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Most people associate their credit report with the chance of obtaining new credit, and give no thought to the other reasons for how it may impact their daily lives. The negative aspect of bad credit is more often considered with a poor report being detrimental. The other way to see it is that a good credit report is helpful in many areas, opening doors and saving money. Good Vs Bad Credit Score It is up to each individual to build and maintain a good credit score to work in one's favour. A bad credit report can be rectified through various means and once a favourable report is achieved it should be maintained and checked regularly. Who Pulls Your Credit Report? So who pulls your credit report and why? It is available upon request for a number of reasons. Banks and creditors have the right to the information held, as do insurance companies, mortgage lenders, landlords and employers. It is in your own interest to maintain a good credit score and not have detrimental information on your record, as you can’t hide it. Landlord It is clear why landlords want to assess the information held. A landlord does not want to rent his property to an irresponsible tenant who may have a habit of paying bills late. A landlord does not know the person and a credit check is a good method of assessing a stranger’s risk of paying the rent on time. Employer An employer on the other hand will be looking to establish an actual relationship with an employee and there are many more determining factors in a person's suitability than a credit report. Obviously, it is of prime importance for anyone looking for a job within the finance industry to have a top-notch credit rating, but less necessary for other employers to see. On the one hand, a good credit report indicates responsibility, whilst a bad credit report can mean that a person just hasn’t built up a credit history, or a long history of good credit has been tarnished by one temporary blip. Nevertheless, some employers do take a credit report into consideration before extending an offer of employment. Employers may turn down an applicant due to bad credit on the presumption they are irresponsible and less trustworthy. Insurance Companies Ninety percent of insurance companies pull your credit report too, again looking for signs of responsible handling of finances Statistical analysis has shown that a person with a good credit report is less likely to be an insurance risk and make fewer claims. Responsibility with credit is generally interpreted as responsibility in other areas of life, such as home security and maintenance, good car maintenance and safer driving habits. Thus insurance payments are influenced by credit scores and a good credit report can result in lower property and auto insurance premiums. Mortgage Companies and Banks Potential creditors, be it mortgage companies, banks, loan companies or credit card issuers all have the right to pull your credit report as their first move to assess your suitability. They want to safeguard the money they advance yo. What better way than to evaluate your credit report to get a full picture of your credit history. They may turn you down flat, or they may offer you what you want subject to higher interest rates. Then again they may see a report with an excellent credit history and advance the mortgage or credit and consider you a valuable customer worth doing business with. A good report can work in your favour and lead to preferential rates and better deals. It could literally save you thousands of dollars in mortgage interest. Final Thoughts Final ThoughtsThis information shows the merits of maintaining a good credit report and the downfalls of failing to do so. Always check your reports, which are free annually, and ensure any errors are rectified before someone pulls your report. As you are aware that it will be checked, make your credit report work to your advantage.
