Tag Archives: Credit Score

Credit Score Not Essential To Obtain Student Loans

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Attending college is very important in today’s society.  If you want to find a high-paying job, you need to show employers that you are a dedicated individual that took time to get their degree.  Pursuing a degree can be challenging and expensive if you do not have money set aside to pay for your tuition.  While most two-year and four-year institutions offer federal financial aid packages, these awards are not nearly enough to pay for your housing expenses, books, and tuition.  If you have reviewed your financial aid package and you know you need more money to make it through school, it is time learn about student loans.  There are several types of student loans out there.  Learn which ones you might qualify for and live comfortably through school.

Credit Score and Student Loans

If you do not need a large sum of money, you may want to start with Federal loans.  Federal loans are the safest and most practical choice for adult students and students who are just exiting high school.  Unlike conventional loans offered by private lenders, federal loan interest rates do not change over time and the interest charged is not determined by your credit score.  There are currently three types of Federal loans available to undergraduate and graduate students:

Start With Federal Loans

Perkins and Subsidized Stafford Loans -  If your school offers subsidized loans and you qualify for this type of loan it is the best option for you.  If you qualify for these student loans, the government will pay for the interest that accrues while you are in school.  The Perkins Loan interest rate is fixed at 5 percent when you are out of school and the Stafford loan is fixed at 6.8 percent or less depending on the market.  You will appreciate that the government pays the interest because you will save thousands of dollars so you can pay off your student debt faster when you are employed.

Unsubsidized Stafford Loans -  These loans are the next best option if you do not qualify for the subsidized loans or your school does not offer the prior option.  Unsubsidized Stafford Loans are available to anyone regardless of their income or credit rating.  The interest will build up while you are in school at fixed interest rates that are listed on your loan contract.  You do not have to start making payments to your loan until 6 months after you leave school.

PLUS Loans -  If you are a graduate student or you are a dependent, you may qualify for a PLUS loan through the federal government.  PLUS loans have have an interest rate of 8.5 percent but they are easier to qualify for than private student loans and have higher loan limits than the others.

Qualifying for Private Loans When Federal Loans Are Not Enough

The loan limits for first and second year students cap off at $3500 per year when you apply without a parent.  The limits will rise to $4500 for students with 24 credits or more behind their belt.  While these funds will help you in a time of need, they may not be enough to eliminate the need to work through college.  This is where private loans come into play.  Private loans are loans that are offered by lending institutions and banks who are making a profit off of the interest you pay.  These alternative loans are much riskier than federal loans and do not offer as much protection as a federal loan.  If you start at a time where interest rates are low, it is possible for your interest rates to rise while you are in school.  Make sure you always apply for federal loans first and then get the additional funds you need through an alternative loan.

If you are attending a state university or a private school, the last thing you want to do is balance work and school.  Put all of your focus on schooling by applying for student loans to pay for your cost of living so you can succeed in school.  Make sure you apply for scholarships and grants before you apply for money that must be repaid.  Follow the tips above and choose the safest loan package that will help you get through school.

Your Credit Score Determines Personal Loan Options

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Many people take personal loans in order to meet financial requirements. Other times, these loans are sought as an investment tool or to help start up a new business. The loans can be obtained from banks and other lending institutions such as credit unions. They can be given in any amount but are often limited to a few thousand dollars.

There are two types of personal loans. They are secured an unsecured. A secured loan is a loan that is taken with some collateral put up against the amount of the loan such as a car or home. These loans can often be acquired at good rates because the lender knows they will receive property in lieu of payment if the borrower fails to meet the agreements of the loan. Failure to meet the loan requirements will cause the borrower to forfeit the property that was put up as security for the loan. An unsecured loan uses no such measures and they are more difficult to receive if you have bad, poor or no credit. This is because the borrower leaves the lender with nothing if they default on the loan. These loans are usually only given to clients that have a good credit history and good credit score.

Your credit score is determined by a number of different factors including your credit history. The number of open credit lines that you have comes into play along with your ability to meet your existing loan requirements. Lenders check your free credit report to see if you pay your bills on time and if you have any unpaid loans in your history. They will also check to see how much you have borrowed against your existing lines of credit.

