Bardsley Finance UK Loan News MENU CREDIT SCORING How University Graduates Should Start Building Up Their Credit Score? One of the biggest issues that university graduates have after they finish their studies is the fact that they do not yet have a … CREDIT SCORING How University Graduates Should Start Building Up Their Credit Score? One of the biggest issues that university graduates have after they finish their studies is the fact that they do not yet have a credit history that would allow them to get large loans. This is usually a consequence of not using banking services and products. Generally speaking, if lenders do not have enough information to determine if a loan application is profitable or not, they will choose to either reject it or to attach certain limits to the deal. This having been said, building up one’s credit score cannot be done overnight. The data needs to be collected over time, from as many sources as possible. This means that an individual needs to use banking products and services as early on as possible, to ensure that he will be able to get larger loans when he needs extra financing. There are several strategies that financial advisors recommend to graduates who want to build up their credit score, however, we will look at the most effective one to date: Get a Credit Card and Use It from Time to Time Almost anyone can get a credit card, regardless of his credit score. While the lender may place a lower spending limit on it, getting one of these cards and using it every couple of months for small to medium-sized purchases will slowly increase an individual’s credit score. However, please keep in mind that using it too often or not repaying the money by the end of the month will damage your credit score. Purchase Products and Pay for them in Instalments When individual purchases and expensive product, pays for it in instalments and makes all the payments on time, the entire process will be recorded in his credit file. Lenders may look at these purchases to determine the repayment habits of a potential borrower. As with the credit card, do not do this too often, especially if you earn enough to pay for the products on the spot. Do not forget that paying for products in instalments involves also paying interest rate, making them similar to personal loans. Do not buy more than you can afford. Get Small Loans and Repay them on Time Getting small personal loans to pay for vacations abroad or home improvement projects is a great way to build up your credit score. These loans do not require high credit ratings, they have low-interest rates and are unsecured. Keep in mind that you should avoid payday advances and microloans as much as possible. These are expensive and will damage your credit score, especially if you use them too often. Start a Savings Account Having money in the bank is a good way to show lenders that you can properly manage your income and expenses. It is a good idea to start a savings account as soon as possible and to contribute to it monthly, regardless of how much or how little you deposit. Get a Debit Card and Use It Regularly Debit cards are much safer than credit cards and can be used to build a transaction history that lenders may extract information from. Unlike credit cards, you can use debit ones as often as you want, but it is generally recommended to pay with them at least twice per month so that the lenders will see that the accounts attached to them are actively being used. These five tips can help any individual build up his credit score from scratch, even before graduating. For example, opening a savings account and getting a debit card is extremely affordable and can be done by anyone. ADVICE What to Do If You Cannot Make Your Monthly Loan Repayments on Time? The Covid-19 pandemic has caused millions of people to lose their jobs or have their incomes reduced to a fraction of what they once were. While the most banks have looked at ways to help their borrowers repay their loans more easily, a large number of individuals have found themselves unable to pay for their basic monthly expenses let alone their loan repayments. This may not be a serious issue in the case of small loans that have low-interest rates, missing monthly payments on mortgages, secured personal loans, and credit card debts can wreak havoc with one’s credit rating. In some cases, this may even lead to individuals losing possession of their homes in favour of the lender. As dire as the situation may seem, it is important to keep in mind that there are things that can be done to find more accessible ways to repay your loans, and even to avoid the consequences of missing a couple of monthly repayments. Here is what you should do if you cannot make your loan repayments on time: 1. Talk to a Bank Representative and Explain the Situation The first thing that you should do is to inform the lender that you may no longer be able to make the monthly payments on time. If your income has been reduced as a result of the ongoing pandemic, there is a big chance that you may be eligible for governmental help or enrollment in a special repayment program. It is in the interest of most lenders to ensure that they get their money back, as taking possession of the borrower’s property would bring about additional expenses for them. As a result, they will agree to work with the borrowers to find a mutually advantageous solution. 2. Consider Refinancing the Loan If you have already repaid a considerable portion of the money, refinancing the loan may be a great option. This course of action will allow you to both extend the loan, as well as get a lower interest rate, both of which will work towards setting smaller monthly repayments. While it will not eliminate the necessity of making the payments, it can make them more manageable. One thing to keep in mind here is that, depending on your relationship with the lender, you may be required to provide the bank with collateral. If this happens, look at what help the government is offering. You may be eligible for a state-guaranteed loan, allowing the government to act as a guarantor in your loan application. 