How Bad Credit Can Affect Your Dating Life

There are lots of things that people look for in a potential partner, and if you think debt isn’t one of those factors—you’re wrong.

There are lots of ways that you can negatively affect your dating life. Poor hygiene for one, or an insistence on recapping the entirety of Babylon 5 during your first dates. (That’s fifth date material at the earliest.)

And the same goes for your financial life: There are lots of ways to screw it up. You could rack up excessive credit card debt, fail to pay your bills on time, and forego savings, leaving you reliant on short-term bad credit loans (like payday loans and cash advances) when things get tough.

And as it turns out, screwing up your financial life and screwing up your dating life could be pretty closely connected: The kinds of behaviors that lower your credit score can also lower your romantic Q score.


Payday loans are a real mood killer.

A recent report from Nitro Knowledge reveals that most people value financial intelligence and responsibility in a potential partner and find debt to be a deterrent from entering into a relationship.

When asked to rank which types of debt were most concerning, payday loans were ranked the least acceptable form of debt on average.  That’s likely because taking out a payday loan is one of the riskiest options for borrowing money, indicating a lack of financial responsibility.

With exorbitantly high interest rates and short terms, these no credit check loans can easily trap borrowers in a cycle of debt. While they might seem like an easy way to get out of debt fast, one study found that over 80 percent of payday loan borrowers didn’t have enough money to make their payments.

Most people are aware that payday loan debt is a bad sign and are hesitant to inform their partners that they have outstanding payday loans.

“Payday loans, in particular, were a notable concern among respondents,” reads the report. “55 percent were worried about revealing this type of debt to their significant other, an unease that may be explained by another 62 percent who felt they were judged by a partner for having that particular kind of debt.”

The 12 million Americans who use payday loans each year are likely to experience dating stress in addition to the financial burden of a payday loan, the report suggests.

Credit card debt isn’t attractive either. 

Those burdened with credit card debt might also find their finances to be a deal-breaker in a relationship.

45 percent of survey respondents said they’d stay away from dating anyone who only makes minimum credit card payments each month. And credit card debt exceeding 15 percent of a person’s salary was considered unacceptable to survey respondents.

Other types of debt were considered more acceptable in romantic relationships, and at the top of the list was student loan debt. Given that more than 44 million borrowers have outstanding student loan debt, it may not come as a surprise to find out your significant other borrowed money for education.

This type of debt also indicates a person’s dedication to educational and career goals, which is likely why it is perceived as acceptable. Mortgage and auto debt came next on the list of most acceptable forms of debt in a romantic relationship.

Being overly stingy isn’t the answer.

Overall, 70 percent of women and 61 percent of men said they would avoid dating someone who spent irresponsibly.

But survey respondents did indicate that romantic partners can be too frugal—49 percent of women and 28 percent of men said they wouldn’t likely date someone who scrimped and saved unnecessarily. The data highlight the importance of determining financial compatibility with a potential partner.

Talking about money on a first date might be awkward, and that’s likely why 84 percent of respondents said they would wait to discuss personal finance until they were at least dating someone consistently.

But avoiding the topic altogether puts undue stress on a relationship. If you can’t avoid debt altogether, make it a priority to be upfront and honest with your partner about your financial status.

How can you improve your financial behavior?

A good credit score isn’t everything in life. But when it comes to improving your financial outlook, the sorts of behaviors that lead to good credit are a flat-out great place to start.

First, make sure you pay your bills on time. All of them. Your payment history makes up 35 percent of your score, more than any other single factor. If necessary, talk to your creditors about changing your due dates to make sure all your bills don’t come at once, straining your budget.

Next, pay down your excess debt, beginning with high-interest consumer debt from credit cards and personal loans. The Debt Snowball and Debt Avalanche methods are two fantastic strategies for paying off debt. Your amounts owed makes up 30 percent of your overall credit score.

Once your outstanding credit card balances dip below 30 percent of your total credit limits across all your cards, you should see improvement in your score. Moving forward, try to keep your credit utilization ration below 30 percent at all times.

Don’t forget about savings!

And while your credit score doesn’t take savings into account, you should also build up an emergency fund. This fund should be kept in cash or in an easily accessible savings account. Either way, the point is that these funds are easily accessible when a surprise bill or financial shortfall strikes.

Having a great credit score is … great! It lets you borrow better loans at lower rates and forego expensive payday and title loans. But the best way to handle a financial emergency is to already have the necessary funds at your disposal. Even the most reasonable installment loans can’t hold a candle to a well-stocked emergency fund.

If this task sounds daunting, don’t worry. Start with a goal of saving $1,000 and go from there. Not only will this save you from taking out an expensive online loan when things get tough, but it could also end up being the difference in your romantic life!

To learn more about navigating money and relationships, check out these other posts and articles from OppLoans:

Do you have a personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Emergency Funds Are Important: Here’s How to Start Building One

Building and maintaining an emergency fund is an important financial cornerstone. If you don’t have one, you should start saving today.

There are keys to avoiding short-term bad credit loans like payday loans and cash advances. One is to maintain your credit score, the other is to build up your savings. And while a good credit score is important, its the savings that will really—well—save you!

Specifically, you should create a well-stocked emergency fund. That way, you can cover unforeseen bills and financial shortfalls instead of relying on bad credit loans and possibly entering a dangerous cycle of debt.

Rest assured: Financial surprises are going to happen, and you want to make sure that you’re prepared. That’s why we reached out to a number of financial experts who can explain how emergency funds work and how you can go about building one today.


What is an emergency fund?

Nicolás Valdés-Fauli is a Certified Financial Planner with Main Street Financial Solutions in New York City. He provided a general overview of how emergency funds work and the many benefits that they offer. According to him, establishing an emergency fund is one of the most important parts of establishing a financial plan.

“An emergency fund is exactly what it sounds like, a fund or an account of easily accessible money used in case of an emergency—job loss and unexpected medical expense amongst others,” he said. The fund is intended to cover one’s monthly living expenses including,  “mortgage payments, rent, insurance premiums, cell phone bills, groceries and everything else you need to maintain your existing life,” according to Valdés-Fauli.

“There are insurance products that cover all sorts of loss. Think life insurance, renters insurance, car insurance, homeowners, disability, on and on. But there is nothing that covers something as broad-based as an emergency. Typically, people need to self-fund, meaning, they need to save their own money to cover these events.”

Unlike traditional savings, which you don’t want to touch until you retire, the money in your emergency fund needs to be easy to access:

“An emergency fund should always be liquid, meaning it should be accessible without a penalty,” explained Valdés-Fauli. Cash in the mattress is never a good idea (fire, theft, inflation), and an emergency fund should be kept in a financial institution. Avoid using CD’s, life insurance policies and retirement accounts, as there are probably penalties with early withdrawals.

He also specified that your emergency fund shouldn’t be lumped in with the rest of your savings: “It should be a separate account from a savings account designated for a future expense such as a down payment, education bills or a vacation.”

How do you define an emergency?

Your car breaking down is an emergency. Your favorite band adding an extra concert date in town? Not so much.

“The definition of an emergency is a crucial step for the creation of an emergency fund,” said Ramsey Preferred Financial Coach Barry Jennings. “Without a clear understanding of what constitutes an emergency, most emergency funds fail before starting as birthdays and holidays pop up without notice and are resolved with the newly saved cash.”

“Within the context of my family, we define an emergency as anything that hinders or prevents the generation of income,” Jennings continued. “This could be things of a medical, transportation, or employment nature.”

“In the years past, grandmothers called the emergency fund a rainy day fund.  They may not know when it was going to rain (an emergency was going to occur), but they knew it was bound to happen sooner or later. The simplest of purposes of an emergency fund is to self-insure against the appearance of Murphy’s Law.”

How big should your fund be?

“While funds stashed away for emergencies can serve multiple purposes (including a major car repair or replacing a furnace in the dead of winter), the most commonly cited reason to build an emergency fund is to allow folks to pay their monthly bills should an unexpected job-loss occur,” said Timothy G. Wiedman retired professor of Management & Human Resources at Doane University (@DoaneUniversity).

