and Home Trust offer secured credit cards. Companies like Prudent Financial Services offer personal loans to consumers who have filed for bankruptcy, have completed consumer proposals or who have past, paid off bad credit.

When new loans and credit cards begin to report to your credit report, it will immediately begin to improve your credit score with each on-time payment. Remember to pace yourself. Start with one credit product, manage it for 6 months and then try a second one. Too many inquiries or applications for credit will hurt the credit score that you are working so hard to build.

For more valuable information and tips, visit us at www.prudentcreditrepair.ca

Reward Cards And Their Worth

What is a Reward Card?

A Reward Card is a credit card that comes with a reward program. It’s a strategy to get consumers to use their credit cards over and over again. In order to do this they give you an incentive by earning points which can be redeemed for anything from cash backs to travel points. Before you get enticed into a reward card, you must understand how they work and if they can be effective for you.

The truth about reward cards

Credit cards that have a rewards program may give you a sense of enjoyment. You’re using a card for purchases and you’re receiving extra value, HOWEVER, there may be risk involved. Here are some points to consider before signing up for that reward card:

· Is there an up front fee?
· Some cards carry annual fees which can cost you more than it’s worth.
· Does the card have a high interest rate? If you’re carrying a balance this can also cost you a lot more in the long run.
· Will you earn points only for a limited amount of spending each month?
· Points may not be rewarded when shopping at discount stores or online so you may be paying more for an item when purchasing through a dedicated store through the program.
· Cash back cards may only allow you to redeem if you spend over a certain amount of dollars in a year.
· Your points may expire if you don’t use them or if you miss a monthly payment.
· The card issuer can change the rules at any time.

When can a reward card be effective?

· The reward programs will benefit you if you actually use the rewards. If you never fly, then having a credit card that rewards you with air miles is virtually useless.
· If you receive points for shopping at specific vendors, then make sure that you’re a regular at that vendor.
· Choose a card that you can accumulate points that never expire.
· When you choose a reward credit card that has no up front fees, annual fees or high interest rate then you can simply collect points when you can to possibly redeem them in the future. Sometimes you may receive a free movie pass or a $20 gift certificate to your favourite local restaurant.

It’s also important to remember that most of these cards are reserved for people with the best credit and you may need to repair your credit before getting the best card out there for you. Prudent Financial Services is the leader in loans to people with bad credit histories and their goal is to help you restore your credit.

For more information, please visit www.prudentcreditrepair.ca

Getting sucked into the Payday loan spiral

You hear and see the payday loan advertisements everywhere. At every corner and all over the internet you will see” Borrow $500 in 15 minutes, no credit check required!” Sounds convenient and easy right? In reality, it really is that easy HOWEVER it’s easier to get sucked into the payday loan spiral.

The Problem

The problem with a payday loan is that you’ll become trapped in a web that’s impossible to escape. With a payday loan you are borrowing against a future pay. The interest rate is extremely high so when 2 weeks roll around and you can only afford to pay off the interest, you carry the loan forward and then the next pay turns into the next pay and before you know it, you’re not paying off the loan and wasting ALOT of money on interest.

What To Remember

You must remember that a payday loan company is disguised as a beneficial route for you but they are happiest when you’re paying them a good chunk of money on interest rather than paying off your loan. This is how they survive. You must also keep in mind that if and when you default in payments, it will be reported to the credit bureau and your credit score will be tarnished.

What Are My Options

You should avoid taking out any more payday loans, seek other alternative lenders that offer a better interest rate. More traditional lenders will even help rebuild your credit by reporting all payments to the credit bureau.

Since 1984, Prudent Financial Services has been specializing in repairing credit with open, affordable, same day loans to discharged and undischarged bankrupts, people whose proposal is almost paid off, or people with paid off debt who still have bad credit scores.

Save your money, your credit rating and your financial health. For more valuable tips and information, visit our facebook page at www.facebook.com/prudentfinancial

Think smart. Think Prudent.