Tag Archive | Credit history

Federal Reserve Study on Online Lending is not Legit

They say that you can use studies and statistics to prove anything that you want; regardless of whether what you are trying to prove is even legitimate. Such is the case with a recent study that the Federal Reserve did with regards to consumer dissatisfaction with online lenders. According to this study only about 15 percent of small business borrowers reported being satisfied with online loans they were approved to get. Here’s the kicker – that statistic doesn’t even accurately reflect the data collected in this study. But people are now being hit with headlines about how much small business owners detest online lending. The thing is, though, that it’s just not true. And the study is pretty much bogus from all appearances.payday-online

The stat that we just mentioned is actually a representation of how many people were satisfied versus dissatisfied. You can check this out by looking at the study’s footnotes. So, the 15 percent is actually a net satisfaction metric that indicates more borrowers were satisfied with their experiences with online lenders than dissatisfied. If you do the math, this statistic actually shows that more than 50 of borrowers reported being satisfied. Banks did score higher than online lending companies in this report, but with as unscientific as this study was it is difficult to tell if that statistic is bogus or on the level.

An Unscientific Study by the Federal Reserve

The Federal Reserve puts a lot of interesting information in the footnotes and fine print of their study. If you cut through all of the confusing information, here is what it really says:

Businesses get contacted via email from organizations that serve the small business community in participating Federal Reserve Districts.

The data are not statistical representations of small businesses.

By its own admission, the authors at the Fed are very clearly stating that the data was not random – in other words the data is biased and not representative of real world statistics. The report even opens up by saying, “Our hope is that this report contributes to policymakers’ and service providers’ understanding of the business conditions, credit needs, and borrowing experiences of small business owners.”

We can now see that the metrics used in this study don’t mean anything in the real world. But they are still being cited continuously. A report that the US Treasury published a few months ago even makes a direct citation of the 15 percent satisfaction metric. It’s a standard case of bad information being created and published and then running amuck.

So what’s next? Now that this bogus study is being quoted and used all over the place, how do we get to the truth of the matter at hand? We are now at a point where critics and supporters of the online lending industry are even starting to buy into the bogus statistic about only 15 percent of small businesses being satisfied with online lending. This conclusion has never been reached by a legitimate study. No one is looking at the fine print from the Fed’s report. Hopefully, people within the industry will begin to look closer at these types of reports to see if what is being represented is truthful. When powerful agencies, like the Fed are able to get away with pushing what are essentially biased reports to the general public, it is easy to understand why so many people are up in arms about the online lending industry. If those folks would actually look at the facts, however, they’d find out that more small business owners are satisfied than dissatisfied with the online lending industry. It seems that is not the kind of true story, however, that the Fed wants the public to know about.

The Great Payday Lending Battle Understanding Florida Payday Loan Regulations

There are currently elected officials – both Democrats and Republicans – who have joined forces to push back against the CFPB’s new payday loan regulations. Many of the opponents of the CFPB’s proposed regulations have mentioned that Florida does a great job regulating this industry at the state level. As such, these people believe that states should have the right to regulate short term loans without interference from the CFPB or any organization that represents the federal government. To help you get more insight into this issue, it is wise to understand the Florida payday regulations for yourself. Here are some things you need to know about payday lending regulations in Florida

Number of Loans are Restricted as are Loan Amounts

A borrower can only have a single outstanding payday loan at any given time. There is a centralized database that is used to track every payday loan processed in the Sunshine State. When a borrower pays back their loan, an extra 24 hour cooling off period is tacked on prior to that person being able to take out another loan. The maximum amount that someone can borrow from a payday lender is $500.

payday21Terms of Florida Payday Loans

A payday loan cannot be given for less than 7 days or more than 31. These loans cannot be rolled over. For example, if someone takes out a two week payday loan, the lender is not allowed to rollover (renew) the loan, tacking on extra fees and running the life of the loan for another two weeks. Note that in this scenario the total loan time would be under 31 days. Terms are set when a borrower takes out a loan. However, if they are not able to pay, loans can be extended without any additional fees being charged.