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Establishing savings is a great habit to adopt as it diminishes the need to rely on credit. Everyone can benefit by having an emergency fund. Even those who live to the full extent of their paycheck can usually find there are some immediate changes that will save money which can be redirected into savings. Daily Living Costs The bulk of most people’s income is spent on housing costs, transport and food. These are the first areas where savings may possibly be made. If housing costs are stretching the budget too far it may be time to consider moving or remortgaging to a lower interest rate. Alternatively renting a room in one's home can bring in additional income which will help to defray the costs of running a home. Save Money On Insurance The most immediate savings which can be made on transport costs are through reducing insurance premiums. Many people stay with the same provider simply from complacency, failing to realize that considerable savings can be made by switching providers or combining policies from the same insurance company. If a vehicle is used for work, consider sharing transport costs with a fellow colleague to thus split the cost in half. Saving Money on Food Savings can be made on food by shopping economically and sticking to a list of necessary purchases. Home cooking is an excellent way to ensure a healthy diet which represents a big saving on processed foods or the costs of eating out. It needn’t be a permanent change to give up fast food and restaurant meals but can be initiated on a month-by-month basis to see just how much is saved. Within a month the lure of freshly cooked food may well have overtaken the appeal of fast, convenient options. Struggling with Credit? If using credit leaves you struggling to meet interest payments then this is a definite sign that you are living beyond your means and changes need to be made. Switch from credit to debit cards or cash, or only charge what you know can be cleared in full at the end of the month. Paying interest on credit cards is an unnecessary expense which means your purchases cost far more than the ticket price. Every dollar not spent on interest is a dollar saved. Banking Fees Likewise, consider if you squander money unnecessarily by paying monthly banking fees. If you do pay the bank for the pleasure of having an account, then save the cash by switching to a checking account which operates without fees. Comparison shopping online will show the best deals out there, which can equate to considerable saving month after month. How Do You Spend Your Disposable Income? Temporary cutbacks can be made in the amount of disposable income spent by curtailing expenditure on treats. Many people spend money on leisure activities determined by personal predilections, and these can be cut back on until finances are more robust. Whether it is money spent on a choice of satellite channels, exercise, cinema trips or magazines, these are all areas where small changes can add up to a large saving over the course of several months. Final Thoughts Adapting to living more frugally will soon start to pay dividends as savings increase and in turn attract compound interest. The initial difficulties involved in cutting back expenses can soon give way to a sense of satisfaction as concrete results are seen in the form of security. Decisions can be made if previous expenditure was simply wasteful and if the things given up really made that much difference to your life. Your credit score rating is an important one to potential creditors as they can give a good assessment of how likely you are to be responsible with your money. A lender will determine whether to extend credit to you or not, based on your score, and even the rate of interest you will be charged. It’s a fair system in that it never discriminates against someone for any other reason than their financial dealings. The main problem within the Fico credit score rating system is that one size really does fit all, so what may appear to be a perfectly sensible and positive financial decision can in fact end up as a liability, causing a decrease in your score. It is perfectly right that your payment history should be reflected accurately so that a lender can determine what kind of risk you pose from your previous financial dealings, just as it is fair that if you act as a guarantor for someone else’s loan it will reduce your own credit to debt ratio, as you have a good chance of ending up responsible for that loan. However, some of the aspects of the credit rating system, which are included for good reasons, do deter sensible moves by some borrowers. If a person is struggling to do more than just keep pace with the minimum payments and interest charges over a number of credit cards, one of the most sensible things they can do is to transfer the current debts to a balance transfer card and take advantage of the initial free interest offer to try and get their debts into some sort of control before they become unmanageable. But,the Fico score system works against this as you will likely be closing older lines of credit as well as applying for new credit, both of which negatively affect your credit score. Likewise, the most astute borrowers who are trying to keep their debts manageable but do still have interest payments to deal with are discouraged by the rating system from moving their borrowing around between cards with better offers to take advantage of much lower rates. This is actually the savviest way of reducing a current balance which carries interest charges, but if you do it your credit score will suffer. This is because this aspect of the Fico rating system was designed to monitor multiple credit applications yet penalises those who are not trying to get more and more credit, but make the best interest rate choices and keep their payments at a manageable