While your credit may have taken a beating in recent years, that does not mean you can’t secure a loan. What it does mean is that you will need to work with lenders who offer Bad Credit Secured Loan(s). Loans of this type generally have specific criteria that applicants must meet. By choosing the right lender, you can use this loan to purchase a car or something else you need, and also begin the process of rebuilding your damaged credit.
In order to qualify for a bad credit secured loan, you will have to provide the lender with proof of your monthly income. Your most recent paycheck stub will often suffice. The goal is to determine if you current make the minimum amount needed to qualify for the loan. As long as you make at least that minimum, the first hurdle in your quest for a loan is cleared.
Loans of this type also require some sort of security or collateral. If you are using the bad credit secured loan to buy a car, then the vehicle will usually serve as the collateral. In other cases, you may need to pledge some other asset that the lender is willing to accept. With most situations, you continue to have use of the pledged asset, but you cannot sell it until the loan is repaid in full. This is the basic definition of a secured loan.
As with any loan situation, make sure that the payment schedule is one that you can honor. Doing so will ensure that your reputation with the lender will remain positive and your activity will be reported to the credit reporting agencies in a good way. In addition, when the comments that the lender submits to the major credit reporting agencies are positive, you will see your credit score begin to rise in a matter of months.
Knowing how to check your credit history – and actually doing so – is arguably the best way to keep informed about your credit situation and thus any potential problems. An excellent starting point, it can allow you to make better informed choices on the way you choose to deal with the latter as well as generally informing you how you’re doing.
What affects your credit history?
How good your credit score – and record – is is dictated by how well you’ve done keeping up with your payments and repayments as well as staying within your credit limit. Lenders find out this information by referring to their own records if you are already a customer, the information given in your application and your overall credit history as held by various credit agencies. The latter generally includes the credit score that has been calculated for you, which is indicative of how well you have been able to keep in line with your repayments and credit limit (almost always the higher the better).
You should always be truthful in your applications for credit so that the information kept on your credit record is correct and up to date. The best way to maintain a good score, as well as to increase your existing one, is to make sure that you don’t exceed credit limits, make late – or even completely miss – payments and let your lenders know of any changes in your circumstances should they occur.
So how can you check your credit history?
The quickest, easiest way to check your credit rating is via one of the online services offered by big credit reference agencies such as Equifax and Experian. Being able to check your credit record is a legal right as detailed in the Consumer Credit Act, and is incredibly easy to do if you follow the online instructions given on one of these sites.
However, if you don’t have regular internet access then you can also write to a credit reference agency with an enquiry, meaning that they then have seven working days to get back to you with the information you request. If you do write to a credit reference agency requesting information on your credit record, be sure that you provide them with sufficient information. This should generally include any names you have been known as in the past (for example if your name has changed due to marriage or a deed poll), date of birth, your present and past addresses (for the last six years is usually sufficient), proof of name and address (a bill generally work best for this, and it can be returned if you ask) and a cheque or postal order for £2 for whichever credit agency you chose to contact (don’t send cash).
George McKeenan is glad he learned how to check his credit history; it definitely saved him a lot of bother.
Maintaining a good credit score is important when one is trying to secure competitive interest rates on car loans, mortgages, or credit cards. To keep a credit score high, one should follow the few recommendations listed below.
1. Do not close credit cards or revolving accounts. It can be tempting to cancel credit cards or revolving accounts once you pay them off or get that balance close to zero. Closing accounts can actually help lower your score, so it is not recommended. The reason it lowers the score is because it appears that one has less available credit since a canceled credit card is no longer available for use.
2. Obtain a free credit report at least once per year. It is helpful to obtain a copy of your credit report at least six months before applying for any large purchase. This allows ample time to verify all entries on the credit report as well as correct any errors if any exist. Also, check to make sure that your social security and personal information is listed correctly. These are items that are red flags for identity theft, so personal demographic information should be verified immediately to ensure that your identity has not been compromised. Every consumer is eligible for an annual free credit report.
3. Dispute any errors on the credit report. Review the credit report for accuracy. Often one person’s social security number can be transposed and it erroneously appears on another consumer’s credit report. Therefore, check for accounts that do not belong to you as well as accounts that are reporting incorrectly. For example, verify that paid accounts are reflected as such and verify that balances are correctly stated. Each credit bureau offers a dispute process. Typical, one can initiate this process online. The credit bureau will investigate the item in question and get back in touch with the consumer with their findings.
4. Make sure to pay each bill on time. Credit reports show monthly updates. Therefore, it is important that one pays their bills on time each month because any month that is not paid on time will be reflected on the credit bureau report. Obviously, the longer a bill is not paid, the larger impact that a consumer’s score will have. Not surprisingly, bills such as cable and electric are also reflected on ones credit report if they are never paid even though these are not revolving credit accounts.
5. Refrain from carrying high balances on credit cards. It is not good to carry large balances on credit cards. Obviously, if one is having financial struggles and has no other alternative then there is nothing else to do with the balances, but if possible, one should pay down large balances. Maxed out credit cards are simply detrimental to your credit score. As soon as possible, one should focus on lowering the outstanding credit card balances. Consumers will see extreme increases in their credit scores by doing this. One simple strategy of doing this is to pay double the minimum payment each month. Ultimately, the overall balance gets paid a lot faster and less interest is accumulated.
Catharine is a credit specialist at Kanetix, and is in the process of saving for a new home. Husband Jeff and the three kids can appreciate having a thrifty mom, as Catherine plans regular vacations and created home-made healthy treats.
The higher your credit score, the better loan terms you will be offered when it comes time to buy a new house, car or other major purchase. Having a high credit score means having the freedom to know you will be able to get approved for financing when you are in the midst of an emergency.
