Is My Credit Score Go Up After Paying a Credit Card

Credit ScoreThe best way to obtain a high credit score is to use your cards as needed, then pay the balance in full every month. This shows potential lenders you’re taking advantage of your credit resources and are capable of paying your obligations as agreed. If you carry a balance for a few months and pay it off in one lump sum, your credit score might drop at first. You can try various strategies to mitigate this effect.

Utilization Rate Improvement

Paying off your credit card benefits your credit score in several ways. One involves your utilization rate. Credit issuers like to see you’re using credit responsibly, so having several accounts open is a positive. However, they also like to see that you’re not maxing out your cards and living beyond your means. A utilization rate of 30 to 50 percent or less is ideal. Paying your balances improves your utilization rate, and keeping your credit card debt below that threshold will boost your score.

Multiple Factors Affected

Credit scores are based on a number of factors, so paying off one card doesn’t guarantee your score will rise. Approximately 35 percent of your score is based on your payment history, and 30 percent is the amount owed. Both of these are boosted by making payments. The length of your credit history makes up 15 percent, and new credit and type of credit used account for 10 percent each. When credit scorers consider your amount owed, they consider the number of accounts with a balance, as this can indicate a higher risk of over extension. As a result, it may help your score more to pay one credit card balance off than to pay multiple cards down by an equal amount.

Short-term Effect Uncertain

Experience notes that paying off your debts in sudden, large spurts introduces some instability into your credit history that can temporarily hurt your score. That often changes soon afterward, but it’s best to pay off cards a few months before you’ll need to make another significant purchase. In addition, because there’s a lag between when you make the payment and when it’s reported to the bureaus, the effect isn’t immediate. As a result, you’ll want to pay off a credit card debt several months in advance of applying for a major commitment like a mortgage loan.

No Guarantees

Despite the positives that come from paying off your card, it doesn’t guarantee that your score will rise. Some cardholders will reduce your credit line once it’s paid off, particularly if you’ve had problems with the account in the past. This negates the expected utilization rate benefits. If your balance was small anyway, or your total amount of debt was large, the benefits likely won’t be significant. If you have a total of $55,000 in available credit lines and a total of $40,000 in credit card debt, paying off the balance on a $5,000 card still would leave your credit utilization ratio at 70 percent — $35,000 in balances for $50,000 in available credit — well above the desired 30 to 50 percent threshold.

Essential Money Management Tips

In this article, we are going to take a look at some tips for money management.

    • Draw a budget – Even before you decide on money management, it is important that you create weekly, monthly and yearly budget. The budget must include detailed information about your income and expenses. The expenses must bear all the details like the amount and reason for the expenses. You need to deduct the bill related expenses from the income. From the figure that you get, allot 10% as savings. Now you have the money that can be used for paying bills as well as other expenses. Thus, you have a budget under which you will have to operate for the week or month.


    • Check before you buy – It is imperative that you shop wisely without ever overspending. Your budget can work as a guide prior to going out for shopping as it will immediately put a check on any kind of impulse buying. For instance, if you see a nice new leather jacket bearing a big price tag then your budget check will tell you whether you can afford it or not. This is the best way to balance your needs and wants. This is in fact the best money management tips you can ever implement.


    • Do not take credit – Credits can ruin your money management plans because borrowing money for something defeats the very purpose of money management. You cannot carry on with proper finance planning when you have huge debts to pay off. Credit card use is the primary tool that compels a person to overspend. Purchases with credit cards often end up as unnecessary that you might never use.


    • Cut down on other spending – Drawing up money management strategies based on money management tips is will not help you to achieve your financial goals. You have to cut down on all the other expenses. You need to stop using your car on a regular basis and avail the pool car facility to go to your office. You can stop going out for frequent lunches and dinners at expensive restaurants.


    • Track all your expenses – The expenses need to be tracked with all the details if you want to manage your money effectively and efficiently. This money management tips will come in handy when you have numerous sundry expenses in a week or month. Tracking your expenses will give you a clear idea about the outflow of cash from your coffers in a week or month.


