Author: Jamie

I have always liked to write and writing about finance is something that I specialise in. This is partly because it is something that I know a lot about but it is also because it is an area that I like writing about. I know that there are a lot of people that would benefit with some hints and tips about finance and therefore I hope that by writing about it, there will be more information available for people to be able to find. Hopefully people will be able to use the information to be able to improve their financial situations and be able to reduce the struggles that they have with money.
Credit Scoring

How Does Credit Scoring Work?

We often hear things about credit scoring, but there are still a lot of us that do not really know what it is. Therefore, it can be a good idea to make sure that we do know what it is and how it works and then we will be able to have a better understanding of it all.

Credit Records

A credit record is a collection of information about you. It is held by three different companies and it will list different things which certain people will look at to make decisions about whether to take you on. The information will include any CCJ’s that have been held against you, details of loans that you have outstanding, details of missed payments on loans, contracts or things like utilities. It will also have details of regular payments that you make as well as your salary and whether you are registered to vote. This information is used by different parties in different ways and it is important to make sure that it makes the right impression.

How Others Score You

You will find that although you are not given a specific credit score, those looking at your credit record will be looking to see whether they can trust you financially. They will want to see whether you are able to make payments. This is because the people that check will be lenders, landlords, insurers and people like this. They all rely on you making regular payments to ensure they get their rent paid, loan repaid or just the money that you owe, paid to them. Therefore, they will want to see evidence that you will be able to do this.

They will all have different ways of judging you though, which means that it can be pretty tricky to know what you should be doing to keep them happy and to make them want to take you on. There are things that will put them off though, such as any recent CCJ’s, lots of missed payments, being consistently turned down for loans and lots of loan applications. However, it can be a bit trickier with other things. They do like to see that you are capable of making regular payments and so even if you are paying your electricity bill on time each month, then this can go in your favour. If you have had loans and always made the repayments, this will also be helpful. However, it is thought that there are some lenders that like borrowers to have missed a few repayments. This is because they know that if that happens, they will be able to increase the charges and that will mean they profit more from you. However, other lenders do not feel that way and they want to see you making all repayments. It is best to make the payments if you can because you will be better off that way and will avoid the extra charges associated with missing payments. However, it can mean that if you have missed a few payments in the past, you may not need to worry as that will not necessarily mean that you will be overlooked. However, it is good to try to make sure as much as possible is in order so that you do not look like you are out of control.

It is also important to make sure that your record is correct. There may be mistakes on there which could lead to you being unfairly judged. Sometimes, for example, when you have paid off a loan, it can still show as outstanding on your record and look bad. So do make sure that any errors get corrected so that you are not unfairly judged based on it.

Overdrafts

How Many Overdrafts Should I Have?

You may wonder whether it is a good idea to have more than one overdraft. This is something that some people do and some people do not. It is worth thinking about whether it is something that is a good idea for you.

Advantages

If you have an overdraft for quite a small amount, then having another one could be handy. It will mean that you will have to open another current account that offers this service. It could be worth looking around to see what is available as you will find that current accounts will vary in how much they charge for overdrafts. They have to only charge interest and the rates they charge will differ, although they tend to be between 35% and 40%.

Disadvantages

The more overdraft money you have available to you, the more you can borrow. Although this sounds good, it is easy to forget about the cost of that borrowing. You will be charged as soon as you get overdrawn. Normally an overdraft is repaid when you have some money paid into your account. This means that when you get paid then it is repaid. If you have two separate overdraft in two separate accounts then it is likely that you will only have money going into the one account. The other will not and so the overdraft will not get paid off and this will be expensive for you as you will have to keep paying the interest on it. So, you need to think hard about whether it is a good idea to have a second one and pay that interest or not.

Alternatives

It could be well worth thinking about whether it could be a good idea to think about an alternative idea instead. It could be worth stating by asking your current overdraft provider whether they will be able to extend your overdraft and lend you a bit more money. It could also be worth looking into other borrowing ideas which could be cheaper. You might find that you could use a credit card, for example which could have a lower interest rate than an overdraft and you will still have no pressure to pay back very much, just a small minimum each month to cover the interest, the same as you would have to with paying the interest on an overdraft.