“Thus, the fund must be large enough to cover housing (i.e., rent or mortgage payments), grocery bills, monthly utilities (including internet access), transportation costs, insurance (i.e., premiums for health, life, auto, homeowners/renters coverage, etc.), and even some occasional entertainment to keep the spirits up until a layoff is over or a new job can be found.”

“At an absolute minimum,” he advised, “the fund should cover three months of recurring expenses.”

That’s a lot of money! But while it’s best to start with a smaller goal and work your way up, a three-month found won’t be enough for many people to weather an unexpected job loss. This is why Wiedman suggests doing some calculations to figure out how much money you’ll need to (eventually) have in your emergency fund—especially as it relates to a realistic job search.

“Estimate how long it would likely be before a new job is found and paychecks resume,” he said. “Also take into account the length of time that unemployment benefits would be provided in a particular locale and estimate the amount of those payments (which will almost surely fall well short of covering your recurring living expenses).

“Then, consider the demand for your job skills in the immediate area, the local unemployment rate, whether relocation is a realistic option, your credentials (i.e., education, certifications, work experience, etc.), and how long it took to find your last job.”

“And further, also consider other factors that might slow down your search (e.g., a conviction—even for a misdemeanor that only resulted in probation, or advanced age given your profession—a 61-year-old unemployed airline pilot, for example,” he continued.

“Finally, realistically think about a bleaker job-search scenario (that might include a prolonged economic recession, for example).  Given all of the factors mentioned above, is it really likely you’d find a new job in 90 days—or could your search easily last five or six months?”

“After an assessment of this sort, a great many folks will conclude that building a six-month emergency fund is a wise course of action,” Wiedman concluded. “Further, if you live in an area with high (or persistent) unemployment, or your skills are primarily only needed in a declining industry (underground coal mining, for example), having sufficient funds to cover nine to twelve months of unemployment would make good sense.”

Still, Wiedman was clear that you don’t know how much money you personally need in your fund until you sit down and do the calculations: “The size of an individual’s emergency fund depends upon a great many variables.  So folks must analyze their personal situations, and act accordingly.”

Set a small goal—and grow from there.

“Most people are buried in debt, live paycheck to paycheck, and don’t have the means to handle even small emergencies with cash,” said Jenning.s “As a financial coach, I address the behavior slowly and deliberately by having people set aside $1,000 initially as a starter emergency fund.”

But just because $1,000 is a good initial goal doesn’t mean that you should stop saving once you meet it. And as Jennings pointed out, continuing to address other areas of financial need—like your debt—will set you up for success in the long term.

“While people become accustomed to having a small amount of cash available for the unknown, they can begin to focus on becoming debt free except for their mortgage.  This will free their income and make further saving possible,” he said.

Once people become debt free, Jennings advised that people continue building out their emergency fund to cover the aforementioned three to six month period. But what comes after that?

“After the completion of saving a fully funded emergency fund, people can focus on saving for retirement and education and paying off their mortgage early. When they have reclaimed the freedom of their income, they are able to focus on gaining wealth and building a legacy,” he said.

These folks can also continue building their emergency fund to cover the kinds of “unexpected shortfalls” that occurred after the 2008 financial crisis—taking their emergency savings from six months to two years. After all, Jennings noted that “even the Great Recession after 2008 only lasted 18 months.”

“This allows the comfort and peace of mind to find gainful employment, if such a need arises, during such difficult times,” Jennings concluded. “It also serves as an additional buffer for use prior to the accessing of retirement accounts, if market timing becomes a concern in the later stages of life.”

You’re going to need a budget.

One of the financial experts we heard from was Michele Lee Fine, RICP, Registered Representative and Financial Advisor of Park Avenue Securities and Financial Representative of Guardian Life Insurance (@guardianlife). She shared the importance of the role that budgeting plays in building an emergency fund.

“First, you have to overcome the big three psychological barriers that keep many people from setting up a budget: Fear, uncertainty, and doubt,” she said. “Fear what you’ll discover when you examine your finances; Uncertainty about how to set up a budget; Doubt whether you can stick to a budget.”

Overcoming those barriers and building your first budget is going to mean getting specific. “Don’t guess how much money you have coming in and going out each month. Write it down,” said Fine. “There are lots of tools to help you, find a worksheet online and—bonus—it’s free. Keep track of all your expenses and sources of income.”

“Some experts suggest doing this for a few months to get a real picture of your financial situation, but starting to track for just a month will help you get some clarity,” she continued. “Scan your bank and credit card statements to see where it’s all going. Add up the expenses and subtract them from your income. This will tell you, at the most basic level, whether you are operating in the black or red.”

Once you have a picture of how you’re spending your money, you can set about actually building your budget. In order to find expenses you need to cut, Fine offered the following tips:

  • Examine current bills: See where the money is going and think of cutting out extras and finding cheaper alternatives.”
  • Pay with cash: There’s something about the tactile quality of cash that makes it hard to part with.”
  • Adjust your habits: All of us have habits that we fall into that can be revised and made more financially healthy.”

At this point, Fine suggests that some people may find it helpful to consult with a financial professional. “He or she can look at your numbers and help you put together a balanced budget that addresses all your needs, from meeting monthly obligations, building an emergency fund, saving for retirement to occasionally splurging,” she said.

Here’s how to get started.

One of the hardest parts of any financial journey is taking those first couple steps. That’s why  Certified Financial Planner Christine Centeno, founder of the fee-only financial planning firm, Simplicity Wealth Management, offered these tips to help you get started.

  • Start Small: Start saving something small each paycheck or each month. Make it a realistic amount, something that you can easily accomplish. The key is to start saving even if its $25 per pay period. Over time you’ll be surprised at how much you have saved. Take advantage of tax refunds or bonuses to increase savings Instead of spending your entire tax return or bonus, aim to save a portion of it. Every little bit helps.”
  • Be consistent: Save every paycheck or every month. Don’t wait until the end of the year to transfer leftover funds to your emergency fund, you’ll be less likely to have funds left over.”
  • Pay yourself first: What does this mean? Save first before you pay any bills. If you are not sure how much you are able to save, I recommend using budgeting software like Mint to help determine how much you have left over each month.”
  • Automate it: Set up an automatic transfer from your checking account to your savings account each month. Or, even better, set up part of your direct deposit to go directly into a savings account. This way you won’t even see it and be tempted to spend extra dollars that sit in your checking account.”

Responsible money management is a lot like exercising: It’s about building up the proper habits and making them part of your routine. The more you incorporate saving money into your everyday activities, the easier it will become!

Want fast savings? Start brown bagging it.

If you’re looking for one area of your life where you can find some immediate savings, Wiedman suggested substituting restaurant lunches with a brown-bag lunch made at home. This option even comes with the added bonus of eating healthier!

Wiedman laid out how the cost of a typical lunch combo at Applebee’s ($11.50) can easily turn into a weekly expense of $57.50—maybe even more if you decide to get the occasional dessert or if you have to drive the restaurant, thereby spending money on gas.

“On the other hand, a healthy lunch brought from home (e.g., a sandwich made with low-fat lunch-meat on whole-grain bread, a dozen peeled baby carrots, a small individually-sized box of raisins for dessert, and a can of diet soda) can be assembled for about $2.80 (i.e., $14 per week),” said Wiedman.

“Further, if that brown-bag lunch is eaten in the employee break room (or after a short walk to a nearby city park), no time or gasoline is wasted on a lunchtime commute. Over the course of a 49-week working year, the savings would exceed $2,100.”

And while opting for fast food would also save money versus a full restaurant lunch, Wiedman pointed out that people would still save a lot of money by choosing the brown bag option—plus, this meal is far healthier than fast food.

“If that fast-food lunch (including tax, of course) averaged just $6.85 per day, a brown-bagger would still save almost $1,000 per year (or even more if the cost of gas consumption is figured into the equation),” he said.

