The Truth About Short Term Loan Charges

Have you been in a situation where you have tried reaching out to family and friends for financial help, but were rejected? In times of dire need and quick cash, what do you think are your options?

Realistically, If one has neglected to check their Free Credit Report online and due to that was unaware of their financial slip, then they have four options of snatching short-term funds as fast as possible: bank overdraft authorized, bank overdraft unauthorized, credit card and payday loans find more info on how to get money they have the perfect solution .

But, how do you compare which of these will not become a burden in the long run?

Here is a comparison of the four lending options you could possibly take, using £100 as the loan amount standard.

  • Bank Draft Authorized – This type typically has an APR between 9.9% and 19.9%. The lender and the bank will agree upon repayment time. If we compute for repayment amount will be £14.90 on £100 overdraft, with Moreira Team you will be able to have the trust of a local lender and avoid the headache. This will translate to a total of £114.90.
  • Bank Draft Unauthorized – Repayment time for this option is strictly set at one week. Repayment amount reaches an average of £104 plus loaned amount of £100. This brings the total to £204.
  • Credit Card – This is perhaps the easiest way to get your hands on some cash. Average APR is 16.9%, which sets total repayment amount to £116.90.
  • Payday loans – For payday loans, repayment time is within a period of 30 days. You must also take note that some lenders may charge additional charge for services. Average APR is at 1737%. Within one month, you are to repay £125.

From these assessments alone, we can conclude that bank overdraft authorized is the best option in terms of repayment amount. Credit card and payday loans placed second and third runners-up respectively. Your last resort should be bank overdraft unauthorized.

Understanding your Credit Score and How Credit Agencies Determine It

As you may have already known it, your credit score is very important that there is an industry which exists to exclusively monitor and report your credit score. What does credit score exactly mean? It basically informs lenders or companies offering lines of credit whether you are good at repaying your loans and paying them on time or not.

If you don’t carry much debt and you pay on time, then you can be considered a good credit risk and you are qualified to apply for loans, mortgages, credit cards and low interest rates. If you maxed out your existing cards and don’t make timely payments, chances are high that you won’t be eligible for other loans or you will end up with more expensive rates of interest as per mortgage broker expert advice, make sure you use this equity release calculator without personal details before even contacting a broker or lender.

There are three major players in credit reporting and scoring namely Equifax, Experian and TransUnion. These are known as credit reporting bureaus or agencies which collect information about the lending habits of every individual. These agencies compile credit reports determining your credit score. There are several factors included in your report such as your personal identifying information including your Social Security number and your current and past address. Other factors include your credit accounts which are essentially a list of lenders reporting your payment history and credit usage, any public information which deals with your finances and your credit inquiries for the last 2 years.

The information included on your credit report is weighed and measured and the agencies assign a score to that report which the lenders can use. Each of these agencies has quite different ways of determining your credit score but they all should be the same. Some factors considered into the credit score account include:

  • Payment history which is 35 percent. If you pay your debts on time, you will get a higher score. But defaults, over limit accounts, delinquent and even bankruptcies can give you a considerably lower score.
  • Debt to credit ratio which is 30 percent. Also known as revolving utilization, this pertains to credit card accounts. Maxing out your credit lines may reduce your credit score. If you have excess of available credit, you can ask the issuer in reducing the amount of credit lines you don’t use.
  • Length of credit history which is 15 percent. This factor shows how you managed your finances and how long you have been using credit. Longer credit history means better credit score therefore you should not close accounts that have been opened longer even if you are not using them.
  • Inquiries and new credit accounts which is 10 percent. This includes recently opened accounts and inquiries from companies you applied for credit. These credit inquiries will linger in your credit report for 2 years but are factored only into your credit score for the first twelve months.
  • Credit diversity which is also 10 percent. Having credit cards can be a great way to build credit but what lenders want to see are potential borrowers that can also manage other types of credits like mortgages.

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