There are many ways to help and improve your credit score. The number one way to help and improve your credit score is to meet all of your financial requirements, in full, in a timely and consistent manner. No factor is greater than if you pay your bills on time each and every month in full. Another way to increase your credit score is to pay down any existing debt that you may already have. You should have no more than 50% of the limit on any given card at any time if you wish to increase your credit score.

If you find yourself having difficulty obtaining a personal loan because of lack of credit history there are some ways to help this situation. The best move is to apply for a secure credit card. This can be issued to you by your bank. The bank will ask how much you would like to secure the card for and the average amount to start is from 300 to 500 dollars. The amount that you deposit into the account will be your credit limit. Then you will need to use the card each month for necessities and pay off the amount in full, on time, each month. This is the best way to improve your credit score in order to qualify for personal loans.

Auto Loans For Bad Credit Scores

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Having a bad credit score does not automatically disqualify you from getting auto loans.  There are still numerous lenders out there that are willing and able to assist you with this major purchase in spite of your existing debt.  Learning how to properly screen the different offers that are available to you, however, will ensure that you secure fundingwhich is wholly beneficial to both your short and long-term financial well-being.

Remove Emotions From The Shopping Process

Many people lock into auto loan agreements that do not reflect their best interests simply because their momentary elation at being approved clouds their better judgment.  It is important to remember that being approved for a poorly designed loan may actually be worse than receiving no loan at all.  When you eliminate your emotions from the shopping process, however, you can actually select a loan option that will ultimately improve your credit by supplying you with a truly feasible repayment plan and sufficient funds for securing a durable and reliable form of transportation.

Perform A Quick Clean-Up Of Your Credit Report

You may not have the money to pay down all of your debt right now but you can still make significant improvements to your credit report.  People who maintain low credit scores rarely take the time to review their reports thoroughly.  Some of the dings that are present on these reports may actually be due to reporting errors such as charges that have been misreported, duplicate recordings and failures to update accounts that have been paid in full.  Simply taking the time to review your three credit reports will allow you to identify any charges that can be cleared up by making phone calls or sending letters.  In this fashion, you have the ability to give your credit score a significant boost in a relatively short period of time and without having to spend any money. You can get a free credit report once an year, but you may need to pay to see your credit scores.

Start Searching For Auto Loans Online

The best place to get started on your journey to find financing for your automobile purchase is the internet.  You can access a range of different offers that are provided by both local lenders and lenders in other areas.  There are additionally, many different sites that will allow you to make side by side comparisons of different offers.  These sites help people to secure loans for bad credit consumers that do not have high interest rates, pre-payment penalties and other negative features that serve to drive their value down.  It is important that consumers make careful considerations of both loan costs and loan features in order to find the best deals.

Appeal To Local Dealerships For In-House Funding

There are numerous funding opportunities that fall outside of more conventional loan offers.  Automobile shoppers can often use these to secure the vehicles that they want and need, however, these funding options are very rarely effective for rebuilding good credit.  One such opportunity, auto loans that come directly from dealerships, are often made available to consumers with poor credit scores, but with sufficient income for justifying the purchase.  Smaller dealerships that really want to sell cars will often offer in-house financing to these consumers.  This is commonly offered based upon the applicant’s current income, rather than his or her credit score.  These loans are, more often than not, smaller than the loan amounts of more conventional auto loans, however, they are generally also far more flexible in nature and easier to repay.

Free Credit Report – How And Where To Get It

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There are several reasons why you need to keep tabs on your credit report and credit score.  These include simply keeping tabs on what your score is, learning how your score is derived, identifying problem areas with your credit score, removing inaccuracies or mistakes from your report and avoiding fraud and identity theft.  Thankfully these days it’s quite easy to get a free credit report on an annual basis (or even more frequently).  You can request your annual credit report from each of the big three credit reporting agencies (Transunion, Experian and Equifax) individually, or you can use one of the services that will provide all three agencies scores to you.  In the long run it’s your choice, I hope to give you enough information here to make your decision easier.

The Big 3 Credit Reporting Agencies and FICO

You may have heard the term “FICO Score” before and wondered how this score is determined.  It is a compilation of the three scores from the top credit agencies; Transunion, Experian and Equifax.  Each agency calculates the score a bit differently, so using a combination of all three to determine a FICO score is the most effective way for banks and other lenders to determine your credit worthiness.  The FICO score ranges from 300 to 850 and it is typically accepted that a score above 650 indicates a positive credit history.  FICO is an acronym for Fair Isaac Corporation, the company who developed the scoring system.