When it comes to the benefits of brown bagging, Wiedman speaks from experience:

“My wife and I brown bagged it for years (while taking turns assembling our lunches), so our annual combined savings were well over $4,000, and the money we saved was used to fund our IRAs each year.  But this method is also an excellent way to ‘painlessly’ build an emergency fund.”

Save more money, save your future.

An emergency fund isn’t a silver bullet to solve all your financial problems. You should still be investing money for your retirement, taking care of your credit score, and doing your research before making any financial commitments, whether that be a mortgage, a personal loan, or an “exciting business opportunity.”

But a well-stocked emergency fund is still an important financial cornerstone. It helps protects you from financial disaster, giving you some much-needed security so that you can safely build on top of it. Without one, you might find yourself relying on no credit check loans like payday and title loans to make ends meet when times get tough.

Even opting for a safer, more affordable installment loan when you encounter a financial shortfall pales in comparison to the benefits of having an emergency fund. The last thing you want during a crisis is to dig yourself even deeper into debt with an online loan or a trip to your local payday storefront.

If you don’t have an emergency fund, start one now. Your future self will thank you. And to learn more about how you can build a brighter financial future, check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Contributors

Christine Centeno, CFPⓇ, MS is the founder of Simplicity Wealth Management. She has over 11 years of industry experience as a financial advisor and is a member of several professional organizations including NAPFA, FPA, and the XY Planning Network. Christine also holds her Masters in Financial Planning. In 2019, after years of working for large firms, she founded her own firm. Simplicity Wealth Management provides clarity to the complicated nature of financial planning and investing by delivering comprehensive advice without hidden fees and unnecessary jargon that leaves you in the dark. The goal is to deliver transparent, easy-to-understand guidance to help clients achieve their financial goals and remain informed every step of the way.
Nicolás Valdés-Fauli, CFP® opened the New York City office of Main Street Financial Solutions in 2010. He has served his clients in NYC and South Florida since 2002. A graduate of Choate Rosemary Hall and Wesleyan University, Nicolas lives in Manhattan with his wife and daughter.
Barry Jennings has taken 30 years of experience in psychology, life and health insurance sales, automobile sales and financing, student loan processing and college funding consulting and turned it into a financial coaching business, Soul without Fear.  He empowers his clients to make positive changes to their financial situation by helping them create a written plan, start an emergency fund, eliminate debt, save for retirement and college, and build a legacy for their families.
Michele Lee Fine, RICP is the Founder and President of Cornerstone Wealth Advisory, LLC located in Jericho, NY. She is a graduate of New York University and participates in several trade and community organizations such as NAIFA; Westchester Association of Insurance and Financial Advisors; 100 Women in Hedge Funds Organization; Women’s International Zionist Organization; Cabinet Member of Israel Bonds, USA; and is a JNF Board Member.
After 13 years as a successful operations manager working at two different ‘Fortune 1000’ companies, Dr. Timothy G. Wiedman spent the next 28 years in academia teaching college courses in business, management, human resources, and retirement planning.  Dr. Wiedman recently took an early retirement from Doane University (@DoaneUniversity), is a member of the Human Resources Group of West Michigan and continues to do annual volunteer work for the SHRM Foundation. He holds two graduate degrees in business and has completed multiple professional certifications.

Financial Basics: Good Interest vs. Bad Interest

Since it’s National Financial Literacy Month, we’re getting back to basics. Today’s post covers interest: The kind that helps and the kind that hurts.

Despite its name, many people do not find “interest” particularly interesting. Which is unfortunate, because a proper knowledge of interest will make a huge difference in your financial life. That’s why we spoke to the experts to create a handy dandy guide to interest that we hope you’ll find interesting. Or, at the very least, that you’ll find compelling enough to read on your phone while sitting on the bus.

Does your bus ride currently provide a helpful dose of financial advice? Well, now it can!


Basic interest.

Interest has been around for a very long time. Even longer than money itself! Essentially, it’s a way for those with resources to get compensation for lending out the aforementioned resources. We give you four cows. You then use those cows to make more cows. One year later, you give us back five cows. As long as you still have some cows left over, we’ve both come out ahead.

When you take out a loan, unless it’s from a friend or family member, you’re almost certainly going to have to pay some interest. The amount will vary, but it will be a percentage of the total loan amount, or principal. The loan may also come with additional fees, which is why it’s important to compare different loans in terms of their APRs, or Annual Percentage Rating. A loan’s APR is a measure of its total cost, including fees and interest.

But you can also make interest work for you! One way to do that would be to start a bank or other lending institution. But an easier way to do that is by putting your money into an account that yields interest, as most accounts do. That’s because when you put money into a bank account, you’re actually lending money to that bank.

So how can you make sure you’re always handling interest as well as possible, regardless of whether you’re paying or receiving it? Keep reading and see!

Taking account.

You have to put your money somewhere. Sure, you could keep it all in your pockets, but that’s just asking for trouble. And while keeping it under your mattress might be a classic, it’s almost as risky as just keeping it in your pockets.

That’s why most financial advisors will recommend you keep your money in a bank account. And, as we previously mentioned, this technically means you’re lending money to the bank and will be receiving interest in return. But if you want that interest to be substantial, you’ll need to choose the right account.

“If you want to maximize the interest you receive on your bank accounts, it pays to try and start with the most favorable conditions,” suggested Stephen Hart, CEO of Cardswitcher. “Before you even start saving, make sure that your account is one that returns a high rate of interest. Shop around as much as possible, comparing deals to see which offers you a better return. Also, check the rewards that are associated with particular bank accounts, as sometimes you can find these can influence your interest rates.”

Finding the right bank account isn’t your only opportunity to be a lender, however.

“The best way to get the best of both sides of the interest coin is to be a lender and not a borrower,” advised Steven Nuckols, president and founder of Wealth Compass Financial (@_Wealth_Compass). “Interest rates are going to continue to rise, although slowly, and lenders will be getting paid more for their money. For most people, this means better returns on bank accounts, CD’s, and new bond issues. A roundabout positive is that banks will have higher margins and will be able to offer more incentives to customers through credit card rewards, bonuses, and interest rates on products.”

But you can’t always be the lender.

A loan again.

Unless you have a swimming pool full of cash in one of the rooms of your house, you’re probably going to have to take out to get a loan at some point. For example, every time you use a credit card, you’re technically taking out a loan. Fortunately, it’s one of the few kinds of loans you can actually avoid paying interest on at all.

“If you’re looking to reduce the amount of interest that you have to pay on your credit card account, one of the most effective techniques is to just ensure that you pay off the amount in full every month before the grace period ends,” urged Hart.

When it comes to every other kind of loan, you’ll want to shop around to find out which options have the lowest APR. The sooner you can pay down any loan, the less you’ll have to pay in interest. You do need to be careful, however, as some loans come with a prepayment penalty that will punish early payment.

If you have bad credit, you’re going to find yourself stuck with much higher interest rates. Short-term bad credit loans and no credit check loans like payday loans, title loans, and cash advances often come with annual rates of 300 percent or higher! (You might have some better luck with a bad credit installment loan.)

The answer to that quandary is simple: Raising your credit score will allow you to get personal loans at better rates! We’ve written about how you can improve your credit score multiple times, like here for example. (And in the meantime, a well-stocked emergency fund will help you whether any surprise bill or financial shortfall.)

At the end of the day, interest is pretty simple. You want to get it, rather than having to pay it. If you are getting it, you want to get as much as possible, and if you’re paying it, you want to pay as little as possible.

To learn more about how you can improve your financial situation, check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Contributors

After working in the financial industry for several years, Stephen Hart left his role as Chief Financial Officer at WorldPay to launch the UK’s first payment processing comparison site, Cardswitcher. Nowadays, he helps SMEs save money on their payment processing costs.
Steven Nuckols is the President of Wealth Compass Financial (@_Wealth_Compass).  An independent registered investment advisor firm specializing in financial planning and wealth management.

3 Risks of Short-Term No Credit Check Loans

You might be familiar with the high APRs that come with no credit check loans, but did you also know that their lump sum payments could end up driving you into a cycle of debt?