  • Discover alternate ways of income – You need to increase your income so that it is easier to tide over financial turbulences. The alternate income systems can help you supplement your regular income and make life easier. You can use the extra money for a variety of purposes like buying a new AC system or even a foreign tour.

Learn Money Management Tips

Money management is going to save you significant amounts of money. If you learn money management tips you certainly will fill your pockets with cash. The good thing about learning how to save money is that you can invest wisely and then you should be able to work less. So what money management tips are useful?

Well firstly you should get together a budget. A budget is going to show you how much money you spend and how much money you save. An easy budget is to simply write down how much you earn in one column and then in another column right down how much you spend. This can easily show you how much you are spending over your pay packet. Then you can cut out the things that are not necessary in your weekly living expenses.

Just listing each thing you spend your money on is going to show you exactly what you are spending your money on. This is the key to money management. Identifying each individual item and then spending the time to think about whether you actually need it. This is a basic money management tips that you should learn.

Another money-management tip is to keep your money in the bank. As soon as you take money out of your bank account and put it in your wallet you have then more of a chance of spending it. This is a basic money-management tip that you can easily learn and implement. If it is not in your wallet, then you are less likely to spend it.

Another good money-management tip is to save a certain amount every week. Then put this amount of money into a term deposit or a high interest earning account. You could also invest in some shares or stocks and leave them in there for the long term. There are plenty of money management tips online and you can simply do some quick research to find out what money-management tips are going to suit you and your budget

3 Money Management Tips

Who needs money management tips on how to ruin their financial lives? Please raise your hand. No one? This is certainly a surprise. Given the many people with money issues when we look around our families, relatives, friends, and associates, I cannot help but wonder that some of them actually did receive money management advice of this nature. Whatever it is, in case you are still keen to ruin your financial life, follow these top 3 money management tips for beginners and you can be sure to get the results!

First, forget about setting money management goals to address any financial concern. Why? Let me ask you a question. How many New Year resolutions have you made, and how many of them have you kept? Come on, be honest with yourself. See? That is exactly why trying to set a money management goal is a waste of time other than a way to kill off some brain cells.

I am not saying you cannot have dreams of retiring at Bahamas and living the good life one day or something. Sure you can. No one is stopping you. Just do not waste time and energy going into the specifics like when you want to retire, how much money you need, and what investments will help you get there.

By the way, always dream big. Do not sweat the small stuff–small money included. Having the discipline to save for a TV or car purchase is unnecessary and could be bad for you. The satisfaction of achieving a smaller cash objective can be addictive. It motivates you to do more and more of it and that means work. There is absolutely no need to train yourself to build up funds little by little. All you need is a big win on the lotteries or horses you bet on to take care of everything.

Since we touch on the subject of savings, I might as well give you the second of the money management tips to wreck havoc on your personal finances: Savings is the last item you need to put on the shopping list. Spend all the money to your heart’s desires regardless of your income resources. Whatever cash you have left–not that it is likely to happen if you heed this advice–at the end of the month can then go into the savings account. Putting aside a fixed amount or percentage of your money first only keeps the bank accounts growing and growing. What good can those savings do?

You do not need an emergency fund for sudden medical bills. You are in the pink of health. No worry of unexpected illness striking, isn’t it? What about car accidents? Well, they only happen to the other unlucky folks. Besides, your driving skills are superb. You have zipped along the highway at 200 miles so many times without trouble. How about saving for retirement investment? Perhaps, except that you are still young and retirement is a long way ahead. It is not too late to start retirement planning 30-40 years down the road when you are in the 50’s or 60’s, right?

Instead of paying yourself first to build up the savings, think of all the fun and entertainment you are missing! So shop till you drop and enjoy life to the fullest with every penny you have.

Now is the perfect time to introduce the third and last of the top 3 money management tips to crash your personal finances: Never ever track your spending. You do not need to be reminded of your impulse purchases or bad spending habits which a good record system will reveal. Paper notebooks are for idle doodling and are not record books to track expenses. Computers are meant for games and online chats. Personal budgeting software like Quicken or Microsoft Money are best left to the accountants and have no place on your laptop.

