Credit Score Basics
Your credit score is a calculation of your credit-worthiness that lenders and others use as a gauge of the risk you pose to their company. Lenders use your credit score to determine whether you qualify for one of their loans and the interest rate you should be charged for borrowing money. Landlords and property owners check the credit scores of potential renters to determine whether they will be diligent about paying their rental payments on time. There are even some employers that review the credit scores of potential employees that would be placed in positions of trust once hired. The most commonly used credit score is the FICO score, although there are others that use slightly different calculations to come up with your personal credit score.
Credit Score Factors
There are a number of different factors that go into the calculation of your credit score.
- Credit utilization rate – the amount of your total available credit limit you’re using.
- On-time payments – your ability to pay your bills on time.
- Number of negative reports – these reports include bankruptcies, foreclosures, accounts in collections, tax liens or civil judgments.
- Length of credit history – amount of time your accounts have been open, averaged across all your accounts.
- Number of credit accounts – total of all types of credit accounts, including credit cards, auto loans, mortgages and other loans.
- Number of hard credit inquiries – hard inquiries are reported whenever a lender requests your credit report to make a decision on whether to approve your application.
Improving Your Credit Score
If you want to get the lowest interest rate for your loans and increase your chances of being approved for the things that you want, you will want to keep your credit score as high as possible. A great credit score is generally a FICO score of 720 or higher, while a decent credit score is typically around 650. For a great credit score, keep your credit card balances low, be careful to never miss payments, and only apply for credit when you really need it to minimize the number of hard inquiries reported.
One of the principal concerns of any business is to increase the sales of its goods and services. An essential part of making those sales is providing your customers with the means of making payment for the goods and services they buy.
The following briefly explains how to arrange for your customers to be able to make credit and debit card payments online – thereby increasing your potential for sales and business profits.
The principles of setting up card payments online are very similar to those for setting up card payments through a physical point of sale terminal (say, in a shop, restaurant or any other business premises) – each uses slightly different technology.
Although a common perception might be that card payments – through a physical terminal or online – have become almost universal, the fact is that an estimated two-thirds of Britain’s small and medium sized enterprises do not accept this method of payment, according to a report on the Real Business website recently.
Such a failure to provide customers with the method of payment they want – since one third of customers who are unable to pay by card simply decline to make the purchase – amounts to lost revenues of an estimated £10 billion.
One of the reasons for businesses apparently being so slow in providing customers with methods of payment they prefer is the perceived cost of installing and maintaining contracts for the use of physical terminals and online payment gateways.
Given the potential for considerably increased sales as a result of accepting card payments, however, the costs are probably overestimated.
Besides, this might be precisely the kind of one-off business expenditure for which a finance loan may be perfectly suitable. Business loans from Everline do just that –sums of anywhere between a few thousand and up to £50,000 may be borrowed over the relatively short term of a few months up to 24 months. The ease and speed with which such borrowing may be set up through an online application may make this an ideal source of funding for your card payment installation.
Terminals come in different types, depending on the business requirement and may be fixed countertop, such as for use in a shop, or portable, often used in restaurants.
Because the security of payments and of course the cardholders personal details is so important, you might want to ensure that any terminal you install meets the current Payment Card Industry (PCI) Date Security Standards (DSS).
The ongoing cost of running such a terminal depends on the type of machine you choose and the number of customers who use it. The cost is made up of a contract with the supplier, a charge for each transaction made, and insurance protection for the terminal.
In order to accept card payments online there is of course no access to any such physical terminal.
Instead there is something called a payment gateway which acts as a service provider for the authorisation of card payments. The gateway effectively takes the place online of the physical terminal you might find at a retail point of sale and provides the same degree of security for protecting cardholders’ information and for the details of the transaction to pass from the customer to the business and from the business to a designated payment processor (the third party agent appointed by the business to handle card transactions).
With the aid of technology, the following bewildering series of steps allows your customer to make a card payment online for the purchase of your goods and services:
- the customer signifies the purchase by clicking on a button on your webpage labelled “Purchase” (or something similar);
- the customer’s web browser encrypts his or her transaction before the details are passed to your webserver;
- you forward these transaction details – again encrypted – through your payment gateway and the payment gateway forwards it to your chosen payment processor (bank);
- the payment processor directs the transaction details to the relevant card association, such as MasterCard or Visa;
- the bank that issued the card receives a payment authorisation request and gives its response back to the payment processor, which forwards the answer to the payment gateway;
- the payment gateway is then able to authorise the purchase that has been made online.
Incredibly, this whole process takes little more than two or three seconds and then it is then over to you to fulfil the customer’s order. Once that is done, the final steps are taken to ensure that the funds authorised by the card issuer and payment processor are deposited into your bank account.
