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Having bad credit can make you feel like a second-class citizen.

Once your credit rating dips low enough, it’s easy to get trapped in a world of costly financial snubs and crummy options.

When you have lousy credit, just about everything in your financial life will cost you more, a lot more than folks with unblemished credit. And that’s when you’re not being turned down flat for everything from a credit card to a bank account to a car loan.

Here’s how having bad credit can transform even the simplest financial transactions into an inconvenient, expensive, and time-consuming experience.

Opening a bank account. Once your credit gets damaged enough, many banks and credit unions will turn you down when you attempt to open a bank account. So a free checking account with a handy ATM debit card is not for you. Easy-as-can-be online banking and bill payments are not for you.

You’ll have to make do with costly check cashing centers for cashing paychecks and paying bills via money orders. Many check cashers charge a 2 to 5 percent fee, based on the value of the check. So if you were cashing a $500 check, you’d be charged a $10 to $25 fee. That’s a lot of money to spend to get to the money that you’ve earned in a paycheck.

Paying bills without a bank account isn’t cheap either. A money order can cost anywhere from $.50 to $1.50; while these fees may seem nominal, they can add up pretty fast. Paying five bills per month via money orders could cost you as much as $7.50 a month.

Paying your bills in cash is another option, but that can take up a whole lot of time since you’ll need to pay each bill in person. Folks with bank accounts can pay bills in seconds. For folks without bank accounts who pay in cash, it can take hours.

Applying for a job. Bad credit can hinder employment options. With your permission, a potential employer may review your credit report when you apply for a job. And if they see any major negative records they may decide not to hire you. If an employer decides to take “adverse action” based on information in your credit report, the company must notify you first and provide you with a copy of your credit report.

Applying for a car loan. As with any loan, your credit affects the interest rate that you pay on an auto loan. Most auto lenders don’t bother to scrutinize your full credit report. Instead they base your interest rate on your credit score and on some basic information on your application. Folks with damaged credit could be turned down for a loan or be forced to pay an exorbitant interest rate on even a small loan. For many folks with damaged credit, buying a car means paying cash.

Purchasing auto insurance. More than 90 percent of auto insurance companies use credit data when determining insurance rates and terms for customers. People with flawed credit may have a hard time finding an auto insurer who will take on their business. And even then, they may be shocked at the sky-high auto insurance premiums they are asked to pay.

Choosing an apartment. Landlords and rental agencies often pull a copy of your credit report as a part of the review process. They also may check to see that the employer listed in a credit report matches the employer that you listed on your rental application. They also are looking for any major negative records. People with credit problems may be turned down as a tenant, be asked to make a higher deposit, or be asked to pay a higher rent.

Signing up for utilities. Even the simple act of signing up for utilities after you move into an apartment could cost you more when you have bad credit. With your permission, electricity, cable and other utility companies may check your credit report when determining your rates. If you’ve got credit problems, you may have to put down a deposit, add a co-signer, or pay higher rates for your utilities.

Choosing a cell phone. Even a cell phone company may treat you differently when your credit is less than stellar. All cell phone companies check your credit score before granting you a service contract. If you’ve got banged-up credit, you may have to pay extra for a service plan or put down a big down payment.

Applying for a credit card. All those credit card offers promising zero-percent introductory rates and rich cash back rebates and other rewards are reserved for folks with good credit. Apply for a low-rate, low-fee unsecured credit card when you have lousy credit and you’ll be turned down.

There are plenty of unsecured credit card offers reserved for folks with no credit or banged-up credit, but these cards come with some pretty serious fees including hefty sign up fees of $100 to $200 and annual fees of $48 or more. And some cards also charge monthly participation fees and program fees. You’ll pay all these fees for a credit card with an interest rate in the high teens and a low credit line. That’s not much of a deal.

A secured card may be a better option for folks with bad credit who are in need of a credit card. With a secured card, you make a cash deposit into a savings account to “secure” your card’s credit limit. The minimum starting deposit is typically $300. Making a $300 deposit gets you a $300 credit limit. Whatever dollar amount you make as a deposit remains untouched in a savings account, earning interest.

After six to twelve months of responsible payments with the card, which will be reported to all the major credit bureaus, you’ll be ready to move up to an unsecured credit card and your deposit will be returned to you. And because you’ve boosted your credit, you’ll be eligible for better credit card deals with lower rates and fees. Be sure to choose wisely.

Living with bad credit can be a frustrating and expensive experience. To transform your financial options, you must first transform your credit. That means getting in the habit of paying all your bills on-time each and every month and slowly building up a solid payment history., Your credit will improve little by little, and so will your financial choices.