So, what if you overspent and ran out of cash? No problem. The almighty plastics can take care of it. Simply whip out a credit card and charge your expenses to it. If need to, you can always apply for another one to extend your credit further. They are not called the credit cards for nothing you know.

How about all the credit card debts you owe? No problem there either. After all, you can just pay the minimum monthly and push the remaining balances away for yet another month. The banks can slap all the interests and penalty fees they want on the outstanding balances. No hurry for full repayment so long as you do not have to pay it now.

Bad Debt Loans

Bad debt loans are the loans for the people who are suffering from bad debts and want to avail quick cash to pay off their dent consolidation right away. People who are suffering from bad debts in their business and are in shortage of cash can avail these loans with ease. If you are a bad credit holder, the reason can be due to any of the following reasons – defaults in previous debts, arrears, and declaration of bankruptcy or CCJ; it doesn’t matter to the lender. Bad debts loans can endow to you in two options, secured and unsecured. In secured option you have to pledge collateral against the loan amount and can grant large amount of cash whereas in unsecured you can avail small amount of cash without placing any security against the loan amount. And payday loans in that situation will get you cash for your personal needs like – buying a car or home, renovating your house, starting a new business or simply for vacation purpose. You will get the full freedom to use it wherever you want.


These loans are the best solution to handle financial crisis for bad debts holders. Bad debts basically occurred from the miss payment of some of your past loan. Loans for bad debts form a great relief to the borrowers who are holding bad debts. Most of the people think that it is not easy to get loan with bad debt history but now it is possible because loans for bad debts have been introduced. These loans are just like perfect hope for the people who have bad debts. No credit check is done. These loans also give ultimate chance to the borrowers to improve their credit scores. The repayment criteria for these loans are also flexible and apt according to the borrower’s capability. Unsecured loans can be incredibly useful as a way of sorting out your financial problems. If someone got stuck in some kind of financial crunch and possessing bad debts can acquire immediate funds from bad debts payday loans without worrying. It is applicable online, so it involves least documentation and faxing procedures.


There are few simple requirements that need to be followed before applying for this loan. These are:

1. The first and foremost qualification should be you should be UK citizen.
2. The applicant should be an adult i.e. 18 or above years.
3. He should have valid active check account in reputed bank.
4. You should be regular employed earning at least 1000 monthly.
5. You should be having good repayment ability to pay back the loan amount.
6. You should be having permanent address of UK.


If you are tormented with bad debts don’t get disheartened as loans for bad debts have been introduced. Secured loans are acquired by the borrowers to get rid of the debt troubles prevailing in their lives. These loans are basically debt consolidation loans. Bad debt loans are easy loans meant for those having credit problems. The amount can be availed by the borrowers as per his requirements and ability and cash be repaid back on said duration or it can be extended as per the borrower convenience.

Cheap Bad Debt Loans

In contemporary times, large numbers of people are becoming victims of bad debt. In such a bad financial situation, the total number of bad debt holders is at an increasing level. But, with the changing scenario, various financial institutions and banks have come forward to provide financial aid to these bad debt holders. Also, there are a large number of bad debt holders who have suffered rejections regarding their loan requests in the past times. For all such people, cheap bad debt loans have proved to be the biggest support so that the debt holders can have the facility of getting easy installment and lower interest rate bad debt loans.

These loans are for all those people who are already suffering from the problems of bad debt and are striving hard to get through their financial difficulties. In fact, these bad debt loan options can contribute tremendously in getting back the borrowers to their normal economic conditions and also retaining their trust and availing the various financial provisions available in the UK market. Since such loans are especially designed to meet with the different needs of a bad debt holder, with these loans, the respective borrower can get assured of easy fulfillment of their financial requirements. Once the people are declared as being defaulters, they start believing that all the available financial opportunities have been restricted for them. But with these highly beneficial and easy to pay loans, the respective borrowers can experience a breath of financial contentment.