level. Your first credit card may not have been your wisest choice and you want to just cut it up and bin it as you now have other cards which offer better deals, such as a cash reward card. However, if you close the line of credit which you’ve held longest this is a detrimental score move, as the oldest card represents the length of time you have been managing credit, and the longer your history is the better for your score. Thus you have to hold onto a card you no longer wish to carry. The other annoyance with the system is that you may well be an excellent and timely payer, aware of all the Fico guidelines to keep your score healthy, yet still feel the restrictions of following them. If you normally keep your debt ratio in the lower levels and always make your payments on time, it can still affect you if you make a one-off high card payment which takes you near to the maximum available credit on your card. A prime example is you have the cash in the bank to pay for a vacation, but know it is far more sensible to put it on a credit card for the insurance protection. Yet if you do so you make be using up a high part of your disposable credit and be penalised for it, even if you pay it all back in full. On the whole, the Fico credit rating score is a fair system which treats everyone in the same way. It doesn’t penalise you for skin color or weight, but only judges you on the scoring criteria it holds for all. However, there are certain problems as outlined above which are a result of the one size fits all approach to scoring which can lead to a reduced score even though you are still being financially responsible. Once again consumer advocates call for the abolition of payday loans, citing the financial misery they cause to those trapped in the cycle of payday loan debt. However, those who are juggling several payday loans and become caught up in a trap have used the loans irresponsibly and are not the victims that their advocates would have us believe. What they must do is stand up and address the problem head-on before it spirals completely out of control. The facts are that payday loans are now, for the most part, regulated. They are intended to be taken out as an emergency source of funding, but all too often the borrower fails to meet the agreed payment on time and thus runs up further fees allowing the amount owed to escalate. In some cases, the problem is simply compounded as the borrower takes out a new payday loan to pay the first one, and ultimately ends up spending more on loan fee repayments than on addressing the principal loan which never seems to reduce. The first way to tackle this debt is to speak to the lender directly and see if you can come to an agreed repayment plan. Explain the situation you have put yourself in and see if the lender will agree to a payment plan to allow repayments to go towards reducing the principal, with interest frozen. Do not make the situation worse by taking out another payday loan. If the interest is escalating out of control then take any measures you can to raise the funds to simply clear the full debt, as the longer the debt continues to accrue interest the more impossible it is going to become. As those who generally resort to payday loans do not have credit facilities available to them there is no likely opportunity of utilising credit to pay off the loans. Having a current checking account is a requirement for taking a payday loan so it is worth approaching the bank and raising the possibility of a debt consolidation loan. You should be honest about the situation and only borrow as much as you need to repay the debt, and then stick to the repayment terms of the consolidation loan if you are able to obtain one. This is only a sensible option if you have the willpower not to immediately fall back into the same cycle again and take out another payday loan. Another option is to ask for help from your employer. Your employer may be willing to advance the funds to clear the debt and then deduct a set amount from your weekly wages until the wage advance is repaid. Once again though this will only be effective if you can stay away from payday loans in the interim, and indeed for good. The problem for many when this happens is that living from payday loan to payday loan has become a way of life, and it is easier to take an easy borrowing route than to simply cut right back and do without until finances are better under control. This type of debt cycle is always going to be a reality for those who have few financial choices and are woefully uneducated about the financial products they use. Ultimately the most likely scenario is that as soon as the payday loan debt has been addressed and cleared the borrower will already be indebted again to a new lender of similar ilk. If you are in this position all you can do is learn from your mistakes and try to be the statistic that breaks the cycle and settle into living within your means. Many people coast along making the minimum payment on their credit card each month making them the ideal card customers whom banks love. They pay the minimum which may be typical $5 or 2%, make their payments on time and don’t go into default. Yet month after month the balance on their credit card never goes down, and if additional spending is added the minimum payment goes up but the balance never comes down. Ironically many believe that they are doing the right thing by paying their cards in this fashion and of course, they are, from the banks' perspective. The bank is making lots of interest from a loyal customer after all. In actuality this is one of the worst things you can do as month after month you are simply paying interest to the bank. The internet provides some free online minimum repayment calculators which demonstrate just what a costly mistake it is to go down the minimum repayment route. If we take an example of a credit