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What Does The Term Credit Score Mean To An Average Citizen
A credit score is a numerical expression based on a statistical analysis of a person’s credit files,a measure of credit risk calculated from a credit report using a standardized formula.Factors that can damage a credit score include late payments,absence of credit references, and unfavorable credit card use.Lenders may use a credit score to determine whether to provide a loan and what rate to charge.
Lenders,such as banks and credit card companies,use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt.Lenders use credit scores to determine who qualifies for a loan,at what interest rate,and what credit limits.The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.
Credit scoring is not limited to banks.Other organizations, such as mobile phone companies,insurance companies, employers and government departments employ the same techniques.Credit scoring also has a lot of overlap with data mining,which uses many similar techniques.
In the United States of America, a credit score is a number based on a statistical analysis of a person’s credit files,that represents the creditworthiness of that person,which is the likelihood that the person will pay their bills.A credit score is primarily based on credit report information, typically from one of the three major credit bureaus,Experian,TransUnion and Equifax.
There are different methods of calculating credit scores. FICO is a credit score developed by Fair Isaac & Co.It is used by many mortgage lenders that use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender. The credit bureaus all have FICO alternatives:Equifax’s ScorePower,Experian’s PLUS score and TransUnion’s Credit score.
Americans are entitled to one free credit report within a 12-month period from each of the three agencies.The three credit bureaus run Annual credit report,where users can get their free credit report,normally without credit scores.Credit scores are available as an add-on feature of the report for a fee.
In some states such as California and Colorado a consumer is entitled to a free credit report within 30 days of being denied credit or receiving sub-normal credit terms from a lender due to their credit rating.
Is pay day loan a trap?
What is a pay day loan? It is a small amount of money that you borrow to meet the expenses deficit until your next payday. Why people go for these loans? Simply because pay day loans offer easy solution to someones immediate financial need. These loans are easily available and do not require much paper work. This easy coming money is a big temptation for the borrower who ignores the fact that these loans are not the money earned by him. Any employed person with a verifiable income can avail pay day loan. There are several companies operating in the market who offer short-time loans on different terms and interest rates. You can check various available options and select the one that suits you best.
Normally, pay day loans are meant for people in job to handle their immediate financial problems. This class of society is not equipped to face the increasing load of interest and penalties in case they fail to clear the loan. Such loans may be tempting and alluring but they can lead you to a bigger trouble in future.
You will find many people recommending pay day loans as best solution to your immediate financial problem. You must consider the pros and cons before opting for such a loan. It is true that people, when find themselves in tight financial situation, mostly fail to visualize the after effects of such easy and hassle-free availability of money.
Some people opt for short term cash loans to maintain their social status and life-style. They try to justify their action without actually knowing that repeated money advances can ultimately put their entire economy out of control.
Once resorting to this easy-to-get money channel, you forego your financial freedom and are compelled to avail a second loan to clear the first one and thus the cycle keeps going on. People get habituated to avail Pay day loans whenever they find themselves in smallest financial inconvenience.
Money lenders lay out a smartly woven trap in front of the needy person who, driven by the magnitude of his immediate financial requirement, just falls into it. Borrower finds this process very easy and he need not worry about it for a month. Money lenders start charging interest at exorbitant rate which sometimes goes up to 300%. A stage may come when you find yourself in much bigger financial crisis than the one when you started out.
Here is a piece of advice in your own interest. Keep away from pay day loan trap. Never go for such loans unless it is absolutely unavoidable and you have no option left. If you are compelled to take one loan, ensure paying it off immediately after you get the money.
Yes, you can avoid falling into pay day loan trap. What you need to do is a little financial planning. Have a close look at your income and expenses pattern. Make your budget and cultivate some saving habit. Small savings in different heads can help you in getting bigger amount of money when you actually need it.