As these cheap loans are provided without any consideration of the borrower’s debt related problems, many people holds the notion that taking the opportunity of these loans might prove to be a really tough task. But on the contrary, these loans are the simple ways through which one can get free from the different debt related hassles. Needless to say, the interest rates that such cheap bad debt loans carry are just similar to any ordinary loan scheme, which does not give any extra pressure or burden on the borrower’s pocket. Bad debt loans are undoubtedly the excellent options for all those people who have been declared as faulty borrowers or defaulters and are suffering from loan related problems.

These loans are easily available in two most common and admired forms- the unsecured bad debt loans and the secured ones. This entirely depends on the discretion of the borrower as well as the lender as to what type of loan to look forward to in the need of the hour. In case the loan is a secured one, it simply means that the respective borrower needs to deposit some security or collateral with the loan lender. And so, the financial lender will automatically charge a nominal rate of interest. However, if the loan falls under the category of an unsecured one, the most important point that needs wise consideration on the part of the borrower is its interest rate. The unsecured bad debt loans often have a high rate of interest as the borrower is not actually keeping any asset as collateral and is not thereby giving any deposit to the lenders.

Sub-prime Debt Consolidation Loans

Vexed by the large number of defaults and arrears that continue creating roadblocks in the form of refusals of loans, many borrowers take up debt consolidation loans at whatever terms offered. What these borrowers are unaware of is that loan providers have designed a debt consolidation loan that is particularly suited to borrowers with bad credit. They are known as bad credit debt consolidation loans or bad debt loans in short.

Before going on to describe the bad debt loans, let us first discuss the reasons behind the use of a specialised debt consolidation loan. Why can a borrower not use regular debt consolidation loans? Regular debt consolidation loans and the regular lenders will be very cautious in lending. Playing safe ensures that they do not incur a very large risk. In the process of playing safe, borrowers are ripped of larger rate of interest for a relatively small amount of loan sanctioned.

The lenders who offer bad debt loans or specialised bad credit debt consolidation loans are not as cautious about dealing with borrowers with bad credit. It isn’t though that these lenders are not concerned about the safety of their investments. However, experience of working in the sub-prime market has shown them that taking moderate risks will always be fruitful. Moreover, borrowers with bad credit are not as lax in making payments as the credit record would have us believe. There are certain borrowers who fell into the trap of bad credit all of a sudden; and would certainly not repeat the thing again because of the good effect that bad debt loans have on their credit history.

Bad debt loans have been the result of this moderate risk taking. Bad debt loans are offered with terms slightly different from the regular debt consolidation loans. The difference in terms will not be as stark as when regular lenders undertake to lend for debt consolidation loans.

How does a borrower proceed once he gets the loan proceeds? This is the most common question put forth by the debtors. Settling debts on their own seems to be an uphill task. Debtor’s ability to undertake debt settlement on his own is clearly visible through the present mismanaged state of his financial affairs.

It is again the loan provider who comes to help. Through its experts, loan providers will try to find the exact nature of borrowers’ debts. Many important questions get answered once the nature of debts on debtor is unearthed. It is on this finding that reputable lenders base their decision of bad debt loan to be used. The amount of bad debt loan to be drawn can best be known through this method. For instance, if unsecured debts hold reign among borrowers debts, then loan provider will recommend loan lesser than the debts in total. This is because loan providers can easily induce unsecured debtors into reducing the debt balance.

This leads us to the point of negotiation. Negotiation forms an important part of the debt settlement process. There are several debts that carry a large interest; still others have a larger unpaid balance. All these debts can be worked upon to bring the debt balance to a manageable limit. This speaks much of the negotiation skills of the lender. If it has been decided in advance that the services of loan experts is to be employed in debt settlement and debt negotiation, then borrowers must start looking for these skills in the lenders during the lender selection stage itself.