No credit check loans can be a good financial solution when you need cash in a hurry. But that doesn’t mean you should simply take the first loan you see advertised or enter the transaction without understanding the risks—especially if the loan is a short-term payday loan, title loan, or cash advance.

When shopping around for a short-term no credit check loan, these are the three risks you need to know.


1. High APRs.

This isn’t so much a risk as it is a given. No credit check and other bad credit loans come with much higher interest rates than standard personal loans. Due to the increased risk of default, there’s really no way around it.

But short-term no credit check loans have APRs that are extremely high, even compared to other types of bad credit loan products. And while these products may seem like a great way to get out of debt fast, their high APRs could help trap you in a recurring cycle of debt.

Simply looking at the interest rate for one of these loans doesn’t tell the whole story. For instance, a 15 percent interest charge on a two-week payday loan doesn’t sound that bad, right?

That’s why you should check the APR. Regular loans calculate interest on an annual basis, while short-term loans calculate interest by the week or the month. As such, a two-week rate of 15 percent translates to an APR of 391 percent!

Yeah, we weren’t joking about these loans being way more expensive than standard loans or credit cards. If you have bad credit and are looking for a loan, a lower APR is one factor you should definitely be keeping in mind.

2. Unaffordable payments.

As we mentioned in the previous section, a short-term loan might seem like a great way to get out of debt quick, but those shorter terms can end up working against you, too. And one way that a short-term loan can spell trouble is through the size of their payments.

Unlike installment loans, which are paid off a little bit at a time, short-term no credit check loans are paid off in a single lump sum. And while this may seem convenient, it isn’t always. Many payday users find that this single payment is more than they can afford in such a short span.

Think about it: The reason that many people take out a payday or title loan is that they’re facing an unexpected expense or financial shortfall. Even if the due date is set on their next payday, paying back the amount they borrowed plus interest only weeks after they borrowed the loan is going to blow a brand new hole in their budget.

When someone can’t afford to make their loan payment, many of them end up having to roll over their loan—extending the due date in return for an additional interest charge—or borrowing a new loan immediately after they pay off the old one. If they have to do this repeatedly, it means they’ve become trapped in a cycle of debt.

This is a reality for many no credit check borrowers. According to a study from the Pew Research Centers, over 80 percent of payday loan customers don’t have enough money in their monthly budgets to cover their payments, while the Consumer Financial Protection Bureau found that the average payday borrower takes out 10 loans per year.

Before opting into a short-term payday or title loan, you should look into the bad credit installment loan options available in your area. A longer repayment period means smaller individual payments, which could fit more easily into your budget.

3. Lenders that don’t check if you can repay.

Before taking out a bad credit loan, you need to look over your budget and make sure that you can afford your payments without having to take out an additional loan. And one of the reasons that you need to do this is that many no credit check lenders won’t.

This is very different from how traditional lending institutions work. Making sure that their customers can repay is why banks and other personal lenders check an applicant’s credit in the first place. If their score is too low, that means that the risk of them defaulting is too high, and the lender will refuse to extend them credit.

But many no credit check lenders do just the opposite. They don’t do anything to see whether or not a potential customer can afford the loan they’re applying for. If they end up needing to rollover or reborrow their loan, these lenders stand to make more money than if the person paid their loan off on time.

Instead, you should look for a bad credit lender that checks whether or not you can repay your loan. This could be a soft credit check (which won’t affect your credit score) or it could mean verifying your income. Whatever method they use, it shows that these lenders care.

Before you click “yes” on an online loan agreement or head down to your local brick-and-mortar payday lender, make sure you account for the three risks laid out in this article. If you can find a lender that addresses all three, odds are you’ve found the right no credit check loan for you.

To learn more about how you can improve your financial situation, check out these other articles from OppLoans:

Do you have a personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Before Taking out a Bad Credit Loan, Make Sure You Do the Math

First of all, you need to figure out how much this bad credit loan really costs. Second, you’ll need to check whether or not you can afford the proposed payments.

Bad credit loans can serve a very useful purpose in people’s lives. When you have a financial emergency and don’t have any savings to cover it, these products can help you keep your financial ship afloat.

But that doesn’t mean that you should be taking out the first bad credit loan you see. Like with any other financial obligation, you need to do your research and find the product that works best for you.

And with bad credit loans, that means doing some math.


First, figure out the APR.

Bad credit loans come with higher interest rates than standard personal loans. That’s unavoidable. Due to the increased risk of default, bad credit lenders have to charge higher rates than lenders that only work with good credit borrowers.

But some lenders charge rates that are way higher than others. And if you’re not careful, you could end up with a much more expensive loan than you could otherwise qualify for.

This is especially true with short-term bad credit loans like payday loans, cash advances, and title loans. These products are designed to be paid back in a matter of weeks, not a matter of years, and that can distort how much they actually cost compared to standard personal loans.

In order to make an apples-to-apples comparison between different types of loans, it’s best if you look at their annual percentage rates, or APRS, instead of their stated interest charges. APR measure how much a loan will cost (including fees and interest) over the course of a full year.

Here’s an example:

A typical two-week payday loan comes with an interest rate of $15 per $100 borrowed. So if you were to borrow $300 with a loan, you would be paying back $345 on the loan’s due date, which would be set for 14 days in the future.

A 15 percent interest rate doesn’t sound too bad, right?

But remember, that loan is charging you rate of 15 percent over only a two-week period! If you were to roll over or reborrow that loan—something that it all too common—you would end up paying an additional 15 percent for those next two weeks.

Let’s look at that payday loan’s APR. a 15 percent rate charged over 14 days comes out to an APR of … 391 percent! This gives you a better idea of how much costlier this loan is than a standard personal loan.

As we said, bad credit loans are always going to more expensive than the kinds of loans offered to people with good or fair credit. But that still means you should be shopping around to find the least expensive loan available.

Can you afford your payments?

Of course, finding the loan that will cost you the least amount of money overall isn’t everything. Because while short-term no credit check loans like payday loans will cost more on paper than a bad credit installment loan, you could very well end up with a nasty surprise.

Namely, you might find that you have trouble paying off your short-term loan on time, forcing you to roll it over and extend the due date (in return for more interest) or take out another loan immediately after you pay off the old one. Either way, your cost of borrowing starts to go up. And fast.

It’s not like this is uncommon, either. One report from the Consumer Financial Protection Bureau found that the average payday loan borrower took out 10 loans a year. A short-term solution? It sure doesn’t seem like one!

So what gives?

Well, the problem with many short-term loans has to do with their payment structures. Namely, it’s the fact that the loan is paid off in a single lump sum. As it turns out, this single balloon payment can be difficult for many borrowers to afford!

Sure, the idea of getting yourself out of debt quick sounds appealing. But there’s a flipside: The quick turnaround for payday and title loans means little to time to save.

With such a large amount of money getting debited at once from your bank account, you might find yourself with another financial shortfall, with bills to pay and not enough money to cover them. All of a sudden, you’re right back where you started.

Before taking out any bad credit loan. You need to take a long, hard look at your budget and your cash flow. If the proposed loan payment isn’t something you can afford, then this product is going to cause more problems than it solves.

According to one study from the Pew Research Centers, well over 80 percent of payday loan borrowers didn’t have enough money in their monthly budgets to cover their loan payments. When that happens, you could easily find yourself stuck in a recurring (and expensive!) cycle of debt.

Checking your ability to repay.

One way to avoid this is to find a bad credit lender who checks whether or not you can afford your loan. That way, you are receiving an extra layer of protection against taking out a product you can’t afford.

Checking your ability to repay is different from checking your credit score. While hard credit checks show up on your credit report (and will likely ding your credit score), a soft credit check or income verification won’t get recorded and won’t affect your score.

When you have bad credit, it’s all too easy to get taken advantage of by a predatory lender that doesn’t care whether or not you can afford your loan. But skipping out on “guaranteed approval” loans can help you avoid them.

Before you click “I agree” on that online loan agreement, take some time and do the math. You won’t regret it. To learn more about how you can protect your financial future, check out these other articles from OppLoans:

Do you have a personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN |Instagram

Financial Basics: Expert Tips for Smarter Spending

We want to let you in on a little personal finance secret: Spending less is great, but you can only take control of your financial future by spending smarter, too.

