Sunday, July 29, 2012

Your Credit Rating and How It Works

Your credit rating plays many important roles in your life. It can dictate not only whether you get a loan, but also whether you qualify for insurance and, in some cases, a job. Today, comparing credit report providers at somewhere like may get you three different credit ratings, or scores, because each provider uses slightly different criteria. But for the most part, your credit score is based on five aspects.

Credit score criteria

1. The single most important aspect of your credit score is your payment history, which makes up 35% of your score. This includes whether you pay back your debts on time and whether you have any past due or charged-off balances.

2. The next most important criteria for your credit rating is how much you owe. Generally, the less you owe the better, although you are measured on how much you owe in relation to how much credit you have, rather than purely how much debt you have. 3. You generally need to keep your debt to less than 30% of your available credit. If you go over this ratio, it will negatively affect your credit score.

4. The next most important aspect of your credit score is your credit history. This measures how long you have had credit and the time since your last activity on each account. The types of credit you use and how much new credit you have both counts for the least amount of your credit score -10% each.

5. Types of credit measures whether you have more than one type of account. This could be credit cards, car loans, mortgages and so on. New credit measures how often you open a new credit account.

Improving your credit score

There are many ways you can improve your credit score or at least keep it from declining.

Making sure to pay all your bills on time is very important. Though many creditors won't report a single late payment to the credit bureaus, they will report payments that are 60 or more days past due or multiple late payments.

You should also try to pay credit balances in full each month or failing that, pay as much as you possibly can toward the debt. This keeps your balances low and also limits the amount of finance charges you pay.

Some people think it's a good idea to close credit cards that you no longer use. But this actually is of little benefit. Closing a card does not erase any negative history and it lowers the amount of credit you have available, which can raise your debt ratio.

One of the easiest things you can do to improve your credit and something many people overlook is to make sure there are no mistakes on your credit report. Reports suggest that up to 25% of credit reports could contain errors, so it's important to check your report at least annually to make sure your score isn't being unfairly affected.

This article was written by Karl Thompson

Wednesday, July 04, 2012

Payment Protection Insurance - The Saga Continues

Payment-protection insurance continues to be a topic of interest, with more and more consumers in the UK coming forward as victims of mis-selling. But with a number of bogus claims firms becoming involved, not everyone is getting the full amount of money that they deserve.

These days, choosing a financial product or service is a lot easier, especially with the introduction of useful comparison sites such as, which make it quick and easy to compare prices and details.

Being mis-sold payment-protection insurance doesn't happen quite as often today as the way we apply for financial products is different. But for those who have been mis-sold in the past, getting compensation is now an easier process.

Thankfully, financial institutions have changed their procedures to help customers making claims, mainly due to a number of claims firms that were misleading people about the process. Over £1.9 billion was repaid to customers last year, with more claims waiting to be settled.

Banks have been trying to make the claims process easier to try to prevent consumers being duped by rogue firms. These firms are making their profits from people by taking a large percentage of their compensation.

Of course, there are many reputable claims companies who are doing a professional job and helping victims get the compensation they deserve. But it is important to make sure you choose a credible firm to help you with the process, if that is what you wish to do.

Sadly, there are still a number of consumers who are unsure as to whether they even have a claim at all. Many claims experts encourage anyone who isn't sure to speak to a specialist and discuss their case one to one. If your claims company is an honest one they should tell you straight away whether you can make a successful claim before you sign up.

Do You Have a Claim?

A typical PPI claim payout is currently around £3000 and three out of four claims are successful. But if you're not sure whether you have a valid claim it might help to consider the following questions.

When you were applying for any kind of credit agreement, such as a mortgage, loan or credit card, were you told that PPI was mandatory? Or were you told that taking out the insurance would make your application more likely to be successful?

If you were persuaded to take out PPI, did you find that the policy was actually of no use to you because you were self-employed or you were outside of the valid age range, for example?

Perhaps you found that you were paying for insurance without even being asked if you wanted or needed it? If you can answer yes to any of these questions then you definitely have a reason to claim.

Making a claim is important so if you do wish to move forward with it but are worried about using a claims firm you could try contacting your lender directly instead. If there is no response after a few weeks go to the Financial Ombudsman Service, which will be able to advise you on your next move.

Tuesday, July 03, 2012

Find Out How Much You Can Save By Using a Debt Calculator

If your major financial goal is to pay off your outstanding debts and achieve the status of being debt-free, you are not alone. Consumer debt is a major issue for many Canadians. In fact, the average debt of Canadians, not counting mortgage debt, is over $25,000. As debt balances increase, monthly payments also increase. This means that it is often more difficult to get out of debt when you have higher outstanding balances. Using an online debt calculator is a great first step to take to explore your debt repayment options.

The Cost of Your Debt

You can use an online calculator to calculate your debt and learn what the true cost of that debt is. Many people believe that the cost of debt relates to their monthly payment or their outstanding balance. However, interest charges are assessed on debts each month. The longer your debt balances remain, the more money you will pay with time. A debt calculator can show you how much money you will pay on these debts if you only pay the minimum amount due each month. You could save money by paying your debts off early.

Your Debt Relief Options

You can also use a debt calculator to explore your debt relief options in more detail. For example, there are several different consolidation loans that you may be considering applying for. These may have different loan terms, interest rates and loan amounts. The loan you choose to apply for will affect your immediate budget, the amount of interest you will pay on your consolidation loan and how quickly you can achieve the status of being debt-free. The right calculator can help you to make a more informed decision about your finances.

Managing Your Budget

You may be trying to decide if you want to seek debt relief, such as with a consolidation loan, or if you want to pay your debts off on your own. A debt calculator can help you to compare the pros and cons of both options. Consider factors such as how long it will take to pay off your debts in full, how much interest you will pay over that period of time and how your budget will be affected by the two options. While you want to pay off your debts, you also want to make sure that your budget isn't too constrained by your efforts. Those who live on a tight budget are more likely to fall of track with their repayment efforts. Even the smallest unexpected expense, for example, can cause those living on a tight budget to struggle financially. The best option for debt repayment is often one that allows you to pay off debts without significant struggling. If you are like so many others who have used a debt repayment calculator, such as the calculator found at, you will make the decision that debt consolidation is your best option. This method typically allows consumers to pay off debts more quickly and easily while also providing for immediate relief in their budget. You can use this calculator and explore the debt consolidation programs offered through this website.