It might be better though, to get a loan which you do have to repay in instalments and then it will not last so long and you will be sure that you will get it paid off. It can even be good to think hard about whether you really need to borrow the extra money at all. Consider whether you have some savings you can use instead or whether you can wait to buy the item once you have more money. It can be a good idea to also think about whether you can reduce your spending in other areas so that you will have more money available so that you do not need to borrow. You might be able to buy items at lower prices or buy less items so that you will not be spending so much and will have more available. You might also be able to find ways to earn more money as well which could help you. Of course, conventional jobs may not be easy to come by or you may not have the time to work more than you are already. However, you might be able to make some money by selling things that you own, by making things to sell, doing online freelance work or things like this. It is well worth investigating all of this so that you can decide whether there is something that you can do which will help your situation and mean that you can avoid getting a second overdraft. It is far better to only have the one and will be easier to repay it and keep track of it as well as keeping your costs down as well.

Mortgages

How to Choose Between Fixed and Variable Rate Mortgages

There are lots of different types of mortgage and it can be confusing at times knowing which one to choose. One of the main choices that you will be making is between a fixed rate mortgage and a variable rate mortgage. It is important to have a good understanding of what the difference is between the two and then you will be able to decide which will suit you the best.

Fixed Rate Mortgage

A fixed rate mortgage will have an interest rate which does not change for a certain amount of time. This will not normally be for the whole of the mortgage but for a limited time, it could a few years or even five or ten years. The idea of fixing the interest is that if the mortgage rate changes, your rate will not. So, if the Bank of England puts interest rates up, it means that most people will have their mortgage rates put up and they will have to pay more each month. With a fixed rate this will not happen and you will continue to pay the same rate even when others are paying more.

If the rates go down though, you will still have to pay the same rate. Therefore, there is a risk that you will keep having to pay this higher rate. Often with a fixed rate mortgage you will be tied in as well, which means that you will not be able to change to a different lender. Or you might be able to change but pay a really high fee. You therefore need to think about whether you think that it is worth being tied in like this. If the interest rates fall a lot, then you could really regret being in a fixed rate mortgage but if they go up you will be really happy. It can be difficult to predict as well, even if you feel you know the way the market is headed, you never know when something might come along and completely disrupt things.

Variable Rate Mortgage

A variable rate mortgage will change whenever the lender decides to change the rate. This means that it has the potential of being able to go up and down at any time. This is something which can unsettle some borrowers but others are happy with it. It means that if the bank of England puts the interest rates down, then the lender might also put the rate down and you will pay less but of course the opposite can happen to. Unless you have a tracker, the lender does not have to follow the Bank of England’s rate and so there is no guarantee that it will go up or down. However, realistically it is likely that the lender will put the rates up when the Bank of England puts rates up but sometimes they do not lower it when it puts rates down.

Choosing can be tricky. If you are being very stretched financially just finding the money to pay the mortgage then fixing the rate will mean that you will know that you will not have any nasty surprises and suddenly have to end up paying out more money than you were intending to. In this case it could be reassuring and helpful to get a fixed rate mortgage. However, if you can afford to pay a bit more if necessary and you feel that rates could fall and want the flexibility of being able to switch lenders, then a variable rate could be better. Also if you want to ensure that your variable rate will go down if the Bank of England lowers the rate then it could be worth considering a tracker, but you will need to check carefully whether this will be worthwhile depending on how much the fixed fee is for this.

Payday Loans

How Fast are Payday Loans?

If you need money in a hurry then you might feel that you should choose a payday loan because they are fast. It is wise to check out how quick they actually are so that you can be completely sure that they will be quick enough for you before you decide that they are the right answer for you.

How Long do They Take to Arrange?

How long a payday loan takes to arrange will depend on the lender. It is worth understanding that there will be differences and these can be quite big. It can be possible for some lenders to get you the money that you want within a few hours, but others may take a lot longer. This means that if you need money quickly, then you will need to investigate this carefully as it could be crucial. If you need money very quickly, it can be easy to panic and apply very quickly, but if you do not check out things like this then you could regret it as you may have to wait longer to get them money than you expected.

