Whenever you take out a loan, it is really important to make sure that you are able to repay it. With a payday loan this can be even more tricky as you will have to repay it really quickly. A payday loan will have to be repaid in full when you next get paid. This could mean that the loan will only last a few weeks or maybe even just a few days and so you will need to be really sure that you can afford to repay it. There are things that you can do though, to give yourself a much bigger chance of being able to repay it on time and in full.
Check How Much You Need to Repay and When
It is wise to start by checking out exactly how much you need to repay and when. You might think that you know this or that you can guess but it is wise to check with the lender. This is because it is not always easy to calculate or we might forget to add on some of the fees or all of the interest. It is best to make sure that you get it completely right.
See if You Have Enough Money to Repay
Once you know how much it will be then you will need to work out if you will have enough money to repay it. You will need to start by looking at how much money you expect to be coming in when you get paid. Be sure to make sure that you allow for any changes in salary you might get. For example, if you have different amounts of pay depending on the length of the month or things like that. Then you should think about whether that will be enough to cover the loan. Do not stop here though, you need to also have enough money to cover all of your other essentials as well. For example, you might need to pay rent or mortgage, have other loan repayments to make, pay utility bills and mobile phone contracts and there will also be food to buy as well. This means that you have a lot of things to consider and you need to add up all of those costs to see if you have enough to cover it. Even if you do, it can be a good idea to have a plan for raising a bit more just in case. If you do not have enough, then you will definitely need a plan for raising a bit more.
One way that you can get some extra money is to reduce spending on other things. To start with, it can be a good idea to not buy anything that isn’t essential. So, cut out all of those treats so that you will be able to use the money for essential things. It can be hard to do this, but it will only need to happen until you sort out your finances so just think of it as delaying buying things rather than depriving yourself. You also could benefit form comparing prices on the things that you are buying> Think about whether you can switch to cheaper brands, retailers, insurers, providers etc and spend less on what you are paying for so that you can reduce what you are spending even more. Even if changes you make will take too long to have an impact immediately, it can be worth doing as it might mean that you will then have less need to borrow in the future.
It can be a good idea to also think about whether you can earn a bit extra. This could be as simple as doing a few extra hours in your job or you might be able to take on a second job or some freelance or temp work just to get a bit extra to help out. You might also be able to sell things you own and no longer need to raise a lump sum of money or perhaps monetise your hobby somehow. It is good to have a good think about the possible opportunities that are available to you and you might find that you can raise quite a bit of extra cash.
There might be some people that are not really sure what payday loans are for. They might wonder whether they are designed to cover the cost of specific things or they may wonder whether there are certain things that you cannot use them for. It is a good idea to think this through though. This is because if you need to borrow money, you will need to choose the right sort of loan for your needs. Unless you know what different types of loans are for, you will not know whether you are picking the best one for your needs.
What Can They be Used for?
There are actually no specific things that guaranteed payday loans have to be used for. With some loans, they have a specific purpose. For example, if you take out a mortgage, then it can only be used for a house purchase. With a payday loan the lender will not specify what the money needs to be used for and they will not check what you are buying with it or ask you what it is for. However, there will still be limitations on what you can buy with it because of the features of the loan.
Amount you can Borrow – with a payday loans you will only be able to borrow between £100 and £1,000. This means that you will not be able to use it to buy significantly expensive things. So, if what you need costs more than £1,000 then a payday loan will not be suitable for you. It is also worth noting that you may not always be able to borrow this much money either. If you have not used the lender before, they may only want to lend you a small amount of money. This is because they lend to people even if they have a poor credit record. So, they will want to build up trust with the borrower first and will therefore want to lend them a small amount and make sure that they will be able to repay that before lending them more. This means that you may only be able to borrow a few hundred pounds. This can therefore, really limit what you can spend the money on and so it might not be a suitable loan in situations where you need lots of money.
How Long you Borrow it for – a payday loan will only be for a few weeks or days. You will be expected to repay everything you borrowed plus the interest and fees on the next day that you get paid. So, if you need money for longer than this then it will not suit you. Also, you will need to make sure that you will be able to afford to repay that lump sum. Make sure that you carefully check your household finances to see whether you will have enough to cover it. You will need to think about how much you get paid and whether that will be enough and also whether you will then have enough money left to pay all of your bills and other essentials as well. If you borrow a lot of money, then this will be harder. It is really important to make sure that you can do this though. This is because you will find that you will get extra charges if you do not repay on time. Even if you do repay and then struggle to pay other bills you will get charged by those companies instead. Therefore, it is so important to make sure that you check carefully that you will have enough time to repay the loan on time and in full.
If you feel that your credit score is not very good, then you might hope to change it. If you are trying to borrow money urgently or you need to rent a property then you may feel in a rush and want to do things to improve your credit score quickly and hope for some easy things that you can do. There might be things you can do easily but you also need to think about other things that might need to be done which might not be so easy.
Check it is Correct
The first step is really easy. Just look up your credit report and make sure everything on it is correct. Sometimes there are errors which have a detrimental effect on our credit score and it can be worth checking to see whether there are any. If there are mistakes then get them changed. You might need to speak to the company that produce the credit report as well as the company that have made the mistake in order to get it rectified. It might that this is all you need to do in order to improve the credit report.
Check You are on Voters Role
A lot of those people looking at your credit score will look to see if you are on the voter’s role. This is because this can be used to check your ID which has to be done if you are opening a new bank account or things like this and so is important. If you are not on it, then ID checking ill be much harder and you may just be turned down because they do not want to do other checks on you. It is easy to sign on to the voter’s role and you do not need to vote even if you are on it.