card which has $1000 outstanding balance and an ARP of 14% and assume that no new spending is added to the $1000 balance we can see the effect of only paying the minimum. Most people would just make the assumption that the $1000 will cost them about $140 to repay. Nothing could be further from the truth. In actual fact, the interest charged would equate to a staggering $1028 and would take almost 19 years to clear. Suddenly the fee on a payday loan begins to look cheap in comparison. The reason for this is that each month the accrued interest is added to the outstanding balance, and that in turn is charged interest, month after month. This compounded interest is not understood by many credit card users who are actually encouraged to just make the monthly minimum payment as it is in the banks' interest to charge them interest. If in addition to the $1000 outstanding balance further spending is put on the card, the situation becomes worse. If the balance increased through spending and interest to $2000 then the total repayment by minimum payments would be an additional $2245 in interest which would take 25 years to pay off, assuming the interest rate didn’t change. Sooner or later most people realise that their credit card has managed to amass a large debt even though they make the minimum payment each month and are suddenly faced with a debt they hadn’t fully comprehended. In order to break this cycle of constant interest more than the minimum payment has to be paid in order to start reducing the actual balance. If funds are tight pay at least something over the minimum to stop the situation getting any worse and do not add any more spending to the card. If your monthly minimum payment is $40 try to pay as much above that as you can each month to begin to reduce the actual balance rather than just service the interest. Anyone who carries a balance on a credit card and does not clear it in full each month needs to pay more than the monthly minimum in order to prevent the interest piling up and to make some reduction of the balance. To put it in perspective look again at the $1000 balance: with a minimum payment only it would cost $1028 in additional interest, but if instead of the minimum you paid $60 a month the total interest would be $111 and you’d be rid of the debt in just over a year. If you are now kicking yourself as you’ve only been making minimum payments then take a look at your outstanding credit card balances, find your current interest rate, and check the total costs on an online minimum payment calculator. You could well be in for a nasty surprise but if you adjust the minimum payments and start to overpay it is possible to break the cycle and reduce the debt. Those who are about to venture into the world of credit and loans may not find it as easy as they think to get a foothold on the rung. Gone are the days of easy lending to anyone who applied, and lenders are now more wary and exercise more caution when lending to someone unknown. Those who haven’t used credit before are impeded by the simple fact that they have no credit history and thus are an unknown risk. No longer able to piggyback along as a cardholder on someone else’s account to establish credit, they must now find ways to establish their own credit reputation. Young people new to credit are generally required to produce a willing co-signer to obtain either a credit card or a loan. Usually a parent will stand guarantor until a responsible way of handling credit has been established by the youngster. In order to obtain freedom from the need for guarantors and to have credit in your own right it is important to demonstrate sound financial sense. This means always paying the amount due on the due date. Late or missed payments will not only cost you in fees but will be recorded on your credit report, thus sending your budding credit score straight into decline. Not only that but it will affect the good credit standing of the person who was willing to step in as your co-signer. When using any type of credit card the best practice to begin with and maintain is to always clear the balance in full each month and thus never pay interest. Simply put if you can’t afford to buy something don’t put it on credit, as there leads the slippery slope to debt. Another way to establish credit is to opt for a secured credit card from a reputable lender who does not impose huge fees for letting you have one. You will need to pay a security deposit equal to the amount of credit advanced, but if you demonstrate good usage with the card you will most likely be able to move onto unsecured credit within the year. Even if you have no need to use the card use it at least once a month and pay the balance off in full in order to establish your credit record. Don’t be tempted to waste your time with pre-paid credit cards as they are not in fact credit cards and their usage is rarely reported to the credit bureaus. People who have always lived by the cash maxim and now wish to obtain credit should consider using the FICO expansion scheme to have their past record of non-recorded bills logged with FICO. People who have been paying rent, utilities, and other fixed monthly payments on time have proven they can handle finances but may have never utilized loans or credit before. The FICO expansion scheme is a step to help people in this category, establish their credit. Whichever route you pursue to establish credit your aim should be to create a credit footprint which will reflect your financial reputation, and naturally you need this to be good in order to obtain the many benefits of having a high credit score. Sensible use of credit and loans, and keep your borrowing at an affordable level, will lead to offers of better interest rates once your credit becomes established. Live for today and tomorrow will look after itself, is folly when applied to your finances. Many