Since April is National Financial Literacy Month, we’ve been writing a series of posts that all focus on the basic building blocks of personal finance. For this article on smarter spending, we reached out to a whole host of financial experts to get their tips and advice. Here’s what they had to say!


Build a budget.

Christian Stewart, Ramsey Preferred Financial Coach for Do Better Financial:

“Create a monthly budget. Managed money goes farther, so the best thing you can do is give every dollar a job using zero-based budgeting. You’ll feel like you got a raise when you tell your money where to go instead of wondering where it went.”

Todd Huettner, President of residential mortgage bank Huettner Capital (@HuettnerCapital):

“If you don’t have a monthly budget, you simply can’t ‘spend smarter’ because you can’t define smart or stupid without knowing how much money you have and what expenses you have.”

Track your expenses.

Marc Andre, personal finance blogger at VitalDollar.com (@vital_dollar):

“One of the most important things you can do to improve your spending habits is to track your expenses. Creating a budget is common advice (and good advice), but a budget won’t do you any good unless you know you are actually sticking to the budget.

“In order to know that, you’ll need to record your expenses. It’s not difficult, but it does take a little bit of effort. You can use a spreadsheet or paper, but take a few minutes at the end of each day to record everything that you spent that day.

“You should also check your bank and credit card statements at the end of the month for any automated payments or anything else that you might have missed. Give each expense a category (food, gas, housing, etc.) and then you can add up the totals for each category, as well as the overall total.

“Tracking your expenses can be a really eye-opening experience, and you’ll probably see a few areas right away that are higher than you expected. It’s a simple way to get information that you can use to know where you need to cut back. And there are also some apps, like Mint, that help to make it more of an automated process and can save you some time.”

Use cash rather than plastic.

Todd R. Christensen, author, Accredited Financial Counselor®, and education manager at Money Fit by DRS, Inc. (@MoneyFitbyDRS):

“Use cash rather than plastic (credit, debit, store, and pre-paid). You will spend on average almost 15 percent less because of the physical nature of cash and the requirement to actually count it out.

“Take only the amount of cash into the store that you plan to spend. Leave store, debit, prepaid, and credit cards at home. You can’t overspend if you only have the budgeted cash.”

Stephanie Schill, personal finance blogger at Wynning in Life (@wynninginlife):

“Pay with cash, and save the change. Pull out the amount of money from an ATM that you aim to spend in a week. Any change you receive put it into a piggy bank or jar. Any money left over at the end of the week put aside. You can use that for future savings, the start of an emergency fund, or a slush fund to pull from if you have a week where you run out of money early.

“Only take into a store how much you intend to spend. If you’re heading to the grocery store and only want to spend $40, bring in $40. cash Are you going to the salon for a haircut and know you always get talked into add-on services? Only take in as much as the service and tip will cost, and nothing more. It’s easy to turn down upselling of product or services when you only have a set amount of money in your pocket.”

Pay yourself first.

Amy White, personal finance blogger at Daily Successful Living (@amysdailyliving):

“My number one tip for anyone trying to improve their financial life is to start by paying themselves first.  Every single time you get paid or receive money you should be setting aside a small portion of it for yourself.  I personally recommend 10 percent of your income, but if you are just getting started you may need to start with a smaller percentage.

“When many people hear this advice, their first reaction is that they don’t have any extra money.  They probably don’t, but I’ve found that regardless of your income when you prioritize setting aside money for yourself you’ll find a way to pay the rest of your bills.

“As soon as you begin paying yourself first and putting yourself first in your financial life something changes inside of you.  That money becomes your future and you are willing to sacrifice in other areas so that you can continue to save and grow your money.

“Once you begin paying yourself you are finally free to begin saving for retirement, your emergency fund or using it to reduce your debt. “

Make a list.

Christian Stewart:

“Don’t become of a victim of the ‘Bullseye Effect’. Ever been into a certain store for one or two items, and walk out $250 wondering what happened? Making a list of the things you need, whether shopping for groceries or clothes, can keep you on track with your money.”

Consider quality over quantity.

Personal finance blogger Kelan Kline of The Savvy Couple (@TheSavvyCouple):

“Always seek the best value. Whether it’s a new pair of sneakers or a meal from the grocery store frugal people always seek the most value. Frugal living is all about getting the most value out of your money.

“Instead of buying quantity, start thinking about quality. You want your purchases to continue to work and provide value years down the road.”

Stephanie Schill:

“Consider quality over quantity. In many cases, spending is an impulse. You are spending because you want something, not because you really need it. Consider, before you buy, if you own something already that can do the job.

“Is there already something to eat for dinner in the refrigerator or pantry?  Do you own a similar sweater? Does your child already have a toy that is close to this one? Try to walk away from the purchase! You’ll likely forget about it by tomorrow anyway.”

Look for places to cut back.

Todd Huettner:

“Monthly subscriptions have become so popular, we lose track of how much we’re actually spending on things. Add them up every month and see what you can cut.

“Make a list of the top 10 things you could cut out from your budget to save a few bucks periodically or for several months in an emergency.”

Pay for services upfront.

Doug Keller, marketing manager at Payless Power (@paylesspower):

“Often when payment is completed after a service is received, individuals are inclined to pay more than desired, especially if careful attention is not paid beforehand. This is the case for dining out or other services such as utilities. When possible, it is advised that you pay upfront in order to protect yourself from overspending based on your budget.

“There are a number of plans and services you may not be aware of that offer this, such as prepaid electricity which requires no deposit or credit check and allows consumers to pay whatever they want and subsequently receive the corresponding amount of electricity.”

Negotiate with your creditors.

Stephanie Schill:

“If you have debt payments higher than you’d like, give the lenders or creditors a call and explain your situation. They may lower your interest rate, or reduce your payment. It’s totally worth the effort.

“Think cell phone, cable, and insurance, but it could be any debt: mortgage, student loans, etc. as well. Be brave and make the call. You’ll be happy you did.”

Try separate savings accounts.

Todd Huettner:

“A simple tip to get control of your spending is to create a separate savings account for each discretionary spending item in your budget. Automatically transfer funds each month into the account.

“Examples include gifts, vacation, groceries, entertainment, eating out, clothing, auto maintenance (oil changes and don’t forget miscellaneous repairs including tires).”

Don’t grocery shop when hungry or stressed.

Todd R. Christensen:

“With regards to grocery shopping, do not shop when you are hungry, in a hurry, stressed or have young children in tow. Studies who you will spend 10 percent to 15 percent more with children in your cart or at your side, and even more when you are hungry.”

Save up for big purchases.

Christian Stewart:

“Saving each month for a big purchase, like new furniture or a car, helps you avoid incurring debt and gives you time to find the best deal.”

Always think long-term.

Kelan Kline:

“Cheap people always look for a quick fix, something that will benefit them immediately. Frugal people are always looking for a long-term solution.

“Get into the habit of thinking long-term when making purchases, especially ‘big’ purchases. Things like appliances, cars, and houses should be thought of as a long-term investment. These are items you want to get the most value out of in the long-term.

“Being able to sacrifice your desire for instant gratification and a fast solution will save you a ton of money.”

Create a no spend day, week or month.

Stephanie Schill:

“Create a no spend day, week or month for yourself. If you’re a regular impulse shopper this may help curb your habit. Challenge yourself to eat what’s in the refrigerator and freezer. Participate in free activities, go to the park, head to the library, etc.

“Stay off your phone to avoid online shopping. Whatever the deal is, there will be another one. What you don’t spend, roll into debt payments or save!”

Be creative and know yourself.

Todd Huettner:

“A great example a lady told me yesterday at a lunch-n-learn workshop I was invited to present at a local business was as follows:

“I opened a savings account at a small credit union with only a few branches that are all 45 minutes away. It does not offer online banking and the account does not allow check writing.

“So, I can mail deposits, but I have to actually go into the branch to make a withdraw and it’s simply too time-consuming to do that without rearranging my day and I know I won’t do it.”

