Wells Fargo released its Q4 2018 Market Research Report which states that one in four Americans have a poor credit score, while 15% have a fair credit score and 69% have a good credit score. The information was taken from a massive research study of 200,000 participants from April 2018 to March 2019.
What Do Poor Credit Scores Mean For An Individual?
A bad credit score can impact your life in a number of ways. It can make you ineligible for certain loans or insurance policies. It can even prevent you from renting a suitable vehicle. Let’s take a look at some of the ways in which your credit score will influence your life:
Ineligibility For Certain Loans And Insurance
According to the Wells Fargo Research Report, one of the primary reasons for having a poor credit score is being denied access to credit or insurance. In fact, the study found that being unable to secure an auto loan is one of the top three reasons for a poor credit score. The chances of you getting a bank loan for a house or a car are generally determined by your credit score, as well. Insurance companies also use your credit score to determine the coverage you will receive. Your credit score determines how much you are charged for your health insurance premiums. It can also influence which life insurance policy you will be able to get. In some cases, your health insurance may even prevent you from getting coverage for certain medical procedures.
Higher Mortgage Rates
Being denied access to credit can make you have to pay more for a mortgage. As noted by My Mortgage Coach in reference to the Wells Fargo report, “Mortgage applications for homeownership were reported to be up 11% in the last quarter of 2018, with greater growth in certain geographic areas, indicating that higher mortgage rates were offsetting some of the positive effects of increased home sales.” The research also found that one of the major reasons for a high mortgage rate is having a low credit score.
Difficulty In Renting A Suitable Vehicle
If you need to rent a car to get around, having a poor credit score can be quite the hassle. You will have to pay extra for a premium car, or settle for an older model that is more affordable. The good news is you can improve your credit score and get affordable auto loans with a good enough credit rating. You just have to be aware of the risks associated with this type of credit.
Inability To Secure An Automobile Insurance Policy
Even if you are able to secure an affordable loan for a car, you will still have trouble getting a suitable automobile insurance policy if you have bad credit. This is because insurance companies and credit card companies use your credit score to determine the risk you pose and the coverage you will receive. If your credit score is low, you will most likely have to choose a higher deductible or go without insurance altogether. You can also look into specialty insurance policies that don’t require such a low credit rating.
Risk Of Losing Your Home
An additional reason for a poor credit score is the risk of losing your home to foreclosure. There is a strong correlation between a low credit score and an increased risk of foreclosure. In some cases, having a low credit score can even make you ineligible for a mortgage. You are also less likely to get a traditional bank loan if you are already in foreclosure. If you are facing foreclosure, it is essential to work with a reputable mortgage broker who can help you find the best solution for your situation.
How Does A Good Credit Score Influence Your Life?
As the name would suggest, having a good credit score is associated with having a positive impact on your life. This could mean getting the loan you want, being able to afford the items you need, or avoiding being denied credit or insurance altogether. There are three major ways your credit score will influence your life:
Affordability Of Key Life Products
The first and most obvious way your credit score will influence your life is in terms of your ability to afford key life products. You may be eligible for a mortgage loan with bad credit, but it will be more expensive than what you are currently paying. If you want to buy a home, car, or any other type of vehicle, it will be more expensive than what you are paying now for similar products. Renting a home with bad credit is also more expensive than what you would pay if your credit score was good. Insurance premiums are also affected by your credit score. If your credit score is low, you will most likely have to pay more for your healthcare and life insurance policies. Finally, traveling and buying meals is more expensive if you don’t have good credit. If you are planning on renting a car or taking a trip, you will need to consider the cost of having bad credit.
Positive Influence On Your Mortgage Application
Simply put, your mortgage broker will likely have a positive influence on your mortgage application. A good credit score will make you appear more favorable to a lender, and perhaps get you closer to getting the loan you want. On the other hand, a poor credit score may even hurt your chances of getting approved for a loan, or make you pay more for your mortgage. Your lender will also have an influence on your credit score, so they can’t provide you with bad credit information. However, they can give you feedback on your credit standing and help you improve it. If you are a home owner and you are struggling with the payments, they can also help you negotiate a lower rate with your mortgage insurance company. All of this will be positively influenced by your credit score.
Reduced Risk Of Losing Your Home
When we think about the downsides of having a bad credit score, the first thing that comes to mind is the risk of losing your home to foreclosure. As mentioned by Credit Karma in reference to the Wells Fargo report, “Roughly 1 in 6 Americans have extremely poor credit scores, which significantly raises their risk of foreclosure.” This is because the worse your credit score, the higher the chance you will be denied a mortgage or loan. In some cases, being denied credit can make you ineligible for a mortgage. If you are already in foreclosure, it is important to work with a reputable mortgage broker who can help you find a solution that will allow you to stay in your home. Having a low credit score can also make you a higher risk for other types of loans or insurance, so it is essential to be aware of these risks and what you are investing in.