Payday Loan Fees

The laws in Florida put limits on fees that can be charged on payday loans. The fee cap is set at 10 percent of the loan amount. Additionally, any loan costs, like verification fees, are strictly limited to just five dollars per loan. It should also be noted that the fee cap is not one that accrues over the course of time. If someone were to take a year to pay off a payday loan, for example, the 10 percent would not snowball into a huge fee. If it were for a $200 loan, the fee would never be more than the 10 percent, or $20, plus costs that top out at $5.

Payday Loan Grace Periods

In Florida the law states that borrowers are given a 60 day grace period if they are not able to pay back loans on the original due date. In order to get the grace period, though, borrowers must set up an appointment with a credit counseling agency within a week of the loan due date and complete a credit counseling course within the 60 days of grace that are given. The credit counseling company may recommend a repayment plan, and the borrower must pay their debt according to this plan without incurring any extra fees or loan costs.

Collection Policies

If someone gives a lender a check and the check bounces, there are limits on what lenders can do. The lender cannot pursue criminal actions against the borrower. The lender is allowed to demand payment, but costs are capped at the 10 percent fee and a $5 fee for bad checks that the lender might get charged for from their own bank. Payday lenders can only get additional money if they file a lawsuit and the court sees fit to side with the lending company on this matter.

These are just some of the main points of Florida payday lending regulation. Some are pushing for Florida to be the model for the entire nation, while others simply want the CFPB to back off and allow states to decide on their own how to best regulate the short term lending industry. Which solution do you think is the best for your state?

All About Cash Loans No Credit Check Required

Despite resistance from some folks in the media and certain governmental bureaus, online cash loans no credit check required offers continue to grow in popularity. Everyone has been there before; it’s still a long way until payday arrives, but there are pressing expenses and bills that have to be paid quickly. For some folks, it might be a car repair that needs to be taken care of. For other people, it might be a need to pay the electric bill, without overdrafting their bank accounts. Regardless of the reason, the fact of the matter is that tens of thousands of people depend on the services that payday advance cash lenders offer.

Understanding a Payday Advance Loan

There is quite a bit of misinformation and misunderstanding swirling around about payday loans. Media pundits and watchdog groups seem to love to demonize this industry. However, recent actions by government representatives have clearly shown that these groups have been doing nothing more than picking on a quickly rising industry that does a lot of good for a lot of people.

Short term loans have been available for hundreds of years. In fact, not too long ago, employers used to offer short term loans to their employees. Those loans would be paid back from the employee’s next paycheck. That same model is still followed by lending companies that offer online cash loans no credit check required. These lenders verify that a potential borrower is employed and has a valid checking account. The borrower requests a certain amount of money (usually between $100 and $1000.) When the borrower gets paid from their employer on the next scheduled payday (usually two weeks after the loan is given) the principal amount plus any fees are automatically deducted from the borrower’s checking account to pay the lender back.

Payday Loan Fees

Every payday lender is different, so borrowers can expect some variance when it comes to loan fees. Payday loans include a flat rate fee. This helps borrowers to understand exactly how much they have to pay back, so they can budget accordingly for the fees. There are some payday lenders that charge roughly $15 for every $100 borrowed. Again, though, it is important to clarify the fee structure with a lender before taking out a short term cash advance loan.

Why Do People Need to Know about Cash Loans No Credit Check Offers?

There are millions of people with low credit scores. Traditional banks and credit unions will not lend money to people with subprime (low) credit scores. Because people with subprime credit scores still need to borrow money from time to time, it is easy to understand why payday lenders offer cash loans no credit check required to their customers. Payday lenders do not take credit scores into account, so they are able to provide loans to virtually anyone who is employed and has a bank account.

The Basics of Credit Scores and Reportscredit-score

Speaking of credit scores and credit reports, there are a lot of people out there who really don’t have a grasp on how credit scores actually work. There are three major credit reporting bureaus. For the sake of this post, though, we’ll talk about the FICO credit score, as it is the gold standard of credit reports. FICO credit scores start off at a very low 300 and max out at a perfect credit score of $850. You don’t have to be rich to have a great credit score, and you don’t have to be poor to have a low credit score. Your individual credit rating has more to do with how you have handled lines of credit in the past than it does with how much money you make.