When Can I Get Money?

There are some payday lenders that are available all of the time. This means that it is possible for you to be able to get money even outside of normal banking hours such as at weekends and in the evenings or at night. This is something that could be really handy for some borrowers. However, this is not something which all lenders will offer and so if it is something that you want, then you will need to make sure that the borrower that you have in mind will offer it. If you need money in normal banking hours, then you will probably find that most payday lenders will be able to help you.

Are Other Loans as Quick?

It is worth bearing in mind too, that there could be other loans that might be just as fast. This is important because you may find that those other loans could be better suited to you and therefore you will be able to use those instead as long as they provide everything else that you are looking for. For example, if you have an arranged overdraft, then you will be able to have access to this money immediately and the same if you have a credit card, although the credit card can only really be used to buy things rather than be as flexible as an overdraft. If you have maxed these out or do not have them then they will probably take longer than a payday loan though.

Drawbacks of Being Quick

It is worth being aware that there can be some problems with choosing a loan that is really quick. The main problem is that you will not have much time to change your mind. If a loan takes a while to organise, you might come up with an alternative idea while you are waiting for the money to arrive. However, if you do not have very long, then there will be no time to come up with an idea and therefore you will have to go with the loan idea. Although it might suit you perfectly, it can be better to take a bit of time to consider all of your options, to make sure that you are choosing the one that is the best for you.

It is also worth noting that you will be able to speed things up yourself, by having a better understanding of your options before you are in the situation of needing money by researching the loans types that are available. Also, it is a good idea to make sure that you fill out the form properly and make sure that you provide them with everything that they need so that you can make sure that you are not a cause of slowing down the process.

Quick Loans

How to Use Quick Loans

There are lots of different types of loans available and it is a good idea to have an understanding of all of the different types of loans and then you will be able to know which will be the most suitable for you, when you are at a time when you need to borrow money. It is therefore a good idea to even learn about the less common loans, in fact probably more important because you are less likely to know about those and other people you might ask for help may be less likely to know about them as well. It is likely that quick loans might be a type of loan that you do not know that much about and therefore one that it would be important to learn about.

What are Quick Loans?

A quick loan is just another name for a payday loan. This is a fairly new type of loan which was designed to help those who cannot borrow money elsewhere and need money in an emergency. This means that they were designed so that the money could be received really quickly. This is still the case and although there is a difference between lenders there are some that will be able to provide the money needed within a few hours of application.

How do I Use Them?

To apply for a loan you will need to complete an application for in the same way that you would with any other type of loan. This is often on the website of the lender or sometimes you may even be able to apply over the telephone. The forms are quick and easy to complete but you may need to send some additional information with them to prove your address. The lender will decide if you can have the money and then make you an offer. It is possible that they will offer you less money than you want as they tend to only lend smaller amounts to first time borrowers. It will depend who the lender is and how much you want to borrow. If you accept their offer the money will be transferred to your bank account and you will be able to withdraw it as cash, spend it using a debit card, write a cheque or whatever works best for you.

Repayment is also very fast. The lender will set up a direct debt so that all the money that you have borrowed, plus fees and interest will all be repaid in one lump sum on the next day that you get paid. They do this because you are much more likely to have the money available then, as your salary will be in your bank account. You will still need to be aware of how much it will be so that you can calculate whether you will have enough. Do not guess at this stage as it is really important because if you do not manage to repay the loan or the full amount you will have extra charges to pay. So, think about how much you will have to repay and how much you will be paid. Also, think about how much you will need to pay out to cover everything else that you will need to buy as well. Think about the regular payments that you have going out such as utilities, rent etc but also things you buy more regularly such as food. You will need to make sure that you have enough before taking out the loan. You may be able to change your spending habits, perhaps buying less and paying less for what you do buy, in order to make sure that you have enough money but make sure you are confident before taking out the loan that this will work for you.