Would borrowers have been able to settle their debts had there been no bad debt loans? Past experience of borrowers trying to pay debts on their own resulted into failures. While they were able to pay the interest, the principal continued. Bad debt loans start by clearing whatever debt is on the borrower. Many of the debts cleared include the high interest debts. Instead of debts owed to several creditors, the borrowers now owe to the loan provider only. Bad debt loan providers do not haggle for loan repayments as the creditors. They will sit with the borrower and devise a repayment schedule for the successful amortisation of bad debt loans.

Guaranteed Online Personal Loans

Do you need a loan and poor credit is holding you back? Alternatively a payday loan will for certain tie you over until the next paycheck or would you instead have a more conventional loan? What if you could find a guaranteed online personal loan? The reason for the loan receives no bearing on what you genuinely require to apply it to or for whatever reason. If it is for debt consolidation or a bad credit personal loan to pay off your car or personal debt, the essence of the place is that you demand a loan.

It doesn’t matter if your bank has turned you down for a personal loan, see how you would apply for online personal loans and get the financial help you need. Sometimes you may have to travel this path to get your finances back in place and so keep in mind your personal situation might demand to be fixed because the bad credit that you experience now isn’t exclusively the same as having no credit. Especially when your bank account is fixed on or next to 0, or worse, it is in the red and those loans you intended could receive might simply be out of your reach.

A bad credit personal loan may make up the answer to keep you from accepting to file bankruptcy. This type of business provides to those who are fully capable of paying the loan back however, for some reason or another they cannot gain a conventional loan. The interest rates may be a little high simply you can get the money you require but be mindful this is a much easier option as compared to those unsecured credit cards with high interest rates that you obtain.

A guaranteed online personal loan can be applied for and funded promptly if you are approved. Counting on how much cash you want, the loan may be unsecured or on that point may be a requirement of collateral for the program. The collateral put up can be a home or auto. Masses frequently use these loans for debt consolidation, credit card debt or to pay off an auto loan.

These loans are wanted over the bad credit loan, or no credit check loans, which finishes being a payday advance and the interest rates will possibly overwhelm you. When you acquire a payday advance, the loan is collectible rather rapidly, either inside a couple weeks to a month at the most. This may not be sufficient time for you to pay back this loan. A personal loan carries the payments to be distributed out thus you can pay it back in installments.

Credit is critical nowadays. In order to get an unsecured credit card wants that you have decent credit because this is a money pit looking to happen if your credit is subpar. The other option for a credit card is either to obtain a secured card or experience no credit cards at all. Services often alter from lender to lender but they are in business to help those people who have bad or poor credit and want the cash.

The student is one case of someone who may finish up with bad credit after drawing loans for their education. When it comes up time to finance a car or a home, they cannot receive the money they require because they have used that lifeline they call a credit card to stay afloat. The loans they have make their credit scores bad and lenders desire a guaranteed direction for the loan to be repaid.

If you wish to discover local companies that will have programs that pass you there guarantee of a prospect to finance with them, so they call for you to apply for that loan. A quick means can be to go online and type in your zip code and the program you want and it will display you services that will lead you to a source where you can find that guaranteed online personal loan . Remember online will usually provide several companies that display the type of loans they offer. There are also many articles on different web sites that may recommend one loan company or some other and exploring which program offers the right services to accommodate your real personal needs of receiving that cash.

There is credit repair software obtainable to lead you over the consolidation process of cleaning up your credit so that you qualify for the lowest APR available whether it constitute for a credit card or a loan. This article may represent the answer to help you find the best option for getting the money you require although I make no guaranteed statements because each personal experiences varies. There are numerous selections available online that walk you through all the various programs and services obtainable to you. Numerous programs are planned to help you get your credit back on track and most individuals who don’t take advantage of these techniques are those who may have filed for bankruptcy.

When you obtain the services from one of these types of credit repair programs and always be aware that monitoring your credit should be done on a steady basis. Likewise inquiries can affect your credit score also as do the bills you owe so if your setting about to acquire a personal loan make sure to be aware of these types of marks because the lender will. When you verify your scores make a point you use this to your advantage so you know whether to apply for a personal loan or auto loan or even a bad credit loan.

