Credit Builder Loans – What Are They and Do They Really Work

Introduction

When you apply for a home or vehicle loan, lenders look at your credit history to determine whether or not to sanction your loan request. Your credit score will also influence the interest rates you are asked to pay. But what if you have no credit history or only a thin history? Does that mean your loan request won’t get approved? Depending on your income, it could get approved, but it’s better to have a good credit history to request loans in most cases. With that being said, there are ways to improve or build your credit history with the help of “credit builder loans.”

Let’s understand what a credit builder loan is and how it works?

What Is a Credit Builder Loan?

When your financial struggles could really use a personal loan, you go to a lender, fill out a personal loan form, and wait for it to get approved. With a credit builder loan, the idea is to build your credit first and then get the money.

With a credit builder loan, you get approval to borrow a certain amount of money from the lender. That money is then deposited in an interest-bearing savings account. You would be required to repay the amount with interest over some time. Once you have paid the entire amount with interest, the lender lets you access the funds in the savings account and any interest you might have earned. The lender then reports your credit history to the big credit bureaus. This helps you build your credit score.

How can I apply for a credit builder loan?

There are many credit unions and community banks that offer credit builder loans. You can also look for online lenders or finance companies that offer better interest rates. You don’t need to have a good credit record or a long one to get approved for a credit builder loan.

These loans are meant to help you rebuild or build your credit history & score. The lenders would charge you a small fee to open the loan account in most cases. Otherwise, you don’t need to get your credit history checked. 

How does a credit builder loan improve your credit history?

For a credit builder loan to work, you must make timely repayments. Additionally, the lender must report all the payments you make to the credit bureaus. Hence, you must choose a trustworthy lender or a finance company with a good track record of reporting such loan payments to all the bureaus. 

Another thing to remember is that the lender isn’t obligated to report to all three major credit bureaus. So, it falls on you to ask them to report to the three major bureaus: TransUnion, Experian, & Equifax. This part is crucial because every credit bureau assigns a score based on their record information.

How much do credit builder loans cost?

To open a loan account for credit builder loans, you will have to pay an upfront fee. After that, the interest rates the lenders offer depend on various factors, like who the lender is, the amount you are requesting, and the duration you can repay the amount. 

Before applying for a credit builder loan, you have to be aware that the lenders can charge you a penalty if you pay off the loan before the date you had previously agreed to in the contract. This is to recover the interests they would lose out on if you pay off the loan ahead of its schedule. 

Conclusion

Credit builder loans can be an inexpensive and easy way to build or rebuild your credit score if you make the repayments on time and ensure the lender reports the payments to all the major credit bureaus. With a bit of care towards your borrowing needs and income, you should be able to repay the loan with no issues. 

What Is Good Credit For Buying A Home?

You don’t need a perfect credit score to get a mortgage. In some cases, the score can be in the range of 500. However, potential lenders will reward higher scores with more options and lower interest rates because of the risk that debtors will not repay the loan. For most loan types, the home purchase loan required is 620 or higher, but the higher the better, so borrowers above 740 have the lowest interest rates.

You can get a traditional loan with a 620 credit score, but mortgages often require a higher rating. According to Ellie Mae, in the six months to June 2020, FICO ( credit score by Fair Isaac Corporation) earned an average of 756 points for homebuyers on traditional loans. High-scoring borrowers will also receive a personal mortgage insurance (PMI) reduction required when paying the down payment. With a 10% down payment, 620 point borrowers will pay 1.1% of PMI, according to Joe Parsons, a branch manager and senior loan officer in Dublin, California. He says 760 FICO borrowers pay only 0.30%.

If you have a 500 credit score or higher, your chances of getting a federal mortgage guaranteed are perfect. FHA (Federal Housing Administration) loans only allow a 3.5% down payment, but you must have a FICO score of 580 or higher to qualify. If your credit rating is between 500 and 579, you will have to pay 10%. However, the lender can set a minimum loan amount for the FHA loan. According to Ellie Mae, the average FICO score for homebuyers on FHA loans was 680 in the six months to June 2020. Even lenders who are willing to take on borrowers with less than 600 creditors want to make sure that other aspects of the loan’s financial position are safe.