(Source: Lucy Lazarony for Credit.com)

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Borrowers visit a payday lending store and secure a small cash loan, usually in the range of $100 to $500, with payment due in full at the borrower’s next paycheck (usually a two week term). Finance charges on payday loans are typically in the range of 15 to 30 percent of the amount for the two-week period, which translates to rates ranging from 390 percent to 780 percent when expressed as an annual percentage rate (APR) The borrower writes a postdated check to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower doesn’t repay the loan in person, the lender may process the check traditionally or through electronic withdrawal from the borrower’s checking account.

If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees and/or an increased interest rate as a result of the failure to pay. For customers who cannot pay back the loan when due, members of the national trade association are required to offer an extended payment plan at no additional cost. In states like Washington, extended payment plans are required by state law.

Payday lenders require the borrower to bring one or more recent pay stubs to prove that they have a steady source of income. The borrower is also required to provide recent bank statements. Individual companies and franchises have their own underwriting criteria.

Internet Lending

Online payday loans are marketed through e-mail, online search, paid ads, and referrals. Typically, a consumer fills out an online application form or faxes a completed application that requests personal information, bank account numbers, Social Security number and employer information. Borrowers fax copies of a check, a recent bank statement, and signed paperwork. The loan is direct-deposited into the consumer’s checking account and loan payment or the finance charge is electronically withdrawn on the borrower’s next payday.

Examples

For example, a borrower seeking a payday loan may write a post-dated personal check for $460 to borrow $400 for up to 14 days. The payday lender agrees to hold the check until the borrower’s next payday. At that time, the borrower has the option to redeem the check by paying $460 in cash, or renew the loan (a.k.a. “flip the loan”) by paying off the $460 and then immediately taking an additional loan of $400, in effect extending the loan for another two weeks. In many states, “flipping” or “rolling over” the loan is not allowed. In states where there is an extended payment plan, the borrower could choose to opt into a payment plan. If the borrower does not pay off or refinance the loan, the lender deposits the check. In this example, the cost of the initial loan is a $60 finance charge, or 390% APR.

When the Consumer Federation of America conducted a survey of 100 internet payday loan sites, it found loans from $200 to $2,500 were available, with $500 the most frequently offered. Finance charges ranged from $10 per $100 up to $30 per $100 borrowed. The most frequent rate was $25 per $100, or 650% annual interest rate (APR) if the loan is repaid in two weeks.

Still confused about Pay Day Loans or need some help deciding on your cash advance options? Then let the experts at The Andres Financial Group help you. Our network of highly trained professionals that have over 30 years of combined experience in the buyout of future payment streams can you get you the money you need now. Contact us Today!

(Source: Wikipedia)

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How can you avoid having to take out another payday loan in advance to handle emergency bills? First, examine why you took your last payday loan in advance. Did you have to handle a medical emergency because you lacked insurance to tide you over? Were you stuck paying exorbitant fees to repair a car or a van? Did trouble with a creditor force you to take out a payday loan in advance to manage that financial crisis?

Once you’ve assessed your past discretions, you can focus on alternative tactics to “payday loan in advance” financing. Create a savings pool that you can tap into if you need emergency funds in the future. When you are living from paycheck to paycheck, any small expense can set your finances spinning out of control.

If you have several months’ worth of expenses stocked away in a bank account, you can breathe a little easier. Moreover, the cycle of financial prudence creates its own momentum, just as the cycle of “payday loan in advance” financing creates a snowball towards indebtedness.

When you pay your creditors on time and dispatch with your credit card responsibilities, you no longer waste significant money per month on paying off interest fees. Instead, you devote all of your disposable income to tackling credit card balances, car payments, and other liabilities, even singles with few expenses may find that, simply by cutting out interest payments per month, they can save $100 to $200 per month.

In addition to socking away cash reserves to avoid the “payday loan in advance” scenario, you should ideally build assets and reduce liabilities. Remember that your mortgage is a liability, not an asset. Any money that you have to pay out is a liability and it needs to be offset by assets. “Positive cash flow” can come from your income, but it can also come from revenues from stocks, mutual funds, and real estate.

The key to avoid getting sucked down into the “payday loan in advance” cycle is to understand the dynamics of your asset/liability ledger and to create the conditions wherein you push the ratio of assets to liabilities higher every month and develop a significant cushion to protect your pocketbook in the event of debt emergencies

(source:superpages.com)

Still confused about Payday Loan Services or need some help deciding on your cash advance options? Then let the experts at The Andres Financial Group help you. Our network of highly trained professionals that have over 30 years of combined experience in the buyout of future payment streams can you get you the money you need now. Contact us Today!

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