Ask yourself this one simple question.

Stephanie Schill:

“Ask yourself ‘Will I be happy I bought this a week from now? Will I be happy I bought this a month from now?’ A mind trick can help you curb impulse spends and put into perspective if what you’re buying is really a need or a want.”

To learn more about how you can spend less, spend smarter, and save more money, check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN | Instagram


Contributors

Marc Andre is a personal finance blogger at VitalDollar.com (@vital_dollar), where he writes about saving money, managing money, and ways to make more money. His goal with Vital Dollar is to help individuals and families get the most out of the money they have and to reach their full financial potential. He lives in Pennsylvania with his wife and their two kids (a son and a daughter).
Author and Accredited Financial Counselor®, Todd R. Christensen, MIM, MA, is Education Manager at Money Fit by DRS, Inc. (@MoneyFitbyDRS), a nationwide nonprofit financial wellness and credit counseling agency. Todd develops educational programs and produces materials that teach personal financial skills and responsibilities to all ages. Having facilitated nearly two thousand workshops since 2004 on the fundamentals of effective money management, he based his first book, Everyday Money for Everyday People (2014), on the discussions, tips, stories and ideas shared by the tens of thousands of individuals and couples in attendance.
A recognized real estate and personal finance expert with over twenty years of experience, Todd Huettner is frequently quoted in the business press including The Wall Street Journal, CNBC, Credit Karma, and Realtor.com. He is President of Huettner Capital (@HuettnerCapital), a residential mortgage bank located in Denver, CO.  In addition to earning an economics degree and an M.B.A., Todd has held his real estate license in multiple states and been an underwriter, financial analyst, and consultant.
Douglas Keller has been a financial expert for 20 years, helping people reach financial stability. He works for Payless Power (@paylesspower) where he continues to help people save money on their bills every month.
Kelan and Brittany Kline aka The Savvy Couple are two thriving millennials that are daring to live differently. They started their personal finance blog in September 2016 to help others get money $avvy so they can live a frugal and free lifestyle. Brittany is a full-time 4th-grade teacher and Kelan runs The Savvy Couple full-time and works as a digital marketer. You can follow them here: FacebookTwitterPinterest, and Instagram.
Stephanie Schill is the creator of the personal finance blog Wynning in Life (@wynninginlife). On her site, she shares how you can spend less, save more, and achieve your financial goals faster. A lifetime saver and self-proclaimed shameless couponer, she is passionate about saving intentionally,  spending deliberately, and having fun along the way. When not writing she enjoys spending time outdoors with her husband Nick and their daughter Wynn.
Christian Stewart is the founder and lead financial coach of Do Better Financial. She has always been interested in money, from saving for her first car at age six to buying her first mutual fund at 18. This passion lead her to get a Finance degree from Texas A&M University, but a lack of planning also meant student loans. She was introduced to the concepts of budgeting and the debt snowball shortly after buying her first car and proceeded to pay off $32,000 in debt in only 27 months. She founded Do Better Financial to empower people to take control of their finances and start winning with money.
Amy White, MBA is the founder of Daily Successful Living (@amysdailyliving), a website dedicated to helping people learn to manage their money.  Amy believes that with the right help anyone can become a personal finance expert.  As an entrepreneur, Amy has helped coach her readers to take control of their money, learn to create profitable side hustles and begin preparing for retirement.

6 Great Reasons To Check Your Credit Report

Can’t think of a good reason to order a free (we repeat: free) copy of your credit report? No worries, we’ve got six.

Our world is filled with unsolved mysteries. What happened to Roanoke? Who built Stonehenge? How many licks does it take to get to the center of a Tootsie Pop?

But some information can be known and should be known. For example, the information in your credit report. And unlike those other mysteries, this one is pretty easy to solve.

“It is important to check your credit report from all three major credit bureaus (Experian, Equifax, TransUnion) at least once every 12 months,” urged Audrey Washington, founder and CEO of Fiercely Financial Coaching (@FiercelyFinance). “You can obtain a free copy of your credit history from AnnualCreditReport.com. This service was established by the federal government in response to identity theft.”

There are a few other ways to get your credit report, but it’s important to be careful that you aren’t scammed. And if you’re still not convinced, here are seven reasons you should check your credit report!


1. Because your credit score depends on it.

Your credit score is a three-digit number determined by the information in your credit report. That number is very important since it will determine if you can get a loan and more.

“Since everything from loan and credit card applications, interest rates, getting hired by a new employer, car and homeowner’s insurance premiums, apartment applications, utility deposits, and cell phone plan services are based to one extent or another on your credit rating, and since your credit rating is based 100 percent. on the information on your credit report, you want to make sure that the information on your credit report is both accurate and up-to-date,” advised Todd Christensen, education manager for Money Fit by DRS, Inc. (@MoneyFitbyDRS).

2. To correct errors.

You know what would be really unfair? If the three major credit bureaus, who will track your credit-worthiness whether you ask them to or not, made frequent errors when compiling your credit report. Sadly, this unfair scenario we’ve just described is also our reality! That’s why it’s important to check your credit report for errors.

“The last thing you want on your credit score is an error that goes unnoticed,” advised Kelan Kline of The Savvy Couple (@TheSavvyCouple). “It’s important to check often and keep track of your credit score to prevent your score from dropping.”

And what might those errors be?

“Your credit report helps you identify errors and/or outdated claims that negatively affect your credit score,” explained Jory McEachern, Operations Manager at ScoreShuttle (@scoreshuttle). “Such errors can contain minor name spelling errors or major collections that you’ve already paid off in previous years.”

3. To spot identity theft.

Some errors on your credit report are actual errors. Other errors are due to stolen identities.

“The biggest concern when checking your credit report should be to ensure that no one is opening or using credit accounts in your name,” recommended Christensen. “Identity theft can cost thousands of dollars to correct and take a couple of years to work through, so the earlier you spot any such troubles, the better.”

And you may not be the only one at risk.

“Parents should also contact the three major credit bureaus on how they can check to see if anyone is using their children’s social security numbers for credit,” advised Washington.

4. You’re applying for a job.

A potential employer may perform a credit check on you, especially if the job you’re applying for is in the financial realm. You should know what’s on it before they do.

“If you are in the job market and you suspect your employer will be running a credit check, prepare by taking a look,” suggested Nathalie Noisette, owner of Credit Conversion (@credconversion).

“You want to preempt any possible reason the employer will deny you the job. Some employers will keep you in the candidate pool if your credit is not stellar, but you offer an explanation as to why your credit isn’t in great shape.”

5. You made or are making a big purchase.

It’s always good to know your financial situation when you’re making a big purchase, but it’s particularly important if you’re going to be making a purchase that could require interest payments.

“If you are considering a major purchase, you definitely want to check your credit report,” urged real estate professional Chantay Bridges. “Your score can affect your interest rate for a large number of years, especially on a purchase such as real estate or an automobile.

“You want to make certain everything is intact before you sign on the dotted line. In addition, you could be rejected based on something that’s there, so you want to have a chance to clear it up ahead of time, especially lates, tardies, or delinquents that are not yours.”

6. Because the possibility exists, so why not take advantage of it?

You get at least one free chance to check out your credit report each year. Why throw that away? And there are other services to consider as well.

“Many credit card companies, credit score apps, and websites offer free credit score monitoring so taking advantage of them is a no brainer,” Kline outlined. “Keeping an eye on your credit score not only protects you but ensures you are moving in the right direction with improving your overall credit score.”