Most lenders want to see a credit score of over 700 or 720 in order to get a mortgage (commonly known as a jumbo loan) that exceeds the statutory credit limit. Look for potential homebuyers with a solid financial position, including good credit. Making a lot of money is inherently dangerous. If your FICO score is 740 or higher, your jumbo mortgage rate may be the highest. You can use a mortgage calculator to show that even lower interest rates can make a big difference.

How Can I Get a Better Score?

If your score doesn’t match a good interest rate or the type of mortgage you want, it makes sense to defer the purchase of the home and take the time to create a credit profile. This can be done in a variety of ways. You have to pay all invoices on time as payment history is the biggest factor affecting creditworthiness.

Make sure you keep your credit card balance low. Many experts recommend using less than 30% of your credit card limit. This is much better when it is much lower. The available loan amount is known as loan use and is the second largest factor in the score.

Keep a check on the credit report. Check for point reduction errors. Keep your credit card open as closing the card will reduce your available balance, increase your credit usage, and may lower your score.

Make sure you withdraw from time to time and immediately. This prevents the issuer from closing the account due to inactivity. Look at the credit mix. If you only have 4,444 credit cards or installment loans, consider adding other types to secure a balance of payments across different credit lines. Whenever you’re trying to create a thin credit file, consider adding a new credit card, secure credit card, or lender loan. Remember that it takes more than 6 months from opening a new account to applying for a mortgage. Therefore, plan your application carefully.

Keep Track of Your Progress

Check your progress with a free score as you strive towards the money you need to buy a home. Some credit cards and many personal finance websites offer them. Both types of scores can be used to track progress. Both emphasize the same elements, but because they are lightweight, they tend to move in parallel. Mortgage lenders have identified older versions of the FICO score. 

If you want to know exactly where you are and what your mortgage lender is looking for, you need a comprehensive report from FICO. You can do this on myFICO.com and then cancel the monthly service instead of paying an ongoing fee. Be sure to cancel before the next billing cycle begins. Monthly subscription fees are not prorated. However, if you are near a free score source or in a good credit area, you do not have to pay to check your FICO score. You almost certainly have enough credit to win the highest award.

Final Thoughts

Your creditworthiness is not the only factor influencing your mortgage approval. But it is an important indicator of your financial health. Track your credit, pay on time, and get help in choosing the right mortgage. By making targeted efforts to improve your creditworthiness, you will increase your chances of getting a mortgage. Higher credit ratings can also pave the way for lower interest rates and more favorable terms. You can do your own research by asking the people around you and searching the internet for specific questions. All you need is an internet connection like 1st Broadband.

Great Ideas to Celebrate Christmas on a Budget

What can be more exciting than Christmas? We all wait for this colorful and joyful festive for the rest of the year and now it is right around the corner. You must have plans to make your Christmas this year the most exciting one that you and your family ever had.The tranquility of Christmas has amplified with the gusty sensation of snow and the sound of jingle bells in the air.

The excitement for the Christmas festive is not getting tinted even by the hardships we have faced this year due to the coronavirus pandemic. Everyone around the globe is trying to find ways to make this Christmas the most joyous of all. Irrespective of being the highly expensive season you always look for adding numerous beautiful aspects to make Christmas a wondrous festive of all times.

From buying gifts for friends and family to shopping decorations for Christmas the whole process can be much daunting. Also, the whole experience can make significant savings from your bank account.

But don’t worry you will handle the expenses differently this year for sure. Wondering why? And how? Well! The answer to all of your concerns has been covered in this blog. We have gathered some simple and bright ideas to help you in having a memorable Christmas celebration this year without surpassing your budget.

So, don’t let the fear of expenses ruin the joy of this festival, and keep your jubilant spirit up in the sky.

Let’s explore how effectively you can make some savings and still have the best Christmas ever!

This Christmas – Be Home Bound

The essence of Christmas is to spend time with your friends and family. What place on earth can allow you to spend a joyful time with your family? Your home! So, try to spend your Christmas at your home. Especially if you have a low budget or are budget conscious either case nothing can be the best idea than celebrating Christmas at home with your family.