Remember when you made the determination to apply for guaranteed online personal loans; the total objective was 1) to acquire the money you want and 2) to assist you to get your credit back on the right track. Credit is the name of the game, regardless where you play and whether it is a problem of experiencing no credit or bad credit, masses actually need to take their credit more seriously. Pay all of your debt on time so you can get a loan that will be as close to the 0 APR as you can perhaps get because payday loans have high interest rates and so represent all of the bad credit scenarios.

Getting a Low Interest Personal Loan

If you are searching for ways to lower your monthly debt payments, then the obvious solution you have probably considered is debt consolidation loans. By taking out a personal loan with a low interest rate and then paying off the high interest credit cards or loans, the monthly payment should go down. Understanding how consolidation loans work is the key to getting the best rates.

Loan Options:

Taking out a personal loan has a few potential options available. It is possible to use a traditional lending institution or to opt for a peer-to-peer lending option. Both solutions will offer loans, but the requirements for funding vary.

A traditional lending institution, like a bank or credit union, will have very strict requirements for personal loan applications. Consumers will need to undergo a credit check and must provide information about current income levels. The problem many individuals face is either a denial due to a high debt to income ratio or a higher interest rate than expected.

Traditional lending institutions often have high interest rates on personal loans or consolidation loans. If you are already struggling with debt payments, then you are unlikely to meet the strict credit rating standards a bank requires to get the best possible rates.

Peer-to-peer lending is another option for that personal consolidation loan. In peer-to-peer lending, you ask for a loan with a preferred interest rate. An investor for peer-to-peer loans will ask for a credit score and will decide if he or she wants to invest in a loan based on the possible risk of default. In many cases, you will end up denied or the investor will require a much higher interest rate.

Peer-to-peer lenders might offer loans when traditional institutions do not, but the cost is generally higher than you might expect. Depending on your credit rating and historical data, you might end up paying as much as 35 percent interest, which is too costly if you are trying to reduce interest rates.
Unless you have an excellent credit score of 720 and up, you can put aside the thought of consolidating your debts with a loan. Let us look at another option that may be better for your financial situation. It’s similar to consolidation but without adding to your debt levels.

Alternative Consolidation Methods:

If you are fighting with debts, then it is unlikely that you will qualify for a personal loan that has a lower interest rate than your current credit cards or other loans. Consolidation loans are not inexpensive, but alternatives are available that can get your debts in order without the unreasonable costs.

Hiring a debt relief service that offers a settlement program may be a better debt solution. The credit consolidation firm starts with looking over the current financial situation and then determines the possible options available for individual needs.

Upon determining the situation, the professionals working in the company will offer advice regarding debt relief options that can help reduce debts. Settling the debts will help pay off the current loans.

A myth about settlement is that it will harm credit ratings and is as bad as bankruptcy. While it will temporarily impact credit scores, consumers are able to immediately begin rebuilding the credit rating. As a result, it is only a temporary change.

Settlement does not have the long-term implications of filing for bankruptcy. If you file for bankruptcy, then your credit history will show it for the next ten years. Furthermore, bankruptcy can sometimes reduce the job opportunities as employers run a credit check.

Settling the account takes around 24 to 48 months, depending on the ability to save the lump sum of cash and the lender’s cooperation. After you make a single payment, the debt is considered paid.

Finding the Companies:

A consolidation and settlement service company requires a little planning to find the best option for individual needs.

After you discuss the situation with the company, you will know if it is the right option for your needs. There are companies that will not charge any fees or expenses until after providing a service. If you need several services, then payments are made when a service is completed and you start seeing results – your debts reduced.

You do not need to seek out an expensive personal loan to consolidation debts. Using a consolidation and settlement service can help you eliminate your high interest debts without the stress of taking out new loans

Easy To Get Personal Loans

There are just times when we got short of our finances and getting a personal loan is the best solution left to pay for the things we need to buy or some important spending that we have to make ends meet. These times, you can even get easy-to-get personal loans online, but you have to be extra cautious with such.