In addition to creating credit scores, each of the three major credit reporting agencies offer access to your free annual credit report through www.AnnualCreditReport.com.  Take note that it is only your credit report they are required by law to provide, they are not required to provide a free credit score and when requesting a free credit report that is all you get.  They also offer paid services to monitor your credit score, get credit and fraud alerts and protect yourself against identity theft with insurance.  They are also the ones to contact if you wish to put a freeze on your credit report or if you have a dispute about information on your credit report.  Overall, they are very good at what they do, although they can be a bit more expensive than other similar services.  It should be noted that in the U.S. the credit bureaus are required by law to provide consumers with their annual credit report free of charge once every 12 months.

Free Annual Credit Reports and The FACT Act

FACT Act is an acronym for The Fair and Accurate Credit Transactions Act (FACT Act) which was developed to help consumers be more aware of their credit history and to give them access to the same data that lenders look at when making a loan decision.  It is a revision of the prior Fair Credit Reporting Act which was passed in 1970 and governs the collection, dissemination, and use of consumer information, including consumer credit information.  The FACT Act allows each individual to obtain a free copy of the information in their credit file once every 12 months.  Consumers are entitled to copies of records from each of the 3 credit reporting agencies and these records are made available through a central source, currently www.AnnualCreditReport.com.  Those who do not have access to the website can also request the credit information through www.FTC.gov or by calling 877-FACT-ACT.

The FACT Act was signed into law in December 2003 and became effective on December 1, 2005.  As of that date all consumers are eligible to request a free copy of their credit report once every 12 months.

Other Sources for Free Credit Report & Scores

As far as the obligatory once a year free credit report goes, www.annualcreditreport.com is the official central source set up by the credit reporting agencies to distribute the required annual credit reports for free.  For some, this once a year report is enough to keep tabs on their credit score and credit history.  Others like to be more informed and for this group there are a number of sites that provide credit monitoring, fraud alert and identity theft protection services.  Let’s look at several of your options:

Each of the big three agencies provide credit monitoring, fraud alert and identity protection insurance for a small monthly fee. Since these are the agencies providing the scores you can be pretty sure you’ll be getting accurate, timely and complete information. They all offer free trials thru their various vendor services during their free trial. Basically asking you to try out their credit monitoring service for a given period – 7 days, 30 days, etc. In exchange, you receive a free credit report and/or score. Depending on the service, you get to see your credit data only from one credit bureau – TransUnion, Experian, or Equifax. Other vendors will provide all 3 credit bureau reports and scores for free. The big thing to remember is, although it’s your right to receive a free annual credit report, you won’t get to see your credit score for free. You usually have to pay the individual credit bureaus for this previlege. So these free trial offers do have their benefits. If you don’t feel you want to continue with the credit monitoring service, you just cancel during the trial period. Otherwise you will be charged.

Types of Free Trial Offer Services

A few are well known for their catchy television and radio advertisements.  Many only provide a free credit report from one credit bureau. While this can be useful information to have, your lenders may access more than one credit bureau for your credit data. You also have companies that are known primarily for providing identity theft protection instead of offering free credit reports. But they often have free trial offers where you can try out their identity theft service and you receive a free credit report and score in exchange.

As mentioned before, some people will find that they don’t require a complete credit monitoring solution and the once yearly free report is sufficient for them. But many credit experts believe it makes more sense to monitor your credit history on a semi-annual or quarterly basis. If you feel like you would sleep better at night with a solution like this in place then the suggestions above are a great place to start your search.

Whatever your situation, you should consider making it a point to access your free credit report at least on an annual basis.  It’s your right as a consumer and it’s possible you’ll find there is some discrepancies or misinformation in there.  This isn’t unusual and can negatively impact your lending ability and the rates you get when you do take out loans.  Correcting an inaccurate credit history can save you literally thousands of dollars in the long run.  So why not take a few minutes to get your free credit report and review it.  At the very least it will provide you peace of mind knowing everything is in order.  And if you are planning on making a large purchase within the next 2 years now can be a great time to start making improvements to your credit score.