But how can celebrate Christmas at home with the less expensive idea? Well! It is possible if you follow some tips to overcome expenses even celebrating your Christmas at home.

These tips include buying decoration items for Christmas only from the sale and having home-cooked meals instead of going to dine out in restaurants or ordering food from restaurants. Following these tips, you would not only control your expenses but also prevent your family from the risks of the coronavirus by maintaining social distances.

Buy Thoughtful Gifts for Everyone

Try not to buy lavish or pricy gifts for everyone. Always keep in your mind the person and your relationship with him/her while buying any gift. But when it comes to children you will have no choice but to bring them what they have been wishing for from Santa for a year. However, even in that case you can also play smart and search out all the sale items available online or in physical stores to get the gift your children have been looking for this year. You can also go for an affordable version instead of the original one. Because sooner or later your children will lose interest in it.  So, why would you go for the expensive one?

Think Ahead This Year

You can avail tremendous discounts by the end of Christmas day. As various stores and brands drop prices of products just after Christmas day. To make more savings you can also go shopping after Christmas. You are right! What is the point of buying things that you need for Christmas when this festive get over?

You are right! This year, you may find it useless to buy things for the Christmas celebration when the event has over. But the stuff you would buy at discounted rates will gear up your celebrationsfor next Christmas.

The discounts and sales you would avail of just after the day of Christmas are so massive that you won’t get them at any part of the year. So, make full use of after-Christmas sales and get countless opportunities for making huge savings for next year.

To Wrap It Up

If you found our tips close to your heart for making some savings and having memorable Christmas this year, you need to have the fastest internet connection to enjoy this festival to the fullest. You can subscribe to amazing bundle offers provided by Spectrum, try packages such as Spectrum Silver and make the most out of your Christmas Holidays!

 

What happens when you use a cooling mattress cover?

Mattress cover serves a couple of purposes which include protecting the mattress, adding softness, or heat dissipation. With a particular focus on heat dissipation, a cooling mattress cover is a top option to help customize your mattress. Your mattress becomes comfier and gives a better sleep experience, especially as your body heats in tandem with a hot room that can create discomfort. 

You may wonder how a cooling mattress cover works to ensure you don’t sleep hot. Well, cooling mattress covers come in a variety of temperature-regulating techniques and technology. Usually, these covers are a thin overlay designed to suit side, back, and any other types of sleepers, even for multiple individuals on a mattress at a time. Once you purchase a type that covers the entirety of the mattress, multiple users can conveniently enjoy the temperature regulating function of the cover. 

Cooling mattress covers are built in diverse ways using different techniques. Some come with cotton material, others wool, yet some are fitted with gel. Whatever material is used, the goal remains to draw heat away from the surface of the sheet where the body lays. The thickness varies; it can be up to 20 inches, slightly lighter, or even thicker, depending on the brand. 

Overall, the bulk of cooling mattress covers can absorb, store, and return heat. If you love to keep your mattress in a “not cold or hot state,” cooling mattress covers are suitable.

Start spending less on mattress renewals

Do I need a mattress protector? This question sounds popular. A mattress protector is different from a cooling mattress cover. While both are laid on a mattress, the purpose is not the same. At the point of purchase, did the seller encourage you to buy a mattress protector alongside the mattress? Did you feel it’s just a marketing strategy to get you to buy what isn’t necessary? At that moment, did you ask yourself: Do I need a mattress protector? Well, it’s normal to feel that way when you know nothing about the importance of a mattress protector. Here are a few reasons to use a mattress protector. 

  • When you sleep, the body secretes sweat, oil, and if you go to bed without a bath, then the accumulated dirt over the day will smear the mattress. An advantage is that the mattress protector can be pulled, cleaned, and laid again. Also, remember that stains on a mattress may affect the warranty. By using a mattress protector, you achieve a twin goal of keeping the mattress neat and keeping the warranty intact. 
  • Dust mites can settle on just about any fabric and feed on dead skin cells. And what better place to find dead skin cells than a place you sleep for hours. With a mattress protector, a mattress doesn’t accumulate dead skin cells, and mites won’t settle on it and start breeding. 
  • Preventing Fluid 

Careful as you may, there’s a chance you can spill fluid. Why not prepare for a possibility then. 

