How to Build Up Your Credit Score Using Only Your Credit Card?

Credit cards are generally known as great tools for unexpected emergencies or situations when an individual cannot keep up with his monthly expenses. To a degree, they can be extremely useful, however, most people tend to use them too often or delay paying them off and this can lower their credit score by a considerable amount. Furthermore, lenders typically look at a potential borrower’s credit utilization ratio when assessing his eligibility for loans. This ratio is calculated by looking at the amount of money an individual has access to (through his credit cards) and then determining what percentage of the total available amount he is currently using.

In most cases, a credit utilization ratio of over 30% will lower your credit rating. In other words, as useful as credit cards may be, using them improperly can also have serious consequences and lower an individual’s credit rating.

This having been said, having a healthy financial life and paying attention to how you use your credit cards can also help you build up your credit score. Here is what you need to do:

  • Find a Credit Card That Comes with Great Rewards

Different lenders have different offers when it comes to credit cards. Look for one that comes with travel perks and cashback offers. This way, you will also get various benefits on top of raising your credit rating. Generally speaking, you should first look for a credit card that can be used both in the country as well as abroad and works on a no-fee basis. At this point, you should also make sure that you choose a credit card that has a relatively low interest rate and as few additional charges as possible.

  • Use the Card in Stores That Offer Discounts

Various stores offer discounts to clients that pay for their purchases using certain credit cards. Be sure to use your in these shops to get as much as possible out of your deal. However, you should not restrict the card’s usage to these locations. If you need to, pay using the credit card in any store that you want.

  • Use the Card Every Couple of Weeks, but Repay the Money as Soon as Possible

How often you use your credit card will affect your credit rating. The golden rule is to use the credit card sparingly and to always repay the money as soon as possible. By doing this, the lenders will conclude that you can manage your income and keep your debt under control.

  • Never Reach the Limit of the Card

If you have a decent credit score, lenders will set a relatively high borrowing limit for your credit card. However, his does not mean that it is a good idea to ever max it out. Regardless of how much money you can borrow using it, try to only make small purchases with your credit card. The important thing here is that you are not reserving credit that you do not intend to use. How little you borrow is irrelevant. 

  • Keep Your Credit Utilization Ratio Under 30%

Your credit utilization ratio is calculated by looking at the limit placed on your credit card and then determining what percentage of that you have borrowed at any given time. Ideally, you should keep this ratio under 30%. Anything more than this will temporarily lower your credit rating and make it more difficult to get loans from the bank. Please keep in mind that the effects of going over the 30% limit are temporary. Once you pay off your credit card debt, your credit rating will return to normal.

Is It Safe to Give Your Children Access to Your Credit Card?

Most people use credit cards weekly, if not more often. These financial tools can be invaluable for those who may have to pay for emergency expenses or who simply need access to various services and products but cannot afford them at a certain moment. It is also important to mention that credit cards can be useful, as well as dangerous. Maxing them out, forgetting to pay them off, using them too often, or never using them (yes, this is an issue as well), can cause the card owner’s credit rating do drop. However, these cards can also be used to increase an individual’s credit rating, provided that they use them responsibly.

This having been said, is it a good idea to give your children access your credit card? While doing so does have certain benefits, it all boils down to whether or not they are responsible enough not to abuse them. Here are a few things to consider:

  1. You Can Make Them Authorised Users

While it is impossible for underage children to have credit cards of their own (considering that they do not have financial histories), they can use their parents’. The minimum age that is required to become an authorised user of a parent’s credit card depends on the lender. Some set the age limit to children of 13 and over, while others restrict this service to those who are 16 and over. Regardless of this, making your children authorised users of your credit card will allow them to legally become extensions of the card owner. In other words, the credit card agreement will still be based on the parent’s credit rating, but the children will be able to use it.

  • Authorised Users Can Build Up Their Credit Rating Using the Card

While an authorised user is an extension of the primary cardholder, his credit report will track the credit card’s utilization. This includes how often it is used, the amount of money that is borrowed using it, and how quickly the debt is repaid. The main advantage of this service relationship is that the authorised user can expand his financial history and build up his credit rating by using the card.

  • It Is Possible to Set Limits for Authorised Users

Most lenders that offer credit cards will allow the primary cardholder to set spending limits for the authorised users. This enables parents to limit how much money their children can spend using credit cards.