More Choices When It Comes To Rental Vehicles
If you need a vehicle to get around, having poor credit will make it harder to find the one that suits your needs. This is because more often than not, car rental companies will only rent you a vehicle if your credit score is satisfactory. As a result, you will most likely have to settle for a less-than-desirable car or pay more for car rental. The situation is similar with airlines. If you don’t have a good credit score, you will more than likely be placed in a higher-category, which costs you more when it comes time to book your flight.
The moral of the story is that your credit score can have a significant impact on your life. This is especially true if you have bad credit, as it will make it more difficult to get what you need. In some cases, it can even prevent you from obtaining a loan or insurance policy you need for a suitable home, car, or other type of vehicle. This article will help you understand what a poor credit score is and how you can fix it.
How To Get A Personal Loan Wit Credit Score under 550?
One of the most common questions that I get asked when talking about personal loans is, “How does one obtain a personal loan with a bad credit rating?” Believe it or not, this is a legitimate concern since many financial institutions won’t provide credit to people with a lower credit score. Thankfully, there is a solution that I would like to share with you to help alleviate this problem. The key is to use the right lender, be selective of the offers you receive, and establish a solid credit history before applying for a loan.
Find The Right Lender
One of the first things that you need to do if you want to get a personal loan is to find a reputable bank or credit union that will provide you with a cash loan. As previously stated, traditional loan providers are somewhat wary of granting loans to those with a bad credit rating, but this is a huge misconception. The reality is that there are many lenders out there that would be more than willing to provide you with the financial assistance that you need regardless of your credit score. In fact, according to a recent report from the American Institute of Stress, nearly half of all Americans are already overextended on credit, and if current trends continue, this figure could rise to 66.2 percent by next Thanksgiving.
So how does one find the perfect lender? It starts by analyzing how you plan on paying back the loan. There are obviously several options including paying it back in full at the end of each month, making monthly payments, or taking an extended period to pay it back. The key is to find a loan provider that offers the terms that you are comfortable with. In addition, it is imperative that you shop around for the best rate since you are searching for the most optimal lending option available. With that being said, you should have no problem finding a dependable and reputable lender that can meet your needs. In fact, as I mentioned above, the situation that the majority of Americans find themselves in is proof enough that there is a genuine need for personal loans regardless of one’s credit score.
Decide How You’ll Repay The Loan
Another important factor to consider when seeking a personal loan is how you will be paying back the money. As previously mentioned, there are several options including making monthly payments, taking an extended period to pay it back in full, or paying it back in cash at the end of each month. If you are looking for an additional source of income, you can always apply for a payroll loan through your employer which allows you to take advantage of this type of loan regardless of your credit score. Another popular option is to apply for a home equity loan with your bank which allows for homeowners to borrow against the value of their home. This type of loan is perfect for those that want to consolidate debt or borrow against the equity that they’ve accumulated in their home. If you are looking for a short-term loan solution, you can apply for an unsecured loan through either a commercial lender or storefront loan provider.
Ultimately, it’s important to determine how you will be repaying the loan. In the end, the lender’s and your bank’s terms and conditions will govern how you are to be repaid. However, you should strive to find the best possible deal which will allow you to pay back the loan in a timely manner while using the minimum amount of financial assistance possible. In other words, you want the minimal amount of interest and fees so that you don’t have to make additional payments down the road. This will help improve your credit score and make it easier for you to obtain other types of loans in the future. It’s important to keep in mind that different types of loans have different terms and conditions, and you should make sure that you are aware of these before you apply for any loan.
Establish A Solid Credit History
Another important point to consider if you want to obtain a personal loan is to establish a good credit history by showing that you have past loan payments on your credit report. Even if you have a perfect payment record and are considered a stellar credit risk, traditional loan providers will still need to see that you have some type of credit history in case you do default on a loan. In fact, the reality is that you can get an excellent credit rating despite having no credit history whatsoever! All you need is a steady source of income for at least six months in order to establish a good credit rating. Having a good credit report will also make it easier to apply for other types of loans in the future. In some cases, it can even make or break your application for a loan as certain lenders may look at your credit report before deciding whether to provide you with financial assistance or not.
