How being rejected for credit can harm your credit rating
Gone are the days when credit was easy to come by. Banks have done a u-turn on the supply of credit since the economic crisis and subsequent recession.
Even if you were always able to get credit easily in the past, you may now find yourself being rejected for no apparent reason.
Unfortunately, it is a vicious circle of rejection and further rejection, for even one rejection weakens your credit score and can lead to more.
Credit scoring can be a mysterious thing and not all lenders adopt the same approach, so it can be difficult to know how to improve it.
If you receive a lot of rejections, then your credit score must be low, or you have a poor credit history. If you have only been rejected once, then you may not just fit those particular lenders’ parameters.
There are a number of things you can do to improve your credit score and get back on track.
One option is to look at applying for bad credit credit cards. These cards are designed for those with a poor credit rating.
If you are someone with a bad credit rating, you will not be considered for the most competitive deals on the market but a bad credit credit card is ideal if you have poor rating or you have little or no credit history to assess.
One of these cards can go a long way to improving your credit rating and in return giving a better chance at securing a more competitive credit card deal in the future.
Bad credit credit cards are essentially a trial run, a chance for you to demonstrate that you can manage credit and debt responsibly.
After all, a credit card can be a very useful thing to have in certain scenarios, for example it is a good idea to make any purchases over $100 on a credit card as this offers you a certain level of protection should anything go wrong.
If the goods you buy are faulty, or the company you purchase from goes bankrupt, your payment is protected, unlike if you had paid cash, or by debit.
They are also very useful for purchasing products on the internet, an increasingly popular way to shop.
These cards do, of course, come with certain drawbacks, as part of their remit is to encourage responsible lending. So naturally the annual percentage rates (APRs) are much higher than on other credit cards on the market.
You will not be able to access any interest free deals on these cards either. By operating strictly within the rules of these cards, that is paying them off every month in full so you do not incur interest, you can work towards improving your credit rating.
It is also a good way to build up a good credit history from scratch. Another point to remember is that payment protection insurance is costly and if you feel you might need it, then check out some stand alone providers first as they often offer better value.
Shopping Secrets = Savings
You only have to visit the petrol station and the supermarket to realise that the cost of living is rising. Everyone is feeling the crunch and we are all looking for smart ways to shop.
Even credit card companies are getting in on the act, offering balance transfer incentives, so always be on the look out for deals
When arranging a balance transfer, look out for arrangement fees as well as the promotional period. Check your credit card or loan and make sure you are getting the best interest rate. If not, make the change.
Good offers on balance transfer are coming up all the time. Make sure you keep your eye open and at the end of any existing promotional period, shop around again to make sure you are still getting the best deal.
Many people believe they are saving money when they shop in the sales. Beware of this trap. You are only saving money if the purchase was planned and is for an item that you need.
Buying something that you happened to see in the sale and liked, does not constitute a saving.
Speak to the sales assistants. The recession means that stores are vying for our custom and, depending on the product, you may be able to negotiate a deal.
If you spot an item of clothing that you like and the sales are coming up, check the laundry label. A red or black ink spot indicates that it is likely earmarked for reduction in the forthcoming sale. So why not see if you can save a few pounds by delaying the purchase.
Buying in bulk can save you money, so look for offers such as buy one get one free. However, don’t always assume that bulk is better. Be sure to check the unit cost to ensure you are getting the best deal.
Bulk buying items that, deep down, you know will not get used is also a bit of a pitfall. Remember, it is only a bargain if you need and use the product. Check the sell by and use by dates if applicable and be honest with yourself.
Some people believe that sticking rigidly to a shopping list will save them money. This is only half true and a little flexibility can save you a small fortune.
Whilst it is a good idea to know what you are visiting the supermarket for, be on the look out for offers and take advantage of them.
Brand loyalty is another way in which we often spend more than we need to. True, branded products offer reassurance and a comfort that we buying a quality product, however they are often priced accordingly.
These days many store own brands are practically indistinguishable from the big brand names so you won’t feel that you’re missing out. Some stores offer money back guarantees, so what have you got to lose?
This tip is so simple but it has to be said, shop around. There can be nothing worse than finding out you paid over the odds for something. Use the internet, call around to check prices and see what is on offer.
The best advice for saving money comes down to this, have a household budget for items like food and fuel and stick to it.
Bank Fee Fiasco
Following the financial markets meltdown, banks are under increasing pressure to act more responsibly whilst rebuilding confidence in the financial systems and rebuilding their financial strength.
However, with many of the apparently easier ways to make money now gone, banks are resorting to ever more clever ways of earning fees.
Savings rates (linked to Reserve Rates) are at record lows. Real savings rates are negative, as inflation runs at much higher rates. Careful savers are being penalised by seeing the purchasing power of their money reduced over time.
Banks respond by using term savings products that encourage savers to fix savings into one, two or up to five year terms, meaning that they lose ready access to their money and have to take a risk on where future money cost rates will go.
Banks have increased both the frequency and amount of fees being charged. Now it is common place to have administration fees for services that were once free. Application fees, for example, are also being charged for loans or mortgages.
Obtaining a credit card has also become much harder. Even the number of balance transfers deals that were once common have reduced. But for the customer with a good credit history, this can be an excellent way of reducing the very high charges levied by banks on debt balances. Continue reading “Bank Fee Fiasco” »