  • Smartphone Apps Can Track How the Credit Card Is Used

Almost all lenders offer apps that their clients can use in order to check their credit card debt, as well as their transaction history. This can be a great tool for parents that want to keep an eye on their children’s spending habits. In some cases, it may even be able for the primary cardholder to remotely revoke the usage authorisation of his credit card.

Generally speaking, credit cards can be extremely safe, and useful, provided that the primary cardholder takes precautions. Giving a teenager access to your credit card can be safe, as long as he is responsible and does not abuse it. Furthermore, in the long run, making your child an authorised user may save him a world of trouble. By using the credit card and ensuring that the debt is repaid (by you or anyone else), he will build up his credit rating. This can be invaluable when he goes to university, applies for a student loan, or tries to take out a personal loan once he becomes financially independent.

How Bank-Offered Microfinance Loans Could Harm Your Credit Score?

For most individuals, microloans such as payday advances are invaluable tools when it comes to keeping up with their monthly expenses. They are currently one of the easiest ways to borrow small amounts of money, in an instant. Furthermore, lenders do not usually place any restrictions on how the money can be used, making the loans appealing to a wider variety of borrowers.

In some cases, it is also possible to get microloans right from the cashpoint. Generally speaking, banks and various private lenders have done everything in their power to market these types of loans as financial products that are both easy to use, as well as save. In other words, they have been advertised as loans that do not require a particular credit rating, and that individuals can get whenever they need extra money.

This having been said, one of the most important aspects of these loans that lenders often avoid mentioning is that these financial products often have hidden fees attached to them, as well as other considerable disadvantages that make them less than practical. Here is what you need to know:

  • Hidden Fees That Are Often Disclosed on a Need-to-know Basis

Most banks advertise microloans and payday loans as great ways to borrow money for urgent expenses, but they leave out the fact that there are several charges that can be applied, as a result of how long or how little it takes to repay the money. Furthermore, getting payday loans from cashpoints that belong to other banks also apply extra charges to the transaction.

  • Using Them Has a Negative Impact on Your Credit Rating

Getting payday advances every month is sure what to reduce your credit rating in a short time. This is because each bank-given payday advance is marked in an individual’s permanent financial records as a loan, which means that it affects all calculations with regard to how much credit an individual is accessing and how often. Please keep in mind that taking out payday loans every six months or so will not have a considerable impact. The issues start appearing when an individual borrows money one month after the other.

  • Taking Out Microloans Will Affect Your Eligibility for Other Financial Products

Microloans may be presented as loans that are easy to get and repay, but they can also affect an individual’s ability to access other financial products. For example, lenders look for indicators that a potential borrower is unable to manage his finances. Taking out payday loans too often may signal them that an individual needs extra credit to pay all of his monthly expenses. As a result, certain products may not be accessed by the borrower while others may have more restrictive terms and conditions attached to them

  • There Are Safer and More Affordable Alternatives

Most lenders tend to push microloan deals on individuals who appear to already have an unstable financial situation. This is because they are the most likely to need to borrow money to get through the month. However, there are better ways to get the money that you need. The first method would be to set up a more restrictive budget to make the most out of your monthly income, however, if this is not enough, it is possible to borrow money from alternate sources. There are several Peer-to-Peer online lending platforms that offer short-term microloans. These have low values and need to be repaid in 30 days, but have the advantage of not harming your credit rating. Most P2P online lending platforms do not report their transactions to credit registers, which means that they won’t show up on your financial records.

The Easiest Way to Start an Online Business during the Covid-19 Pandemic

The Covid-19 pandemic that has swept the globe has led to many individuals losing their jobs or having their incomes reduced by a substantial amount. As a result, a large number of people have been finding it increasingly difficult to continue paying their financial obligations and monthly expenses. This having been said, what most do not yet know is how easy it is to start a business, even during the Covid-19 pandemic?

In most cases, everything from the manufacturing products, marketing, and selling them can be done without the entrepreneur having to leave his home. However, please keep in mind that this can only be done in the case of online businesses. These require that you build an online store, however, we will also look at how this can be done without having to pay any fees.

  • Create an Online Store

Creating an online store is considerably easier than most would think. Regardless of what type of products you intend to sell, the general structure of the website is the same. Furthermore, most social media platforms already offer users the ability to set up stores through which to sell various types of merchandise. The deciding factor when choosing the right platform for you should be the products that you intend to sell. For example, affiliate marketing tends to work great on Instagram and standalone websites, however, handmade products (digital or physical) will be easier to sell through Etsy and Facebook. These social media stores can be created and maintained for free.

