Tips to Improve Your Credit Rating

At present, the economy of United Kingdom is experiencing another recession. The solution to the problem is not completely apparent. Moreover, there is a higher insecurity ahead because the effects of a federal Europe or a pending Greek or Spanish withdrawal from the Eurozone are still not identified.

However, in spite of the economic condition, it is getting clear that one of the causes of the problem was bad debt and irresponsible lending. As a result, we’re currently facing a credit crunch. Banks are more hesitant in terms of lending and consumer spending is little.

Because of this trend, the lending market is more demanding and even with the Government’s measures to improve liquidity, the flow of cash from banks to small firms and the people is still staggering and unstable.

On the other hand, one approach that can boost the odds of getting credit is to keep a good credit rating. Having a good credit rating convinces banks that the money they are lending will be paid back in full and on time and the borrower will have more chances of getting approved for a loan.

A person’s credit rating shows their ability to pay back debt. Consequently, improving your credit rating means getting and responsibly paying off the debt.

When applying for a credit card, put a lot of thought into it because once you have a credit refusal, it will be recorded and can have a negative effect on your credit rating. To avoid these negative effects, consider checking the Internet for opinions and experiences of others found in several forums.

Another great way to increase your credit rating is to get on the electoral roll. Some credit ratings agencies take into account a person’s presence on the electoral roll when giving a credit rating. Contact your local government authority and fill up an application form, which can be found online at times.

Capital One Got the Most Complaints Compared with Its Market Share

In terms of picking the best credit card, most of the consumers take into consideration the interest rates and rewards. However, a recent study found another factor: complaints against credit card issuers filed with federal authorities.

Based on a report by Ken Thomas, a Miami banking analyst, some of the credit card issuers that got the most complaints in relation to their market share are SunTrust, TD Bank, GE Financial and Capital One. On the other hand, issuers with the least complaints in relation to their market share are HSBC, American Express, Discover, JPMorgan Chase, Bank of America and Citigroup.

According to Thomas, besides getting a good interest rate and benefits, it’s also sensible to check complaints so that you are aware of the kind of customer service offered. Reports like the one conducted by Thomas will convince banks to work more in order to meet the needs of their customers.

Thomas examined 13,502 credit card complaints filed with the Consumer Financial Protection Bureau that had the name of a particular user. The bureau started getting complaints on July 21 until May 15. Due to the Freedom of Information Act, Thomas was able to get the necessary information.

The results showed that Capital One had the highest number of complaints, accounting for 20 percent. Following is Citigroup, with 17 percent and tie at third are JPMorgan and Bank of America, with 16 percent each.

American Express and Discover got only a few complaints because both are known for their high customer satisfaction, according to credit card surveys done by researcher J.D. Power.

At present, credit card accounts in the United States have reached more than 500 million, which is more than the country’s residents of approximately 310 million. Credit cards have the highest interest rate among all loans that consumers can apply for. Outstanding credit card debt already exceeded $730 billion.

Aqua Advance Credit Card for Those with Poor Credit

Aqua has recently released a new credit card intended for consumers with poor credit, and it charges an interest rate that may decrease through time. It starts with an interest rate of 34.9 percent APR, but if you pay your debt responsibly, the interest rate of the Aqua Advance card will decrease by 5 percent annually over three years. You will then end up with an interest rate of 19.9 percent.

The Aqua Advance credit cards are intended for those who previously have had credit problems or who have zero credit history and wish to build one. The initial credit limit of the Advance card ranges from £250 to £1,600. Moreover, it offers a 24-hour helpline, text message reminders prior to deadline of your payments, and zero foreign currency exchange charges so you may be able to use it out of the country.

Aqua also released the Reward credit card, together with the Advance card, which pays 3 percent cashback on all of your purchases and limited at £100 cashback annually.

In addition, Aqua decreased its interest rate on the current Classic card to 32.9 percent, which was originally 35.9 percent. Just like the Advance card, it also has a credit limit which ranges from £250 to £1,600.

Some other credit builder cards include the Capital One Classic, which has a credit limit that ranges from £200 to £1,500 and an interest rate of 34.9 percent, and Vanquis Visa, which has an interest rate of 39.9 percent.

These credit builder cards will help you if you had troubles in the past in terms of borrowing. However, these cards must be used responsibly, which entails spending a little of the money, then paying it off in full and on time. Since the interest rates for credit builder cards are higher compared to those of typical cards, do not put yourself in a situation where the interest drains your account.

White Collar Workers Also Apply for Payday Loans

Based on the data from a study, not only low paid workers are applying for high-interest payday loans but also professionals in well-paid jobs, for instance, doctors, lawyers and accountants.

The survey was conducted by a certain payday lender and results showed that 7 percent of payday loan applications in the previous year are by workers receiving high salaries.

A 35-day payday loan allows people to borrow money from £100 to £1,000 until their paycheck arrives, and one half of the applicants are composed of white collar workers. Of the one half white collar applicants, 28 percent are working in the field of management, with 26 percent working in sales and marketing.

Jason Gardiner is the creator of the FridayFriday.com, which is a short-term online lender. Gardiner is also the one who conducted the study and according to him, the results are in contrast with the conventional perspective that low-paid or jobless people are the only ones who apply for payday loans.

Gardiner added that 7 percent of payday loan applicants are lawyers, accountants or doctors. This proves that when income is not taken into account, people will at one time need a short-term loan to carry on until their next paycheck comes.

Furthermore, Gardiner said that these professionals are applying for payday loans because of an unexpected cost increase, which can happen to anyone in spite of the amount of their salary.

Consumer Focus statistics show that payday loans market is becoming widespread, where borrowers increased from 300,000 during 2006 to 1.9 million during 2010. The industry is accused of targeting people with financial problems, provoking the Office of Fair Trading (OFT) to examine whether or not firms pursue consumers ineligible for credit. However, payday lenders claim that they are providing a service that is needed by consumers and that their high interest rates are most of the time clearer compared to those of typical banks.

Assistance Programs for Refinancing or Buying a New House

In terms of refinancing or purchasing a new house, there has been a wider range of options compared to the past for consumers who have little or no equity in their homes or who have experienced some financial problems.

Homeowners had a few or no option in refinancing into a loan with a low interest rate after the fall of home prices during the middle of the year 2007. Moreover, homeowners who lost their homes had to wait for a long time to buy a new one.

However, throughout the previous couple of years, there has been a development of several government assistance programs. Also, in the private sector, programs that are intended to assist consumers who encountered financial difficulties are being offered by banks and credit unions.

According to the president of residential lending for Zions Bank, Kim Casaday, only a few people are aware of the available resources. In fact, a free counseling is being offered by Zions for Utahns in order to assist them in terms of homeownership. Options for homeownership can be checked in Zion’s website, Thehomeownerscafe.com.

One of the major assistance programs is the Home Affordable Modification Program (HAMP). It helps consumers get a lower mortgage rate, lower monthly payment or other kinds of assistance to avoid losing their homes.

Another assistance program is Home Affordable Refinance Program (HARP). It helps homeowners who are not late in their mortgage payments but are not able to refinance due to the fall of home prices.

On the other hand, Utah First Credit Union is offering a no-wait housing loan intended for those who are not eligible for conventional financing. Consumers can apply for loans with a maximum of $320,000, and they may apply immediately after their short sale, foreclosure or bankruptcy. However, those who are qualified for the loans will be charged a higher interest rate and must have a 20 percent deposit.