So, with all of this information in mind, you may be wondering what constitutes a low credit score. Generally speaking, any FICO score that comes in lower than 601 is considered to be a bad credit score. People who have credit scores that are lower than 601 will find that it is difficult to get bank loans or credit cards with reasonable interest rates. People who have low credit scores can turn to online payday lenders to get cash loans no credit check required. Simply put, there are millions of people who would have to go without money for emergency expenses if it were not for online payday loans.

Do You Know if Your Credit Score is Bad?

People often assume that if they have low paying jobs or a few financial problems that their credit score is low. This is not true. The only way to find out if you have poor credit is to pull your credit report. The credit bureaus are legally bound to offer at least one copy of your credit report every calendar year. Pull your credit report and take a look at the details. Then look at the FICO score to see how you are doing. If you have a lower credit score and need to get fast cash, an online payday loan may be the best way to get access to fast cash for unexpected expenses.

Benefits of Online Cash Loans No Credit Check Required

When a borrower goes online to get a payday loan from a reputable lending site, they get the benefit of being able to apply for a loan without leaving their home. Online lenders allow people to apply for their loans in just a few minutes. This helps to eliminate the hassle of leaving home, driving across town and waiting in line to apply for a cash advance loan at a local lending location. Online payday lending companies usually approve loan applications quickly, and make sure that the funds are directly deposited into borrower’s checking or savings accounts on the next business day.

We hope that you have learned a bit about online cash loans no credit check offers from this post. Don’t forget that this website is filled with helpful information, posts and the latest news about the payday lending industry. Feel free to look around to find more informative posts while you are here…

A Super Simple Method to Improve Your Credit Score

Having a low credit score is the pits… When your credit rating is classified as being subprime (generally considered to be a FICO score lower than 620) there are a whole host of negative consequences. When your credit score is low it is difficult to get mortgages and auto loans with decent interest rates. If your credit score is poor it can be hard to rent an apartment. A low credit score can even prevent you from successfully landing a great, new job.Non-Payment

Those are just a few of the consequences of having bad credit. With those things in mind, then, it is smart to get a handle on your current financial situation and to do all that you can to raise your credit score. Now, there is no ‘miracle credit repair’ program that will allow you to obtain a perfect credit score overnight. However, there are some very simple things that you can do to raise your credit score up a little bit at a time.

In today’s post, we are going to share one of the most effective steps that you can take to improve your credit rating. This step is not the be-all-end-all step to fix bad credit, but if you are just embarking on a plan of action to get better credit, this is the one method that you must use to get the ball rolling.

Here’s the Credit Rebuilding Method that you Must be Aware of:

Start Paying More than the Minimum Amount Due

Whenever it is possible, make credit card payments that are over the minimum payment that is due. This is a simple, yet effective habit that can help to repair your credit in the months to come. The credit bureaus don’t just look at the amount of outstanding debt that you have, they also look at how long it takes for you to pay off your consumer debt. Logic dictates, then, that by making payments above the minimum monthly amount due, that you will pay off those debts faster.

Credit repair experts do not agree on exactly how much this tip will help to improve your credit score, as there are lots of other variables that only apply in certain situations. However, accelerating your monthly payments and paying off debts in a timely manner is a method that nearly all of the lending institutions recommend. In fact, some people pay for credit counseling – quite a bit of money sometimes – only to learn tips like this one. Plus, if you pay more on your credit card bills each month, you will wind up paying less money over the long haul. Minimum payments made for years can often add up to nearly double the amount – if not more – than you borrowed in the first place.

Remember, a low credit score is something that you don’t want to carry around for years and years. Any step in the right direction is a good one. If you have been struggling because of a low credit score, it is time to start taking action. Begin making payments as much above the minimum as you are capable of, and you should see your credit score begin to improve in the near future. And as you get closer to a good credit score, you will undoubtedly learn other methods that you can use to speed up the process. Remember, you don’t have to pay for expensive credit counseling sessions to improve your credit score; you can do it on your own with a bit of diligence and by developing healthier financial habits.