There you have an answer now to the question: Do I need a mattress protector

Avail Best Personal Loans with the Lowest Interest Rates

Are you looking to apply for a personal loan at a lower rate? You are not the only one looking to do that. 

Many people don’t apply for an instant loan because it involves a higher rate of interest. It is because it is an unsecured loan. 

But with a robust CIBIL score, it is possible to enjoy the best personal loan interest rates

Read on and know the best way to get personal loans at a lower rate! 

  • Use your credit score 

If your CIBIL score is higher, you don’t have to worry about a higher loan rate. It is because you can make the most of the credit score. If it is 750 or more, you can get the loan approval at a lower rate. It is because it denotes that you can manage timely repayments as you have done in the past. You can maintain a higher CIBIL score by paying off your loan and other outstanding on time.

  • Don’t hop jobs 

Many Salaried individuals keep changing their jobs often. It is to enjoy a hike in their payment structures. Lenders don’t trust such candidates creditworthy as they may not make timely repayments if approved. Hence, if you want to avail of the best personal loan interest rates, then you ought to have a stable employment record. Therefore, if you wish to enjoy the best personal loan interest rates, you should not switch jobs. In turn, your stable employment record may help you negotiate for a lower interest rate.

  • Use your past relationship with your lender 

If you have a past relationship with your lender, then you can use it to your advantage. Since lenders are aware of your past repayments and other records, they may approve your request at a lower rate of interest. In turn, it may help you pay lower EMIs and save big.

  • Compare all available loan offers 

Another way to enjoy the best personal loan interest rates is to compare all available loan offers. It is possible to do that on a third-party website. This way, you can compare all available deals on a third-party website and pick one matching your needs and budget. Even if you are able to save a bit on interest charges, it may help you ease off managing your outlays better.

  • Use your employer’s credibility 

If you work for a known company, it may work in your favour to avail of the best personal loan interest rates. Yes, you can use your employer’s credibility to negotiate for a lower rate of interest. Why? It is because when you are employed with a reputed company, lenders are sure that you will receive your pay cheques on time.

You are now aware of the ways you can avail of the best personal loan interest rates. This way, it may be possible to settle for a lower rate and save big on repayments. 

Applying for a top up personal loan with a known lender may help you get approval for a significant amount. It may also let you enjoy instant approvals with faster disbursements. You may also make repayments over a flexible repayment tenor of up to 5 years. 

Bajaj Finserv presents you with pre-approved offers on personal loans, home loans, business loans and more. It is to simplify the processing of the loan. 

You can explore your pre-approved loan offers today by sharing your basic details such as your name and mobile number.    

What Are The Most Important Factors To Be Taken Into Consideration At The Time Of Choosing Any Kind Of Food Catering Service?

Whenever there is any kind of small gathering with family or friends then opting for the right kind of food catering service is the best possible way of ensuring that people can make the planning aspect very much easier. Whenever the burden of preparing the food will shift on somebody else people will be able to focus on enjoying the event very easily. Hence, the following are the basic factors to be taken into consideration by the people to choose the right kind of food catering collins ave:  Continue reading “What Are The Most Important Factors To Be Taken Into Consideration At The Time Of Choosing Any Kind Of Food Catering Service?”

What Are The Most Important Advantages Of Installing The Dashboard Camera Into Vehicles?

A dashboard camera is considered to be one of the most important accessories to be implemented by the people into their vehicles nowadays because it will help us help in providing the people with several kinds of advantages. Following are the most important reasons to install the dash camera with GPS in Kuwait into the vehicles:  Continue reading “What Are The Most Important Advantages Of Installing The Dashboard Camera Into Vehicles?”

What Are The Most Important Reasons That You Should Purchase Stoneware Drinking Glasses?