So now that you know how important it is to have a high credit score, what are some of the things you can do to pull your own score over to the excellent side of things? Much like a dieter who needs to face the scale in order to have a starting point of reference, you need to obtain a free copy of your credit report to know where you stand before you can go about trying to improve anything. Once you have your report in hand, the following five tips will help you get that score up if you need to.
Make Sure Your Credit Report is Accurate
There are a surprisingly high number of inaccuracies on credit reports simply because consumers do not take the time to report wrong information. You should pay particular attention to duplicate accounts, an incorrect address, date of birth or social security number, accounts you don’t recall opening and negative information being reported that is more than seven years old.
By law, credit reporting agencies can only keep information about your payment history with various creditors on file for seven years, whether negative or positive. The exception to this is bankruptcy and other public records, which can be kept on file for up to ten years.
Report Errors to the Credit Bureau
If you notice an account that is still being reported late even though you have paid it, report this to the credit reporting agency. They are required to follow up with the creditor to verify the status, and to remove the negative mark if it can’t be proven. All types of errors should be reported to insure that your information is accurate when you need it to be.
Be Timely with Your Bills
Paying your bills on time each month is key to having a higher credit score. If you tend to forget to mail payments, set up bill pay or automatic withdrawal to make sure that every creditor is paid on time every month.
Watch Your Debt to Income Ratio
It doesn’t reflect well on you if you are maxed out on all of your credit cards and are now seeking even more credit. This is refererred to as debt to income ratio, and most lenders like to see a rate lower than 36 percent. If yours is higher than that, start by paying off your smallest bill first and continue until you have eliminated all non-essential debt. Your accountant can help you with keeping your finances in good standing.
Keep Accounts Open
Even if you no longer use a credit account, by keeping it open you will raise the amount of available credit. The more available credit you have, the higher your score will be.
If you hire an accountant or bookkeeper you can often save yourself considerably on your taxes. It’s definitely worth the investment to keep your credit in good standing.
You may not have heard of the credit score scale however, it is something that you should learn and understand. Basically the scale is a ranking system used by banks and other lenders to determine your credit worth or your capacity to repay back the money you want to borrow. The banks use this system to qualify you for loans and other financial products that you apply for.
In recent times the credit score has become a very important number because of our greater dependence on credit and the current state of the economy. Before the financial downturn the score did not play a influential as it does now. In those days it was very easy to get a loan as the banks were literally giving them away. Today, you will find the loan market far more challenging and difficult. There are now tighter constrains and banks are very choosy to whom they lend money to. When the economy was good a credit score of 620 would qualify you for very good deals on interest rates. However, today that score would not get you very much. Today, a credit score of 740 is considered to be the level that people need to attain to have a chance to qualify for the best deals.
It is very important that you regularly check your score and see where it sits on the credit score rating scale. In this way you can see if there are any major changes. The difference of 100 points can mean paying extra thousands of dollars on a long term loan. You can check your score by contacting the leading big 3 credit bureaus which are Trans Union, Experian and Equifax. There is a fee for this however, there are on-line services that can provide you your scores for free. It is also advisable to obtain a copy of your credit report. This report is also provided by the credit bureaus and is free of charge. The credit report contains information relating to your credit history. Check the report to ensure the contents are accurate, up to date and if there is any evidence of identity fraud. If there are any details that are wrong then, report this to the credit bureau immediately.
In today’s world, your credit reports influence more than just your finances. Bad credit can also hinder your ability to find a place to live or get a job. Everyone is entitled to one free annual credit report from each of the three major credit bureaus. If you are not getting yours, your credit could be at risk.
Misinformation
Someone else’s account could easily wind up on your credit report by mistake. People who have resided at the same address or have common names are susceptible to this problem. You should regularly check your credit reports to make sure they don’t show any accounts that are not yours. Never assume that the credit bureaus are perfect.
Fraud Detection
You can’t rely on just your credit card statements to alert you to identity theft. Identity thieves often open new credit card accounts with stolen information in order to avoid detection. Although many credit card companies have fraud detection teams, identity thieves are becoming increasingly trickier. It is up to you to make sure that your personal information doesn’t get used fraudulently.
Negative/Positive Items
Just because negative items on your credit reports are supposed to drop off after a certain period of time, that does not mean they always do. You should examine your credit reports to see if there are any lingering negative items that you can get removed.
The same holds true for positive items as well. If one of your creditors is not reporting to all three major bureaus the way they should, you need to contact them and request they do. Good credit reporting helps balance out negative items.
Timing
You may not plan on opening a new line of credit or getting a loan, but you never know when you might need one. Don’t want to wait until you’re applying for a loan to check your credit report. Most disputes take 30 days or more to resolve and reflect on your credit reports. If you are taking out a loan for a last-minute emergency, you could wind up paying a higher interest rate because you didn’t pay attention to your credit.
Don’t Limit Yourself
Many people assume their credit is worse than it is or think it’s better than it is. Before you approach any lender, you should know what your credit is like so you can competitively compare interest rates. Don’t settle for the high rates offered by sub-prime lenders when you can do better. Alternatively, you don’t want to apply with prime lenders if you know you can’t meet their credit eligibility requirements.
What seems like a stable condition could change at any time. The best way to deal with financial, housing and job emergencies it to be aware of what is on your credit reports and ensure the information is accurate. A proactive approach to managing your credit can save you a lot of grief if you find yourself in a bad situation.
About the Author: Tony Smith is a writer, blogger, and freelance designer. He enjoys writing about a wide variety of niches and has recently completed work for CreditLoan.com.