3. Apply for a Debt Consolidation Loan and Have It Cosigned If you have several forms of debt that need to be repaid, a debt consolidation loan may be the perfect tool to reduce the cost of all your loans. These are usually large enough to cover both loans as well as credit card debt and have relatively long terms and low-interest rates. The downside is that they must be secured against the borrower’s property. In other words, if you cannot make the monthly payments on a debt consolidation loan, the lender will be entitled to take possession of your property. However, this danger may be mitigated by finding a family member or a close friend to cosign the loan. This will ensure that if you are unable to make one or more payments, the cosigner will be able to take them over until you get back on your feet. These are the three most reliable strategies to manage debt that you can longer repay. While they are effective and relatively easy to implement, they will not make the debt go away. BORROW MONEY Is It Safe to Borrow Money During the Covid-19 Pandemic? The Covid-19 pandemic has had a major impact on the economy of countries around the world. In some regions, the spreading of the virus has caused jobs to disappear and income rates to plummet. This, in turn, has pushed many individuals to seek other sources of financing to maintain their lifestyles or just to survive. Borrowing money via companies like CobraPaydayLoans.co.uk has always been the most popular way to get the money needed to buy premium products and pay monthly expenses such as rent, medical bills, and others. Normally, borrowing money is extremely safe because banks are constantly looking to make their products as accessible as possible. However, these financial products and services are dependent on the state of the economy and on one’s ability to repay the debt. When the country goes through a recession or income rates are reduced, individuals may find themselves unable to repay the money that they’ve borrowed, which can lead to more serious issues. This having been said, is it safe to borrow money during the pandemic? Choose the Right Lenders Deciding which the best lender for your needs is always important. This is the main factor that can make borrowing money safe or dangerous, including during the Covid-19 pandemic. If you have a stable source of income but need to borrow money regularly, consider getting microloans from online lending companies. Doing so will not affect your credit rating and debt will be affordable, regardless of how often you borrow money. In most cases, if you borrow small amounts of money, the interest rate will not be enough to make the microloan expensive. Pay Attention to Your Credit Score The biggest danger of borrowing money, especially during times of economic instability, is not paying attention to your credit score. Every serious financial choice that an individual makes will be recorded in his credit file. This makes it important to never borrow more than what you can afford and to only get a loan when you need it. One of the main components of an individual’s credit rating is his credit utilisation ratio. This measures how much credit one has access to and how much of it one uses. For example, having multiple credit cards and not using them can hurt your credit rating. Furthermore, lenders look at a potential borrower’s repayment history (which also includes utility bills). Missing payments or consistently making them late will lower your credit rating and determine lenders to offer you less advantageous terms and conditions. Focus on Short-term Loans or Ones That Are Extremely Affordable Getting short-term loans is great because it is easy to repay them whenever an individual determines that his income may decrease. Alternatively, you can apply for personal loans that have small interest rates or long terms (longer terms usually means smaller monthly payments). This will ensure that whatever happens, you will still be able to repay the money. Seek Cosigners for Added Financial Security It is a common practice for individuals who have low credit scores, or who are unsure if they will be able to repay their money on their own to have their loans cosigned. In most cases, individuals ask family members or close friends to be cosigners, ensuring that if anything happens, their payments will still be made. It is also important to mention the fact that having a loan cosigned will also ensure that you get better terms and conditions, provided that the cosigner has a better credit rating than you. This may result in a more affordable loan, which is invaluable, especially during the pandemic. BEST LOANS What Are the Best Loans to Get in 2021? 2020 has concluded, leaving many individuals wondering how stable their income may be in the foreseeable future. As the Covid-19 pandemic continues to disturb the normal operations of businesses from around the world, it is now more difficult than ever to determine if individuals should use the services and products offered by banks or not. An increasing number of financial analysts and consultants are currently arguing that a global recession is highly probable, however, the new deals offered by banks seem to contradict this theory. All things regarded, a recession is may be near, but this does not mean that it is unsafe or impractical to borrow money from banks. Here are the most advantageous loans to get in 2021. Personal Loan Personal loans have always been an incredibly popular form of debt, and most banks and private lenders offer them all-year-round. Furthermore, the requirements for these are as low as they can get and most individuals will be able to get one regardless of their income level or their credit rating. One of the main advantages of these is the fact that they do not require collateral, which means that the borrower is not required to secure them against his property. It is also worth mentioning that they have very low-interest rates, making them some of the most affordable loans offered by banks. As a word of warning, please pay attention to the terms and conditions offered by the lender. Even personal loans may require collateral if they are large enough or if the borrower