In summary, the key to getting a personal loan with a low credit score is to find a reputable lender that will approve you for the loan regardless of your credit score. In addition, it’s important to remember that you can’t necessarily rely on your credit score alone to establish creditworthiness. Instead, you need to find other indicators that lenders use to evaluate your creditworthiness such as your credit history, employment record, and overall affordability. By applying for a personal loan through a reputable lender, you show that you are ready, able, and willing to pay back the money in full while demonstrating responsible credit behavior. Furthermore, by having a good credit report, you show that you are a reliable and responsible borrower, and this will make it easier for you to obtain other types of loans in the future. So, in conclusion, don’t be shy to apply for a loan when you need one. Remember that there are many reputable lenders out there that will be more than happy to provide you with the funding that you need regardless of your credit score. In addition, don’t be afraid to use the internet to your advantage and conduct a quick online search to find the best rates and available terms for a loan that you are interested in.
How much of a loan can you get with a 550 credit score?
You’re being bombarded with emails from loan providers, wanting you to apply for a loan with them. But how much of a loan can you actually get with a credit score of 550? We set out to find out.
The Basics Of Getting A Loan
Before you begin your loan application, it’s essential that you know the basics. Are you employed? Do you have a job with steady income? What is your annual income? How much money do you need for a monthly living expense?
These are just some of the questions that a potential lender will want to know. Even if you have the perfect credit score, you’ll probably still need some sort of collateral in the form of a property or some personal equity. Having a good credit score does not guarantee that you’ll be granted a loan. It just means that your chances of getting funded are higher than those with a lower score.
How Much Can You Afford To Spend?
Now that you have the basics down, you can begin to dig into how much you can actually afford to spend on a loan. If you’re looking for a new car, for example, you might want to set a maximum budget of around £20,000. Anything above that and you’ll be better off saving the extra money instead.
Similarly, if you’re looking for a vacation, you might want to set a maximum budget of £25,000. Over that and you’ll want to save as much as you can instead. When it comes to the cost of living while on holiday, you’ll need to add that into the equation as well.
Loans are an essential part of everyday life for many people. Be smart about how much you spend and you might just get by without needing to borrow a penny. Of course, if you do need some quick cash then there are plenty of lenders out there willing to lend. Just make sure that you’re not being tricked by offering a cheap interest rate when the terms and conditions of the loan are actually very expensive. Always read the small print and make sure that you’re not being fooled.
How Much Can You Really Afford To Spend?
Now that you’ve got the basics down, you can begin to look at how much you can really afford to spend on a loan. Remember, you’re not just looking at the cost of the loan itself but you’ll also need to pay for any fees and charges levied by the lender. That’s usually going to be around 0.5% to 1.5% of the loan amount for an administrative charge. In addition, you’ll need to pay for an insurance premium if you’re borrowing under £25,000. Again, that’s usually going to be around £300 to £500 for a standard insurance policy.
As an example, say you’ve got a £15,000 car loan and you want to upgrade to a more expensive model. That’ll be an additional £375 that you’ll need to pay upfront. In addition to that, you’ll need to budget for the cost of renewing the loan with the bank every month. On top of that, you’ll need to budget for loan brokers who’ll charge you a percentage for bringing you the loan. All of that will add up to a pretty penny.
What’s The Most You Can Afford?
Once you’ve budgeted for all the upfront costs of getting a loan, you can begin to look at what’s the most you can afford to spend. That’s a difficult question to answer because it depends on so many different factors. For example, what’s your salary and what’s your rent? If you’re renting a two-bedroom flat in London, you might be looking at spending £500 to £700 a month on rent. That’s £7,000 to £9,000 a year. And you’re only paying £15,000 a year in salary. Where does the rest of your money go? On food, on bills, on traveling?
If you’re looking for a new car, you might have to wait until your next salary comes around before you can afford to splurge like that. Or maybe you’ll have to save up the money for a rainy day. Budgeting and being smart about how much you spend is important. You don’t want to strain yourself financially just to make a purchase that you can’t afford. That’s what credit cards are for.
If you’re looking for a new home, you might have to put some extra shifts in at work to be able to make the down payment. A five-year mortgage with a 15%down payment on a newly built property in London is going to set you back £19,000. If you can afford to put down a £7,000 deposit then you might just make the whole payment. On the other hand, if you’ve got to borrow £12,000 then you’re going to have to find the rest of the money somewhere else. Borrowing money to purchase a home is not a good idea. Make sure that you’ve got the money to pay for it first before you begin applying for a mortgage.
Applying for a mortgage is a daunting task. There are so many different types of mortgages and each one has its own set of costs associated with it. To make the process easier, you might want to get a bank loan or store credit card. That’s going to be the best way to get started. Just make sure that you’re not being fooled by looking into the fine print. Always read the terms and conditions of any loan agreement before you sign on the dotted line. And don’t be afraid to ask questions – after all, nobody knows the financial landscape better than you.