Trevor Wetherly lives near Birmingham and spends his weekends renovating a small cottage. He intends to retire there and enjoy the quiet life very soon.
In the tech-world, a single company coming up with multiple solutions to too many problems never works out. Apple wouldn’t be Apple without developers creating billions of apps for its store, and smart TV manufacturers would be pretty stupid if they didn’t rely on Netflix, Hulu and Amazon to integrate with their hardware.
The same goes for accounting software. Running a business today is more than just accounts receivable and payable. It’s about sharing files, making your e-commerce site easier for customers to pay and simplifying your payroll process. That’s why it’s no surprise that Quickbooks and Xero — two popular pieces of accounting software — both offer integration with many apps.
Xero, a relative newcomer when it comes to accounting software, integrates with more than 300 business apps. Quickbooks has about 60 right now, but is adding more.
So what are these apps? Here are some of our favorites:
For small businesses that have a retail store, there’s a good chance Square is being used as a main form of payment. The company plugs into an iPhone or iPad and lets customers swipe their credit card, tap in a tip and sign their name using their index finger. Square charges 2.75 percent for all major credit card swipes.
Both Quickbooks and Xero offer integration with Square’s app. The Square Quickbooks and Xero integration imports all Square sales seamlessly, automatically updating the books and keeping transactions organized.
For now, this small business expense reporting app only integrates with Quickbooks.
It automatically creates expense reports from credit card charges and syncs with your existing books in Quickbooks.
Concur lets employees download their mobile app to submit everything from lunch receipts to mileage. Everything inputted into that mobile app, again, syncs with your accounts in Quickbooks.
This app, for now, is only for Xero.
Expensify’s tagline is “Expense reports that don’t suck.” The app’s easy-to-use interface and simple design makes expense reports fun again… if they were ever fun to begin with.
Expensify is used in 169 countries by more than 2 million people and 300,000 companies — it’s proven. Your Xero chart of accounts is imported into Expensify as expense categories, helping you easily categorize all your expenses into a comprehensive report.
Intuit, the creator of Quickbooks, is continually adding more apps. For now, they are behind Xero, who can integrate with the likes of PayPal and eBay.
Xero currently has partnerships with Bill.com, (cash flow), Deputy (timesheets) and Kabbage (funding), and is always adding more.
Quickbooks is leaning on a few key apps as well, including Shoeboxed (expenses and documents) and Transaction Pro Importer (invoices).
Both companies understand the importance of integration, which will only push developers to create more apps that make running a business more efficient. If you want to learn more about app integration with these softwares, go to Xero and QuickBooks to learn more.
You’ve always gotten along fine with just a checking account, so you may be wondering why open a savings account? There are actually several benefits to opening a savings account. If you’ve never seen the value before, consider these five benefits:
- It’s a safe place to store money A deposit account held in an FDIC-insured bank or credit union is one of the safest places to keep your money. Keeping the money in your home still leaves it vulnerable to theft. On the other hand, keeping all of your money in your checking account but trying to consider some of it “savings” may not be enough to resist spending it on more immediate needs.
- You can set and save for goals Once you’ve opened a deposit account, whether it’s a savings account, money market or certificate of deposit, you can then monitor your savings easily online. This will help you get an up-to-date picture of your finances and set savings goals. You might consider opening more than one savings account so that you can save separately for things like education or maybe an expensive purchase like a new computer or TV. Here again, opening a savings account gives you more options and more motivation to save then stashing it in an envelope or your wallet.
- You will earn interest
Interest is probably the best part of opening a savings account – letting your money earn money. And, depending on which deposit accounts you choose to open, you can earn varying amounts of interest. Generally, the highest interest rates are found in certificates of deposit, then money markets and finally savings accounts. (This is because the access to your funds is more restricted in that order as well.) Regardless, when you open a savings account, you also open the possibility of earning more money just for doing so.
- It will help your credit
Having a savings account that is well-stocked and growing can do good things for your credit score. Potential lenders like to see that you are responsible with your money and have some at your disposal beyond your checking account. Keeping your savings in cash won’t allow them to find it when they run your credit.
- You can access the funds when you need them
Finally, if you had hesitated in opening a savings account because it seemed restrictive, no need to worry. Savings accounts can be as liquid as you need them to be. A traditional savings account at the same bank as your checking account is easily accessed. You can transfer funds between the two accounts at will. And, with online banking so common now, you can do this just as easily between financial institutions.
So, if you’ve been on the fence about opening a deposit account, debate no longer. Open a savings account sooner rather than later to start seeing the benefits.
Sponsored content was created and provided by Citizens Financial Group.