has a poor repayment history. Debt Consolidation Loan Debt consolidation loans are great to apply for at the beginning of the year, even if it is uncertain how stable the economy will be throughout 2021. Individuals who have created a lot of debt by buying presents or other expensive items during the winter holidays will have noticed that having multiple loans that need to be repaid can be tough. Debt consolidation loans can not only help make the existing debt more affordable, but they also have the benefit of having very long repayment terms (usually of 10-15 years). This makes it possible for lenders to offer extremely small interest rates. Keep in mind that these are usually secured against the borrower’s property. While missing one or two repayments is not an issue, not paying the money back on time and failing to get an extension may lead to the lender taking possession of your property. Generally speaking, debt consolidation loans are great, even during a recession, because they are very affordable and can reduce the cost of other types of debt. Even if an individual’s income is reduced for one or two years, once his finances stabilize, he will find it easy to repay the money. Short-term Loans Short-term loans such as payday advances and microloans are useful regardless of the high-interest rates that are attached to them. This is mainly because their short terms and lack of early repayment charges enable borrowers to repay them before their income is affected. However, there is a downside to these transactions, namely the fact that using them too often hurts an individual’s credit score. This type of loan should, ideally, be used only every couple of months. Those who find themselves requiring additional financing monthly will be better off using online lending services. The companies that offer loans through the Internet do not report the transactions to any credit reporting agency, making them greater for those who need to borrow money every month. Regardless of which type of loan you are interested in, please remember that you should never borrow money that you cannot repay, or get loans when your income drops. Getting out of debt is a long and difficult process and if your income is reduced, it is better to look for additional ways to earn money, rather than borrow it. BUDGETING How to Bounce Back after the Winter Holiday Expenses? The winter holiday season is always extremely stressful, on a financial level. Having to purchase gifts for family and friends is sometimes complicated in itself. However, when we factor in the considerable price tags that some of these prices have, the situation can be extremely difficult to manage. Most individuals tend to go into debt without having a bounce-back plan after January starts. The unpaid loans can then have serious consequences on the entire year, as they will constantly reduce the budget that is available to individuals. This having been said, there are several ways to go about repaying your debt. Here are some strategies that anyone can use: Budget Your Income with Debt in Mind Simply trying to repay the debt as you go isn’t always enough. Both your regular expenses as well as the debt repayments must be carefully planned to ensure that you will have as much financial freedom as possible. This means prioritising your most expensive loans or forms of debt. This can include personal loans that have high-interest rates, payday advances, and credit card debt. One of the most commonly made mistakes when organising one’s finances is deciding to first repay the largest loans. The objective here is to get rid of the most expensive debt, regardless of its total value. As you repay these loans, even if they are smaller than the others, you will have an increasing amount of money to direct to other loan repayments or expenses. Consider Getting a Debt Consolidation Loan If you have taken out multiple loans during the holidays and decide that you may not be able to make all the monthly repayments, consider applying for a debt consolidation loan. This is a financial solution that enables borrowers to merge multiple forms of debt into one, leaving them with one monthly payment and one interest rate. Depending on the lender, it may be possible to use the money to repay your credit card debt, as well, however, this depends on who issued you your credit card. Again, as above, you should focus on repaying your most expensive forms of debt first, especially if the debt consolidation loan is not large enough to cover all of your obligations. Furthermore, keep in mind that debt consolidation loans are secured loans. This means that borrowers will have to put up their property as collateral to borrow the money. Eliminate Unnecessary Expenses If the two options presented above are not enough, you always have the option to reduce your expenses. Eliminate as many creature comforts as possible and only keep the expenses that are required for your basic needs, such as rent, groceries, utility bills, medical bills, and household supplies. Look at all online subscriptions that you might be currently paying and put them on hold. Also, focus on saving money by looking for discounts on clothes, household supplies, personal care products, and even food. While this course of action may seem difficult, you will only have to keep going for a short period, until you manage to either create a financial buffer or repay some of your debt. Generally speaking, spending too much money is never a good idea. There are no easy ways to repay very expensive loans, which means that it is best to avoid them in the first place. If you tend to borrow too much money during the winter holidays or purchase a large number of products on instalments, consider starting to save up money throughout the year and use it during December. This involves fewer risks and puts less pressure on an individual’s finances. Looking for Something? RECENT POSTS How University Graduates Should Start Building Up Their Credit Score? What to Do If You Cannot Make Your Monthly Loan Repayments on Time? Is It Safe to Borrow Money During the Covid-19 Pandemic? 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