Hopefully, that’s enough reasons to check your credit score. Still not convinced? Well then here’s one more: ‘Cause we think it’d be pretty cool. To learn more about how your credit score works—and how you can improve it—check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN | Instagram


Contributors

Chantay Bridges is America’s leading mogul, who utilizes her gifts and abilities in outreach to her community and world around her. She is an exceptional Realtor, (translation: the one you want to hire), Author, Speaker and a keen philanthropist with a strong business acumen.
Author and Accredited Financial Counselor®, Todd R. Christensen, MIM, MA, is Education Manager at Money Fit by DRS, Inc. (@MoneyFitbyDRS), a nationwide nonprofit financial wellness and credit counseling agency. Todd develops educational programs and produces materials that teach personal financial skills and responsibilities to all ages. Having facilitated nearly two thousand workshops since 2004 on the fundamentals of effective money management, he based his first book, Everyday Money for Everyday People (2014), on the discussions, tips, stories and ideas shared by the tens of thousands of individuals and couples in attendance.
Kelan and Brittany Kline aka The Savvy Couple are two thriving millennials that are daring to live differently. They started their personal finance blog in September 2016 to help others get money $avvy so they can live a frugal and free lifestyle. Brittany is a full-time 4th-grade teacher and Kelan runs The Savvy Couple full-time and works as a digital marketer. You can follow them here: FacebookTwitterPinterest, and Instagram.
As a credit specialist at ScoreShuttle (@scoreshuttle), Jory McEachern helps individuals reach their ideal credit score so that they can qualify for all the important things in life. With ScoreShuttle’s online first-of-its-kind technology, members receive the most current updates and tips and advice on how to boost their score, fast.
Nathalie Noisette is the Founder of Credit Conversion (@credconversion), a credit counseling, and repair company located in Avon, MA. Credit Conversion uses principles of behavioral change to not only allow clients to improve their score but understand the habits that lend to poor credit.
Audrey Washington, Founder/CEO of Fiercely Financial Coaching (@FiercelyFinance) has been an entrepreneur since 2005 and is a personal finance coach, educator, and speaker. She is the author of the book Transform Your Money Mindset – Simple Steps for Financial Fitness. Her signature programs are Workplace Financial Fitness,  financial education for employees; Financial Fitness Boot Camp; and Debt Free Boot Camp. She is also an affordable housing/community development consultant. She is a certified Financial Capability Coach, Homeownership Counselor, Homebuyer Educator, and Foreclosure/Default Counselor. Audrey teaches Personal Financial Management at Monroe College and is a Life Member of the National Council of Negro Women. She enjoys the beach, reading, baking and time with family and friends.

Do No Credit Check Loans Show up on Your Credit Report?

With traditional lenders, reporting payment information to the credit bureaus is a two-way street. But with no credit check lenders? Not so much.

No credit check loans aren’t known for offering lots of fancy perks. They’re a way to get you the cash you need when you need it: ASAP. But are these loans so no-frills that they don’t even end up on your credit report? And is that a good or a bad thing?


How do no credit check loans work?

If you have good credit, you can easily get a personal loan from a bank, credit union, or another traditional personal lender. But if you have bad credit, your options are going to be more limited.

For one thing, traditional lenders will run a hard credit check when they evaluate your application. And those hard checks will actually ding your score. And while the damage is small and temporary, it’s still the last thing someone with bad credit needs—especially when they’re going to get denied anyway!

That’s where no credit check loans come in. These are smaller loans—both online loans and cash loans from brick and mortar lenders—designed to provide emergency bridge financing for people with bad credit. And just like the name suggests, no credit check loans will not involve a hard check being run on your credit history.

There are three main kinds of no credit check loans. The first is payday loans—also known as cash advances. These are small-dollar loans with very short repayment terms and extremely high interest rates. A typical two-week payday loan with a 15 percent interest rate has an APR of almost 400 percent!

Title loans are also common, but, unlike payday loans, these products are secured by collateral—namely, the title to the borrower’s car or truck. You can generally borrow more money with a title loan than you can with a payday cash advance, but you’ll still encounter APRs averaging around 300 percent!

Lastly, there are bad credit installment loans, which are structured more like traditional loans. Unlike payday and title loans, which you pay off in a single lump sum, installment loans are paid off in a series of set, regular payments over a period of months or years, not weeks.

How does credit reporting work?

Your credit score is based on information in your credit reports. These are documents that track your history as a user of credit. Generally, the information stays on your credit reports for seven years, but some information sticks around for longer.

You have three different credit reports, one each from the three different credit bureaus: Experian, TransUnion, and Equifax. And those credit bureaus rely on businesses like lenders, landlords, and debt collection companies reporting information to them in the first place.

Some businesses only report to one or two of the credit bureaus, not to all three. This is why information can vary across your reports, and why a credit score created from, say, your Experian report could be higher or lower than a score created from your TransUnion report.

Credit reporting is a two-way street. Businesses that check consumers’ credit scores rely on the credit bureaus to provide them accurate scores and credit histories, while the bureaus rely on these same businesses to report this very same information.

No credit check loans don’t show up on your report.

With no credit check lenders, however, there is no two-way street. In most cases, there isn’t even a one-way street. No credit check lenders don’t rely on the credit bureaus, and they don’t report to them either.

Case closed, right? Actually, no. Not quite yet.

There’s one big exception.

While no credit check lenders don’t report payment information to the credit bureaus, debt collectors most certainly do. And if you end up defaulting on your no credit check loan, the odds that the debt gets sold to a collection agency are pretty good.

If that happens, and the debt collector reports your account to the credit bureaus, your score is going to take a big hit. This is one of the annoying things about no credit check loans: You don’t get the bump from paying one off on time, but you do get dinged for failing to make your payments.

Consider a soft credit check loan instead.

There is an alternative to choosing no credit check loans when you’re in need of some quick cash: You could apply for a bad credit loan that performs a “soft” credit check instead. Unlike hard checks, soft checks don’t end up on your credit report and don’t affect your score.

What’s more, a soft credit check lets you know that the lender is taking your ability to repay into account, making it less likely that you’ll borrow more than you can repay and end up either defaulting entirely or stuck in a dangerous, costly cycle of debt.

Even more than finding a lender who performs a soft credit check, you should focus on a lender that checks your ability to repay—whether that’s a soft check, an income verification, or another type of underwriting process. Anything is preferable to no check at all.

Some of these soft credit check lenders even report your payment information to the credit bureaus! So if you make your payments on time, that information will go on your report and can help you build a better credit history!

To learn more about how you can improve your financial situation, check out these other articles from OppLoans:

Do you have a personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN |Instagram

If You Have Bad Credit, Watch out for These 5 Predatory Loan Warning Signs

High interest rates and short repayment terms are a good start, but you should also find a lender that checks your ability to repay!

Bad credit loans can be a great tool to help people bridge unforeseen financial gaps, but the wrong loan can leave you trapped in a bad cycle of high-interest debt. In order to avoid predatory lenders, here are five warning signs that you should use to sort out the good loans from the not-so-good.


1. Ridiculously high APRs.

When you have bad credit, you’re shut out from borrowing at traditional lending institutions. And the kinds of loans you will be able to get approved for are going to carry higher interest rates due to the increased likelihood that you (and other customers) will default.

But there’s a limit. And predatory lenders charge interest rates that go way beyond it. You might not be able to tell just by looking at their stated interest charges, but some of these loans cost could be charging over 40 times what standard personal loans would charge—or even more!

We’ll cover more about the dangers of short-term bad credit loans in the next section, but we can’t talk about the sky-high high interest on these loans without mentioning them. That’s because the interest rates on short-term loans can obscure how expensive they are compared to regular loans.

Why is that? Well. your standard personal loan states its interest rates on an annual basis, while short-term loans state their rates on a weekly or monthly basis. This is why you should use a loan’s annual percentage rate, or APR, to measure its true cost.

Once you do that, the high rates of these short-term predatory loans will become clear. For instance, if you borrow a two-week payday loan with an interest charge of $20 per $100 borrowed, that 20 percent fee would seem a little high, but nothing too bad. However, that two-week loan carries an APR of 520 percent!

2. Short terms.

Then again, if you’re borrowing a two-week bad credit loan, why should you care about how much it’s costing you on an annual basis? After two weeks, you’re going to pay off the loan and free and clear … right?

Maybe not. Short-terms not only mean higher overall rates, but they also carry with them some other serious obstacles, ones that could prevent you from paying your loan off on-time. Once you’re forced to rollover or re-borrow a loan, those costs start adding up. Fast.