Also, keep in mind that you are not limited to these platforms. There are also several website builders such as WIX and Squarespace that enable users to build a website that has integrated eCommerce features. However, these usually require a paid subscription.

  • Decide What Kind of Products You Want to Sell

Next, you will have to decide what you want to sell through the store. Those who have the artistical skills may find that it is easy to create and sell digital products, such as artwork, banners, images, and others. Choosing this category of products has the advantage of not requiring physical shipping or dealing with manufacturers. Creating handmade products is also extremely popular among both entrepreneurs as well as shoppers. Again, choosing this category of products does not require looking for manufacturers, however, you will have to decide how you will ship the products to your customers.

  • Find a Manufacturer and Ask for Samples

Most entrepreneurs start online stores and sell products without ever having to handle any of the products. This is done by designing the products, finding a nearby manufacturer, sending in the specifications, and only ordering items when a customer has placed an order. In most cases, it is possible to give the manufacturer the shipping address of the client and have the product sent directly to them. This saves money, time, and space.

  • Consider Getting a Loan to Give Your Business a Boost

Starting in any business is often difficult and the first few months are slow in terms of sales. Sales tend to only pick up once the brand or company gains popularity. Luckily, popularity can be bought through marketing campaigns. It is usually a good idea to get a personal loan and use it to finance an ad campaign on Facebook, Google, or other social media networks. This will give you all the funds that you need to drive traffic to your website and create a thriving community that will support your brand. However, please keep in mind that you should ensure that the personal loan is unsecured so that if anything happens and the business fails, you will not be in danger of losing your property to the bank.

5 Tips to Make Repaying Your Student Loan Easier

Access to higher education has always been expensive, pushing many to take out loans to pay for their tuition fees. There are currently loans that are given out by the government, as well as some that are offered by various private lenders. Regardless of where one borrows the money, student loans have one thing in common, namely the fact that they must be repaid soon after an individual graduates from university. This may not sound difficult to do, however, most fresh graduates finish their university studies only to find out that they need to repay the loan but that they do not have a job or a home. In many ways, graduates are expected to adapt to this new situation in a matter of months, which can be extremely difficult. Luckily, there are ways to make repaying a student loan easier. Here is what you need to know:

  1. You Only Start Paying after You Earn a Certain Amount of Money

Most loan agreements specify that graduates are only required to repay their loan after they start earning over a certain amount of money. This can give many individuals a bit of breathing room, enabling them to hunt for a good job and to find an affordable home. When it comes to government student loans, the amount that must be repaid every month is usually 9% of the individual’s total income.

  • It Is Possible to Repay the Loan Early

Almost all student loans can be repaid early, by making single payments of at least £5. This is usually a good practice if you ever find yourself reaching the end of the month with money to spare. While it may be more comfortable to save that money for other purposes, in the long run, it is better to make the extra payments and repay the loan as fast as possible.

  • Try to Budget Your Finances throughout Your University Years

One of the biggest mistakes that undergrads make when it comes to their student loans is that they do not think ahead. Individuals who are worried that they might not be able to repay their student loans, but still have one or two years of university left, can start preparing in advance. Putting even £15-£25 aside, each week can make things easier. The math is simple, 1 year has 52 weeks; if an individual saves £20 each week, then in one year, he can raise over £1000. This can be done even when individuals are on a tight budget as it is easy to find forms of passive income online. In most cases, tutoring others can help students earn enough to save money for their loan repayment.

  • Talk to Your Employer

Some companies that hire fresh graduates often offer to help them repay their student loans. This is usually done through an agreement where an individual agrees to work for a certain number of years for the company. In exchange, the companies offer to support the monthly repayments. Keep in mind that there are also situations where employers may agree to pay more money to students from which then can redirect a portion towards repaying the loan.

  • Consider Getting a Personal Loan

In some cases, it may be more affordable to get a personal loan or even a payday loan in the UK and to use it to repay the student one. However, this is only possible if the personal loan has a lower interest rate than the student one or if there is an emergency that can leave an individual unable to make the student loan payments.

Keep in mind that each of these tips is situational. As a result, some may only work in certain cases. This having been said, try to implement as many as possible into your repayment strategy. This will make it considerably easier to pay off your student loan

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