Bad Credit Scores and Financial Careers Do Not Mix

credit-scoreA good credit score can get you a lot of things. You can get lower interest rates on mortgages and auto loans when your credit score is high. You might even get more affordable insurance premiums if you have a solid credit history. And here’s something you may not have considered – a good credit score can actually improve your marketability in today’s job market. There are lots of employers that use credit reports to weed out employees who have lower scores.

Can you work in Finance with a Subprime Credit Score?

Employment options in the financial sector are even more limited for people who have low credit scores. If you have the desire to be a broker, banker or to start a career in the financial industry, you may want to keep tight reins on your spending habits, and do all that you can to improve your credit score. Even if you know everything there is to know about the financial industry, if your credit score doesn’t reflect that practical, financial knowledge, potential employers may turn you down flat.

Why the Financial Industry Frowns on Employees with Bad Credit

It may seem unfair to think about the possibility of losing out on a great job in the financial industry because of your credit score. It is important, though, to consider things from the employer’s perspective. Some of the folks doing the hiring in this industry believe that if a person has trouble managing their own finances that they may not be the best candidate to handle the finances of potential customers and business clients. Some companies in the financial sector also have to consider their reputation in the market place. If word gets out that a company is hiring people with low credit scores or bankruptcies in their past, this may prove to damage the credibility of the company in question.

A Matter of Public Records

Speaking of bankruptcies, it is important to know that bankruptcy filings are readily available, public records. Companies in the financial industry regularly pull reports via the FINRA BrokerCheck system. Being as bankruptcy still carries a bit of a stigma in the world of high finances, the better brokerage firms and banks can – and very often do – avoid hiring people who have filed for bankruptcy in the past.

Loss Prevention

Although the focus so far has been on financial industry jobs, you should know that there are employers in other industries that use your credit report to determine whether or not they will hire you. As you are probably well aware, there are a lot of companies that deal with employee theft. And while a low credit score does not mean you have the potential to steal, companies sometimes believe that people with low credit scores are more apt to steal from their employers. Again, this is not fair to the overwhelming majority of people with low credit scores, but it is a policy that more and more companies are adhering to these days.

Although you may squeak by when you apply for a job at some financial-based companies, you should be prepared to undergo very intensive background checks any time you seek employment in the financial industry. Regardless of the type of job that you are currently looking for, or that you look for in the future, it is always good to have as high of a credit score as you can achieve. So do your best to improve your credit score to improve your chances of landing that job you have been dreaming about.

Less Than Half of Americans Really Understand Bad Credit Scores

Everyone knows the importance of staying on top of their financial situation. We do all that we can to live on a reasonable budget, to pay bills on time and maybe even to save a little bit of money. One of the measures of how well we are doing financially is our credit score. Like everyone else, you probably know that it is in your best interest to have a higher credit score. But do you know the impact that a bad credit score can have on your entire life? If you are like more than 50 percent of American consumers, you may not.credit-score

It is true that credit scores can be a bit difficult to understand at times. For example, you may have up to three different FICO scores, dependent upon which of the three credit reporting agencies you choose to turn to when you are checking up on your credit score.

A new report published by the Consumer Federation of America (CFA) indicates that very few American consumers actually understand just how much their credit scores really matter. It appears that there is a fundamental lack of understanding about how credit scores are calculated and the different things that actually affect how high or low a credit score really is.

The study, which is quite enlightening, states that less than 50 percent of consumers in the United States know how costly it can be to have a bad credit score. The report also shows that people do not know that multiple credit checks can cause their credit scores to drop.

Every year the CFA releases its Annual Survey of Consumer Knowledge About Credit Scores, and this yearly report may help to explain just why so many Americans are in rough financial conditions. There are multiple sites that allow people to get free annual credit checks, but it appears that most people either aren’t aware of these sites or simply do not understand how to put the information from their credit reports to good use.

According to the study, the U.S., as a nation, has a current $800 billion in credit card debt. To top that off, our total consumer debt level is right around $25 trillion! With so much money on the line, you would expect that American consumers would be better educated about their credit scores. Sadly, though, that does not seem to be the case.

Stephen Brobeck, the executive director over at the CFA, said, “Credit reports and scores are so important to consumers that they should be trying to improve their knowledge.”