Make Sure You Make Regular Payments
It is a really good idea to make sure that you are making regular payments. This could be loan repayments, mobile phone contracts, utility bills, monthly insurance premium payments or things like this. If you are doing this, then it will show that you can manage your money well enough to keep finding enough to make these payments. If you struggle to make payments regularly then it wise to address this. Firstly, set up direct debits or standing orders for these payments and they will be made automatically so there is no chance that you will forget to pay them. Then, try to manage your money carefully so that you know you will have enough. Perhaps try to make sure that they are all paid just after you are paid and then you will know you have the money available to do it.
Pay off Loans
If you have a lot of loans, then paying some off them off could be handy. It can look good if you have repaid loans as it shows that you are responsible and capable of managing your money well. You will have to have a strategy though to do it as you will need to find extra money to be able to do it. This might mean that you will have to cut down spending on luxury items and use the money to pay some off the loan. You might have to find ways to earn more money so that you can do it. It does not matter what method you use, just make sure that you can afford all of your essentials and then use any money that you have left over to repay loans. Hopefully you will be able to start to make a dent in your debt and make a better impression.
How Might a Potential Employer use Credit Scoring?
One thing that could make some people worry is the fact that a potential employer might look at their credit score. They might worry that it will not look good and could impact their chances of getting a job. While this is true to some extent, it is important to understand how they might use it so that you do not overly worry, but you can make sure that it looks good. It is good to understand what they might be looking for as well.
To do an ID Check
They might want to look at your credit record so that they can check that you are who you say you are. They will want to check to see whether you live where you claim to and things like that. This is just to help them check the details of your application and to be sure that you have the qualifications that you claim to. Not all employers will necessarily do this but you could find that some will. It can help your case if you are on the voter’s role as this is something that will be used to check your identity. Some people do not want to vote but being on the voter’s role does not mean you have to vote. Some people worry about the fact that their details might be sold if they are on the voter’s role, but you can opt out of this if you want to so it does not have to happen.
To See if They can Trust you
Some employers will look at more than just this though. They might want to look at your credit record to see if you can be trusted. If you are working with money, perhaps for a bank, they will want to check that you are not in big financial trouble. This is because if you are, you might be tempted to take some of the banks money to help yourself out of trouble. Obviously, most people would not even consider doing this, most are honest and realise that this money will not be theirs to take. However, they could be cautious and if there was another candidate equally qualified for the job but with a better credit record, they could be inclined to want to take them on rather than you. This might also be the case with jobs where you might be open to bribes. Perhaps as a judge or police officer, for example. They will want to check that your finances are in order so that they are not concerned that you might be influenced by the offer of money.
What to do
What you might want to do is to think about your borrowing and the payments that you make regularly. Make sure that you are paying for everything on time that you need to, such as things that you need to pay monthly and that you do not borrow too much money. It can be a good idea to set up direct debits or standing orders so that the money is paid automatically as this means that there is no chance that you will forget. It is also a good idea to budget carefully so that you make sure that these payments are made first and that you buy all of your essentials before spending money on anything else. Then you will make sure that you repay the loans and pay all your bills and this will look better on your credit report. The good thing about doing this is that it will also benefit you, so you will no have extra charges for late payments.
There are lots of different places that offer credit cards. It can be tempting to think that they are all pretty much the same though and not really take notice of the differences and just quickly pick one. However, there could be quite significant differences and it is therefore a good idea to know what they are so that you can choose more carefully.
Some Have Rewards
There are some credit cards where you can earn rewards when you use them. Usually you get a percentage back of the money that you spend either in cash or vouchers or some other type of reward. This can benefit some people, but the interest rates can be higher and that means that if you intend to not repay the full balance each month on the card, it will mean that you could end up paying more and not gaining form the rewards on the card.
Interest Rates Vary
There will be a difference in interest rates between different cards. The interest rate is what you are charged if you do not repay what you spend on the card when you get your statement. It can make a big difference if the rates are low compared to high, especially if you spend a lot of money on the card and do not pay it off very quickly. Rates can go up and down though as they are normally not fixed when you have a credit card, so if you have a card already and you think the rate is good, make sure that you check pretty often to see whether the rates have changed on your card and others as it might be a good idea to switch every so often if you can find a better deal.
There may be additional charges on a credit card. These might include late payment charges, charges for cash withdrawals or for using the card abroad. These charges will not be something that everyone will pay and you will need to think about whether they are something which are likely to impact you and if so, you will need to look into them and compare them. It can be wise to be aware of all of the charges before you sign up to a card just in case, just so you are aware of things that you will be charged for so that you can avoid them or at least the cost when you are thinking of doing them.
The way lenders are with customers will also vary. Their customer service might be different and the way that they treat their customers, which is something you could find out by looking at reviews of that lender or even contacting the customer service department yourself. The way you bank with them, whether it is online, by phone or whatever may also vary and be significant for you It is a good idea to find out more if this is something that is important to you.
So, the difference can be quite large between the different cards and it is therefore a good idea to make sure that you keep them in mind. Then if you are choosing a new card, you will know what sorts of things to look out for. You will also be able to consider whether your current card is still good or whether you should consider swapping to another one. It might seem like a big hassle to switch but it could save you a considerable amount of money and mean you get better value for money as well so is worth considering.