people perceive saving money for the future as desperately dull and associate it with depriving themselves in the present. With interest rates so low there is little benefit perceived to saving money which is likely to lose value due to inflation. However saving money is the key to financial freedom and by handling finances responsibly great savings can be made which can be put into saving plans for the future. One can never foretell what the future will bring, be it ill health, unemployment, or some other factor which reduces your income and leaves you struggling to survive in the present. If the unforeseen happens when you have amassed debt though credit cards or loans then debt can become a vicious cycle which is it is seemingly impossible to escape from. Falling into debt through having inadequate savings to tide you over will result in your credit score plummeting and thus cost you more in interest payments. Everyone should have an emergency fund set aside, in addition to saving for the future. When you decide how much you need your emergency fund to be then you have a target goal to reach, and after that additional savings can be made for the future. Many people live only one pay check away from being homeless and estimates vary in how much an emergency fund should hold, but aim for at least six months of all your monthly expenses. Make a habit of always paying yourself first by directing a minimum of 10% of your salary into a savings account. Once it has grown to the level of your required emergency fund then you can use further savings to invest more strategically and invest in stocks or bonds. Peer-to-peer lending is a good choice to see a high-yield return on your investment whilst steady blue chip stocks provide a reliable dividend. Savings made for your future can be used to pay off your mortgage early and thus save an exorbitant amount in interest charges paid to the mortgage lender. Having savings enables people to start a family without unduly worrying about additional costs. Saving for retirement may even enable you to enjoy an early retirement and have the chance to see the world when no longer servicing a mortgage. Saving can become addictive when you see your pot of gold begin to grow and accumulate interest or dividends, and it is far more enjoyable receiving interest than paying it. The best time to start saving is with your very first pay check, but it is never too late to start. Living debt free with savings behind you for the future is the wisest way to handle your finances and enjoy a stress-free approach to your money. Can you get cashback deals in Spain? In the UK, cashback deals are very popular and you can earn money back by shopping. When you shop smart, you can both save and make money using cashback deals in Spain. Up until recently, Spanish cashback deals were not very popular. However, they are quickly catching up. As you all know, saving money is my thing. Over the last couple of months, I have tried out a couple of cashback deals in Spain. Do I think that they are worth your time and effort? I don't think all Spanish cashback companies offer value for money, but there are some that do. Best Cash Back Deals and Cashback Companies in Spain Letyshops Cashback Letyshops is an established cash back company that offers cashback in a variety of online stores. If you are comfortable shopping online in Spain, Letyshops is certainly worth signing up for. The site gives you instant access to 3300 shops that offer discounts and cashback. From time to time, they will also send through special discounts and promo codes that you can take advantage of when you shop. One thing I love is that there are no withdrawal fees. You can sign up today and receive a Euro 5 bonus when you spend Euro 30 within the first 30 days of being a member. You can get up to 25% cashback when you shop on AliExpress and in many other stores including Marks and Spencer. Deals and vouchers are also available. Click here to join Letyshops. Beruby Cashback Beruby is another Spanish cashback site that you may want to check out. It does not have as many stores, but it is pretty good. One of the best bonuses I picked up was to a Spanish casino site called 888Sport. You have to deposit €25 but €35 is with you within 30 days. If you enjoy betting online, this is a bonus that is worth having. You can also enjoy discounts with other sites such as booking.com One of the advantages of Beruby is that you can take surveys and make extra money towards your cashback total. You can join Beruby by following this link. They are two of the best sites I have found so far. If I find any more, especially casino bonuses, I will update this page. Are you a British ex-pat and live in Spain? In that case, you will have noticed that fuel prices have taken a serious hike over the last month. It is no longer cheap to drive a car or go far a day out in Spain. So, how can you save money on fuel, petrol and diesel in Spain? How To Save Money On Petrol and Diesel in Spain Fortunately, there are ways in which you can save money on driving your car in Spain. Saving money on fuel and diesel is not very complicated but you have to plan ahead. Here are a couple of ideas for you: Join one of the many points schemes and fuel-saving schemes. Getting a Carrefour Club is easy and Carrefour offers good deals on fuel. With the Carrefour card, you get money back vouchers that you can spend in-store. If you don't live close to a Carrefour you can try other schemes. Both Cepsa and BP have their own schemes. Also, look out for smaller local stations that may give you a discount on fuel when you fill up.
Yes, fuel prices and general fuel costs in Spain really are sky-rocketing. But you can save money on fuel when you shop for fuel smart and plan ahead. |
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April 2023
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