The CFA study shows that only 29 percent of people know that people with bad credit scores will likely pay up to $5,000 more on a typical car loan than someone with good credit will end up paying over the same amount of time.

It is too bad that so few people really understand what their credit score means. It is likely, however, that this lack of understanding is going to continue to cost people even more money in the years to come. And right now is simply a time when none of us can really afford to pay more than we should have to. We can all hope that people begin to take their credit scores a little more seriously in the coming year and that we all – as a nation of consumers – begin to work toward improving our credit scores, while reducing our overall level of consumer debt. If we plan on really recovering from the recent financial problems that we have all dealt with, it is high time that we all begin doing what we can to improve our financial outlook.

The Student’s Guide to Financial Assistance with Bad Credit

The cost of a higher education keeps getting more and more expensive. According to a report from the College Board, the average student at a private university paid a little more than $40,000 in the 2013-2014 school year for college expenses, like tuition and room & board.
There are not a lot of folks out there who can pay that kind of cost directly out of their pockets. As such, most college students wind up applying for some type of financial aid to help cover the costs of their education.low-interest-student-loans

Students with bad credit scores may find it challenging to get the financial aid that they need. It is important for these students to know that their credit score will affect their chances at getting some types of financial aid, but not all of them.

Here are a few steps that students with bad credit can take to improve their chances at getting the money they need to earn their college degrees.

Apply for federal financial education aid before you do anything else

You can finance your education in one of two ways: you can get federal aid from the government or choose to get money from private lenders. It is best to try to get federal aid first, especially if your credit score is low. The government does not take your credit history into account when you apply for government educational aid. To get financial aid from the government, though, you need to apply via the FAFSA program. Once you apply, the government will take a look at your financial situation and they will then let you know if you qualify for any educational grants or loans. The government also charges lower interest rates than private lenders, which is another reason to try them first.

Don’t Borrow More than you need

The federal funding may help you with college costs, but those types of loans may not cover everything. You may need to borrow money for living expenses and other bills. You can try to get a student loan from a private lender. These types of loans involve credit checks, and the banks are a bit stricter about who they loan money to. In order to up your chances of landing a private loan, don’t apply for any more than you really need to borrow. In other words, take out the smallest loan possible the first time around. Banks are more likely to approve small loans than larger ones, and if you pay on time, it will help to raise your credit score.

You Can Ask a Family Member to Cosign

If you cannot get a loan from the bank on your own, it may be wise to get a family member to cosign on your loan application. If a family member with good credit is willing to be a cosigner, you may get the loan you need to pay for extra educational expenses. Remember, though, that your cosigner is placing trust in you, and if you do not pay your loan payments on time, you could affect the cosigner’s credit score.

These tips should help you out as you continue to look for ways to fund your higher education. The real goal should be to finish your education with the lowest amount of debt as is possible. Try to cut costs when possible and to pay your student loans off sooner rather than later. It is much easier to enjoy life after college when you are not worried about paying off a large amount of educational related debt.

The Topic No One Wants to Talk About: Credit Card Debt

People like to do all that they can to keep up appearances. Most folks go out of their way to keep their homes and even their vehicles looking good. We put energy and money into looking our best; either through wearing nice clothes, taking better care of our bodies or both. And who can deny that we all like to brag a bit about our families and careers when we meet someone new?sgiwoxtdkkilttb8ixhk

Any time we meet someone for the first time, the dreaded small talk will come up. You know, those conversations about the mundane aspects of life. Even during these types of conversations, we all like to put our best foot forward and to project the best image of our lives as possible. There is one subject, however, that people often avoid talking about as much as possible – credit card debt!
A recent poll indicates that Americans consider credit card debt to be the worst topic possible to discuss with people who they just met. Americans were asked in this poll to rate how likely they would be to talk on a certain topic with a total stranger. Poll participants were asked to rate each topic with a rating between very likely, somewhat likely, somewhat unlikely and very unlikely as their ultimate answers.

Eighty Five percent of poll responders said that they would either be somewhat unlikely or very unlikely to talk about credit card debt with a stranger, which makes this the lowest rated category on the poll.