The stoneware drinking glasses are considered to be the best possible way of enjoying the very satisfying sipping of the favourite drinks without any kind of problem. This is considered to be one of the most durable options and stronger options available in the industry which makes sure that people will be able to avail themselves several kinds of advantages because of the good great durability provided by it. Usually, the stoneware drinking glasses will last for several years depending upon the maintenance of the people and the best benefit is that it is always made up of clay and stone which makes the appearance and texture of every piece very much unique.  Continue reading “What Are The Most Important Reasons That You Should Purchase Stoneware Drinking Glasses?”

Facebook Influencer Marketing Is Really Beneficial Or Not?

Of course, Facebook doesn’t need any introduction, as it is one of the leading socializing platforms today over the web. Apart from making friends, and building communication, Facebook is the one of the  Best Influencer Platforms. It inherits the scope to run a business online successfully, as it helps brands to have a responsive audience, boost awareness and improve sales.  Continue reading “Facebook Influencer Marketing Is Really Beneficial Or Not?”

Implications of Taking a Personal Loan and Business Loan Together

Loans give us instant cash to pay for expenses when we need them. There are several types of loans you can take, and two of the most common are personal loans and business loans.

This post discusses the possibility of taking both these loans simultaneously. Today, you can procure an online personal loan or a business loan a lot more easily than you did in the past. Let’s first compare the two types of loans.

Difference Between a Personal Loan and Business Loan

An online personal loan is an unsecured loan that you procure for personal reasons like medical expenses, home renovation, or a child’s education. A business loan is meant to cover business expenses. Business loan amounts are typically higher than personal loan amounts, and you need more documentation to get a business loan.

Can I Take a Personal and a Business Loan Simultaneously?

Absolutely, yes! The key here is to meet the requirements. If you don’t pose a high risk to the lender, they will be ready to sanction a second loan to you. Here are a few conditions for getting a second loan:

Low Debt-to-Income Ratio

Your debt-to-income ratio, as the name suggests, connects your income to your debt. If you have a high income compared to your total debt, it will increase your chances of a second loan. A debt-to-income ratio below 40% is usually acceptable.

Good Repayment Capacity

Of course, your lender is primarily interested in getting their loan amount returned. As a result, they will pay close attention to your financial credentials. Your bank statements, income tax statements, proof of income, and audited profit and loss statements will all come under scrutiny.

Upon examining your documents, if the lender concludes that you have a good repayment capacity, they are likely to give you a second loan readily.

High Credit Score

Your credit score is a three-digit number generated by India’s premium credit reporting agency, TransUnion CIBIL. It reflects whether you have good or bad credit behavior.

If you are financially responsible and do not default on payments, you will have a high credit score. A credit score of 750 or above is considered good and will be looked upon favorably by lenders, increasing your chances for a second loan.

The reputation Of Your Employer

Lenders will probably like you if you work for a well-known, big multinational company rather than a small, unknown, private firm. This is because you will be perceived as having a stable income with job security and can easily repay the loans.

Income

If you have a high income, you have two advantages. Firstly, you can take high loan amounts, and secondly, you can get the lowest interest compared to the current personal loan interest rates.

The lenders will look favorably on you if you have a high income because you will be more likely to have the money to repay two loans simultaneously. 

Relationship With Your Lender

If you are an existing customer of the lender, especially with a savings account (or if you have some investments with them), they will send you to an unknown person. Therefore, youYou will get more leverage for a second online personal loan or business loan from a lender.

Your Repayment History

How has your repayment pattern been with previous loans, if any? A lender will delve into your previous financial dealings with a specific focus on whether or not you paid off your loans promptly. If you did that, you are likely to pay them in a similar fashion, which makes you a preferred candidate for a second loan.

Conclusion

You can get a personal loan and a business loan at the same time. However, take care that you meet the conditions that we have outlined here. And, above all, pay attention to the current personal loan interest rates, which tend to be quite high compared to interest rates of other types of loans.

You can take advice and assistance from Fullerton India, a Non-Banking Financial Company (NBFC) from whom you can get loans with competitive pricing, minimal documentation, and digital processing.