If you are looking for easy-to-get personal loan services, you have to keep in mind the purpose of your loan. Personal loans tend to have a variety of uses – from paying credit cards to buying something that is needed, but then again, you have to make sure that you are capable of repaying the amount at the given term. Keep in mind that in availing of these types of fast and quick loans, you should not only show that you are capable of repaying but you have to also make sure to repay it before its due time.

As personal loans can be used in a variety of reasons, it is also quite difficult for you as a borrower to focus on repaying it, especially if you intend to use the loan for purposes that are not income generating.

To avail of easy-to-get personal loans, you will most likely be required to be at the right age, at least 18 years old, and you may also need to prove that you can repay the said loan. It is also important to check your credit report, as this is often checked by lenders. You have to understand your credit score as lenders would often analyze your attitude in repaying loans and would be particular on how you get a low credit score.

It is advisable also to ensure the correctness of your credit report as this will always be checked during loan applications. Keep in mind too that fixing inaccuracies in your credit score may take time, thus it is important to also take care of it early on.

Make sure you already have a plan on how to repay your loan even before availing it. Review and plan your budget and savings. In applying for loans, you will be asked how you can manage to repay the loan and it is wise to be prepared even before you are asked. Of course, before availing easy-to-get personal loans, you have to study and explore how you can accommodate changes in your current financial situation to give way to repayment plans for your borrowed money.

Indeed availing for a fast personal loan can be a good way to find solutions to financial needs that may unexpectedly come your way. But with the many uses you can do with these type of loan, it can be a burden if you don’t plan ahead for its repayment. Even if you do have a bad credit, you can still avail for these loans and you should treat this opportunity to straighten up your credit records and prove to the lender that you can be trusted

Title Loan Tips

Obviously, if you have the opportunity to get a loan based on your good credit score, then by all means, take advantage of that opportunity. You will most likely have lending companies competing for your business and can negotiate lower rates because your credit history gives you bargaining power.

However, for those of us with poor credit histories and no bargaining power, it’s important to be aware of all the credit options available to us. Most, lenders will require collateral. This means they’ll ask us to put up something of value – that we own – as security for the loan. It’s a measure they take to ensure they’ll get their money back one way or another. Either they receive full payment for the loan, or they take our collateral.

So let’s say you have something of value and that “something” is a car. You own the title for that vehicle and in order to get some quick cash, you approach a title loan lender to get a loan, using your title as collateral. Here’s what you want to be sure you find out beforehand:

    • Term of the Loan – The bottom line is, how long do you have to pay off this loan? One type of title loan to be avoided is the Title Pawn loan. A Title Pawn is usually a 30 day loan with a balloon payment at the end. Meaning you have 30 days until the full amount of the loan, including interest, is due. This is almost impossible to pay back and can lead to increased debt. So stay away from this type of title loan!
    • Prepayment Penalty – Let’s face it, loan companies want your interest payments. That’s how they make money. To ensure they make a profit off of your loan, they discourage early repayment by charging you a penalty for paying your loan off early. So before you sign the loan, be sure to ask your loan officer if there is a prepayment penalty.
  • How Interest is Accrued – Most loan companies calculate loans so that the initial payments are applied primarily to interest, with a very small portion of those payments going toward principal. The closer a borrower gets to the end of the term of their loan, the more their payment is applied to principal instead of interest. This is a common practice among moneylenders, and not at all exclusive to title loan lenders. However, there are varying ways of determining interest. For example, is the interest amount determined by the remaining balance of the loan, or is it determined by the full amount of the loan and then divided up into the monthly payment? A loan that only charges interest on the remaining balance of the loan will save you money in the long run. Because each time you make a payment toward principal, the balance of your loan decreases, therefore lowering the amount of interest due on that loan.

Unfortunately, most people with bad credit end up paying more for their loans than people with good credit. But utilizing these tips can keep borrowers from paying more than necessary.