To put this in perspective, people rated ‘Details about your love life at the second worst, with 84 percent and their work salaries at third worst, with about 80 percent. These are very personal topics, so it is apparent that people feel very embarrassed or put on the spot about credit card debt to place it as being worse to talk about than these hot button topics.
The poll indicated that younger Americans were a bit less embarrassed to talk about credit card debt than their older counterparts. But even with that in mind, 79 percent of Americans aged 18 to 24 stated that they would not be comfortable talking about credit card debt with a stranger.

Debt and Personal Failure

Why are people so afraid to talk about credit card debt? It is probably because many people view debt as being a symptom of personal failure. This is especially true in the years following the most recent financial recession. Americans do not like to admit that they are struggling with debt. If you are someone who finds it hard enough to pay the bills every month, how much harder is it to actually talk with someone about these types of struggles?

Before the most recent recession, credit card debt was not considered to be such an off-limits topic of discussion. Most people were used to living off of credit cards, and it didn’t seem like a serious issue. Today, however, things have certainly changed. People obviously find credit card debt to be a touchy, if not downright painful topic. This study really proves that the majority of us simply don’t want to discuss our credit card debt problems.

If we don’t feel like discussing credit card debt, then we at least need to take action about this embarrassing subject. More American consumers need to do what they can to stop using credit cards for every day purchases and to pay off their consumer debts sooner rather than later… It is a heck of a lot easier to talk about credit card debt when you don’t have any!

A New Approach to Cash Loans

Disposable-cash-for-student-loansThere is a small business in the Bronx that offers healthy foods to the residents in that area. This business is owned by one Hamad Ali, and it continues to thrive in one of the most economically challenged areas in this New York borough. As you might imagine, Mr. Ali, like many other small business owners, has had issues with getting financial services from mainstream banks. However, Mr. Ali currently gets financial services, including the ability to get fast cash loans, from a very different type of financial institution.

“I’ve been in New York more than 30 years doing business with all the banks—Chase, Citi, all of them—and they never cared about me,” said Mr. Ali. “But my bank now, it is a lovely bank.”

So what is the name of this bank that actually seems to care about small business owners and financially challenged residents? It is called Spring Bank, and in many ways it operates like most other commercial banks. However, Spring Bank is a bit different in that it was developed by and primarily serves the people and businesses of this community. Community developed banks have been around since 1994 and they fill in the gaps that big banks simply do not want to serve.

Spring Bank, much like payday lending companies and other alternative financial institutions, provides desperately needed financial services, like checking/savings accounts and the ability to get cash loans, to people who are grossly underserved by traditional banks. The unbanked people of this nation make up a huge share of the market, and thanks to the Spring Bank, unbanked and underbanked people have a bank that they can turn to when they need financial assistance.

Spring Bank has been around for around seven years and boasts a remarkable $105 million in assets. This bank focuses on working with local business owners who may not qualify for business loans offered by traditional banks.

Melanie Stern, Spring Bank’s director of consumer lending said, “Most of the people who need these loans can’t afford the interest rates.” To reach those people, and to provide services, like affordable cash loans, Stern rolled out a new kind of financial product that is called Borrow and Save. The way this works is that Spring Bank uses $700,000 in CDFI grants to help subprime borrowers pay for necessary products and services. At the same time, the Borrow and Save program assists their customers in building up a savings account, while improving their credit scores at the same time. These financial services may help the unbanked people in the Bronx to get mainstream loans and checking accounts in the future.

At its core, the Borrow and Save program is akin to a one year small dollar loan of up to $1500. Once a borrower is approved, one fourth of the total loan amount is placed into a savings account and the money then becomes available to the person when the total loan has been repaid.
Community developed banks, like Spring Bank, may not revolutionize the lending industry. But as is the case with other alternative lenders, like payday loans lenders, Spring Bank is certainly doing its part to offer valuable financial services to people who have not been able to get these types of financial services from mainstream credit card companies and big banks. It may be happening slowly, but people are finally starting to realize that alternative lending companies really are valuable assets to the people and businesses that they serve in vastly underbanked areas of this country.