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Managing Your Credit in College

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Reasons Why Managing Your Credit is Important

College is the start of a new life. A life independent from overprotective parents, teachers getting on your back about homework, curfews, and a sheltered life where something goes wrong you can run to your parents to fix. College is the start of the real world. We go to college to establish a foundation for our life in the real world; an education for future careers, acquaintances for future relationships, living skills for your future independent life. However, what most students forget to establish is probably one of the most important things in life: good credit. In the real world, a persons credit is like a personal bio. It shows how responsible and reliable you are when it comes to making payments, and in a world with a mentality “buy now pay later” reliability is key. Credit is just as important than your financial well being.

Establishing good credit is incredibly important because every time you make a financial move, your credit is checked. This is even more important to college students who have zero credit and need a loan not to mention having looming college loans over their heads. As stated before, college is all about laying foundation to succeed in the future. Establishing a bad foundation at college could be a significant detriment to your future life. Just as you wouldn’t blow off a studying in college because you fear not being able to find work later, you shouldn’t blow off your credit because you will not be able to purchase essential aspects of living. College students come out of college in debt with little to no money. Students, until they find work, simply do not have the money to buy a car, to travel, rent an apartment, or more importantly to hold them over in emergency situations. This is where credit comes in. Good credit will ease the transition from college to work for a student. With good credit, lenders will not be hesitant to lend you money (i.e car loans, credit cards, home loans etc.), so students can worry less about making payments and worry more about future plans. Once someone has bad credit it is incredibly tough to get out of. Especially for a student who has no source of income. A student with bad credit is most likely going to be force into a paycheck to paycheck job barely making end’s meat because of their inability to borrow money. On the flip side a student who establishes good credit during college is able to follow through with their life plan; go to graduate school, pick a career, get a steady job, wherever life takes them they will always be two steps ahead of someone with bad credit.

College is a jumping off point to the rest of your life. It is where you establish a foundation to build your career, relationships, and your life in general. Good credit in college enables you to pursue your dreams with focus and tenacity. With good credit established in college, It is easier to be financially independent and comfortable later in life. Without establishing credit in college a student will start out life at deficit, unable to be financially support their dreams and aspirations. Establishing good credit in college is the foundation of a successful life.

How to Identify and Use Alternatives to Payday Loans

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Since the onset of the recession, many people have been in the position of being left short of cash towards the end of the month, and payday loans seemed like a good idea to make ends meet until the next paycheck.

However, this one-time decision turned into a monthly habit. Usurious interest rates, huge late payment penalties are forcing people who take on a short term loan to continue to borrow from lenders – not only for their daily expenses, but also to be able to pay back previous loans.

Before the Center for Responsible Lending started raising awareness regarding the lending practices of payday loans shops, their clients were silent victims who felt insecure about making their struggle to repay these loans known to the authorities protecting their rights. As financial education became more and more available, through brochures and internet pages, a more educated public started seeking alternative solutions for quick loans.

If you, or someone you know, are in dire need of cash just until the next paycheck, the following are better alternatives to any offer that short term lenders could make you:

  1. Credit union loans

Credit unions are established at local community level, so their managers are well informed of the people’s needs for small amount loans. They also know that these people may not qualify for a loan from an established bank due to bad credit score.

One great lending program implemented by the Credit Union in the state of North Carolina is SALO – Salary Advance Loan. This loan does not carry a fee and has a 12 percent interest rate. By comparison, any instant cash loans by payday lenders are laden with various hidden fees and carry interest rates of around 500 percent.

The success of the SALO loan program prompted many other credit unions to come up with similar solutions for employed people in need of a short-term cash boost. The conditions vary from state to state, but the lending limit is established at around $500. The search tool of the Credit Union National Association will help you identify the lending program available in your area.

  1. Small amount loans from banks

After a pilot program implemented in 2008 by the Federal Deposit Insurance Corp. proved successful, more and more banks are willing to offer loans under $1,000 to people who would not qualify for standard loan programs. Right now, 31 banks all over the US are part of this project and it is quite visible that it works and that it is a good solution both for banks and for the people who need small amounts of money for a short term.

 

The general conditions of this type of loan include a fixed interest rate of 36 percent and a lending period longer than one salary cycle. These conditions are working to the advantage of the lender and borrower at the same time, making the small loans from banks a much better alternative than bad credit payday loans.

You can identify a bank participating in this lending program close to where you live by accessing the web page of the Small Dollar Loan Pilot Program found on Payday Loans Depot

  1. Advance on salary

This option will reduce the amount of your next paycheck, but it is still preferable to payday loans that will dig through your finances for months to come. Some people find it hard to approach their employers and admit that they are short of money.

The best solution is to approach someone from the HR department you are on friendly terms with and discuss the issue in private, possibly during the lunch break. Many companies nowadays accept the repayment of a salary advance through small monthly installments, which is a great advantage to you.

  1. Pawn Valuables

Installment rates on pawned goods are still lower than payday loans installment rates. It is not easy to part with valuables, even for a short time, especially if they hold memories for you. However, you do have the opportunity to recover them. If you sink too deep in debt from instant loans, you may be forced to sell these objects and lose them for good in order to repay your debts.

In times of financial crisis, people are forced to make difficult decisions when they have bad credit scores and they need cash on the spot. However, before you decide on payday loans, use the little time you have available to explore other ways of securing the amount of money you need.