One of the primary issues with short-term loans is that … well …. they have such short repayment terms! What seems like an easy way to get out of debt fast turns into the opposite: A loan that becomes much too difficult to pay off.

A lot of this comes down to the size of the loan’s payments. With short-term loans, you’ll pay them all off in a single lump sum. It’s convenient, sure, but that single large payment can leave people right back where they started: After taking out a payday cash advance to bridge a financial gap, they find themselves facing a brand new gap.

Studies bear this out. According to one report from Pew Research Centers, well over 80 percent of payday loan customers didn’t have enough money in their monthly budget to cover their loan payments. And a study from the Consumer Financial Protection Bureau (CFPB) found that the average payday loan customer takes out 10 such loans every year.

When you’re looking for a bad credit loan, you should see what installment loans are available in your area. Since these loans are paid off a little bit at a time, their smaller payments might fit more easily into your budget than a short-term payday loan, title loan, or cash advance.

If you can easily make your payments without having to roll over, reborrow, or refinance, that’s a sign that you found the right bad credit loan for you. Heck, some installment lenders even report payment information to the credit bureaus, which means that paying your loan off on time can help improve your credit score!

3. They don’t check your ability to repay.

One of the appeals of no credit check loans is right there in the name: This is a lender that won’t be checking your credit. Hard credit checks will often lower a person’s score, after all, and when you’ve got lousy credit, that’s the last thing you need!

But there is a difference between not checking your credit score and not checking your ability to repay. And even if a lender isn’t doing the former, they definitely should be doing the latter. If they’re not, you should take that as a flashing red warning sign.

Even if a lender isn’t checking your credit score, there are ways that they can check your ability to afford a given loan. One thing they can do verify your income. Another way is by running a soft credit check that won’t affect your score.

Lenders that don’t do any of the things are sending a message loud and clear: That it doesn’t matter to them whether or not you can actually afford your loan. And if you have to roll over your loan or take out a new loan immediately after paying off your old one, that’s all the better for them.

Finding a company that checks your ability to repay is a great way to avoid predatory bad credit lenders. Otherwise, you could find yourself trapped in an unceasing cycle of debt, taking out loan after loan without ever getting closer to being out of debt.

4. Hidden costs or fees.

You’ll find these with bad credit and no credit check loans, but they can be even worse when it comes to products like secured credit cards and debit cards. In some cases, you could end up paying exorbitant fees simply to access money that’s already yours!

This is why it’s critical that you read the fine print before signing up for any financial product, whether that be a loan, a credit a debit card, or a lease. And if a product comes with lots of hidden fees or extra charges, then that’s a sign that this not the product for you.

5. Poor customer reviews.

One of your best resources for unbiased information on a lender or finance platform is going to be people like you. So before you sign yes on that online loan agreement, check out that company’s reviews to see what their other customers are saying!

Sites like LendingTree and Google are a great place to start, but you should go deeper than that. Visit the company’s social media pages to see what kind of experiences customers are reporting. Better yet, visit their BBB page to see a) whether they even have a BBB page, and b) what kind of rating they’ve received!

There isn’t a 100 percent surefire way to avoid predatory lenders—even if you have good credit! But heed these warning signs, and you should put yourself in a position to find the bad credit loan that works best for you.

To learn more about how you can improve your financial situation, check out these other articles from OppLoans:

Do you have a personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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20 Must-Know Terms to Boost Your Financial Literacy Vocabulary

Want to be fluent in financial literacy? Start with these 20 essential words.

Pop quiz: What does ‘creditworthiness’ mean? How about ‘principal’ or ‘credit report’?

Understanding financial terminology is an essential part of financial literacy. At first, the words might sound like a foreign language. They might be intimidating, but it’s an important language to learn—it’s how lenders, banks, and credit card companies talk about you, so study up because you want to know what they’re saying!

To begin, cover the basics. Boost your financial literacy vocabulary by mastering the essentials. Take a financial literacy lesson or two, and go from there.

Ready to get started? Here are the 20 most important terms to strengthen your financial literacy vocabulary.

Financial literacy vocabulary words

1. Annual percentage rate

Annual percentage rate, or APR, is the yearly interest rate charged on borrowed money. The rate is expressed as a percentage and indicates how much interest the borrower will pay over the course of a year.

2. Asset

An asset is any resource (tangible or intangible, owned or controlled) that holds value. In other words, assets contain value that can be converted into money. An individual, company, or country can own or control assets, which include things like cash, investments, art, technology, real estate, and intellectual property.

3. Bankruptcy

Bankruptcy is a legal status that a person or entity can enter when they’re unable to repay their debts. Bankruptcy shields borrowers from debt collection, but it requires that they sell their assets to repay the money they owe. Bankruptcy carries significant financial consequences.

4. Budget

A budget is a plan for using income to meet financial obligations. It tracks how much income a person receives and details how that money will be allocated to pay for expenses, build savings, and meet financial goals.

5. Comparison shopping

Comparison shopping is a strategy that consumers can use to save money on purchases. It consists of comparing the prices of similar products to determine which is least expensive.

6. Credit

Credit is a financial arrangement in which money is borrowed for a purchase and paid back at a later date. It allows consumers to make purchases that they wouldn’t be able to afford if they had to pay the full price in one installment. By spreading the cost over time, credit enables borrowers to make big-ticket purchases such as homes and vehicles. Common forms of credit include loans and credit cards.

7. Credit report

A credit report is a record of a borrower’s credit history. It is produced by the credit bureaus and typically consists of four sections: personal information, financial account history, history of credit applications, and public records. The information in a credit report is used to calculate a consumer’s credit score, which is one of the primary factors that lenders consider when evaluating a credit application.

8. Credit score

A credit score is a three-digit number that represents how likely a borrower is to repay a debt. It is calculated based on the information in a borrower’s credit report and ranges from 300 to 850. Borrowers with higher scores are viewed as more likely to repay debt obligations and are thus more likely to be approved for credit and receive lower interest rates.

9. Creditworthiness

Creditworthiness is a term that refers to how much confidence a lender can have in a borrower’s ability to repay a loan. Creditworthiness is primarily determined by how well a borrower has managed previous debt obligations.

10. Debit card

Unlike a credit card, a debit card immediately withdraws funds from the user’s bank account. Debit cards are less likely to contribute to excessive debt than credit cards, but users face fees if they overdraw their account.

11. Debt

Debt is the money that a borrower owes to a lender. It can be accrued through any form of borrowing—credit cards, mortgages, personal loans, and auto loans among others.

12. Default

Default occurs when a borrower is unable to meet the obligation of debt repayment. Default is the second and more serious stage of nonpayment that follows the stage of delinquency. Once a loan enters default, the lender typically reports it to the credit bureaus and sells the debt to a collection agency.

13. Diversification

A core principle of investing, diversification spreads investments over different assets with varied risk potential. Diversification is a strategy to reduce the overall risk of loss.

14. Emergency fund

An emergency fund is money set aside for big, unexpected expenses such as job loss or large medical bills. It provides a financial buffer that shields against accruing unwanted debt.

15. Income

Income is money received through sources such as employment, investments, or business transactions. There are two ways to measure income: gross income and net income. Gross income is the total amount that’s earned before expenses, taxes, and other costs. Net income is what remains after these expenses are deducted.

16. Interest

Interest is the percentage of a loan principal that lenders charge borrowers. There are two primary kinds of interest: simple interest and compound interest. Simple interest is calculated exclusively on the initial amount of money borrowed, while compound interest is calculated based on the loan principal plus the interest that accumulates each period.

17. Need vs. want

One of the most basic concepts of personal finance is being able to differentiate between needs and wants. A “need” is defined as an essential expense, such as food or housing. A “want” is an expense that would be nice to have but isn’t essential, such as designer clothing.

18. Pay yourself first

Pay yourself first, or PYF, is a strategy in which saving is prioritized and made an essential cost in a budget. Typically, in PYF a certain percentage of income is deposited in a savings account each month. Just as other “needs” such as rent and food are essential, so is saving, and only once those “need” expenses are covered can money be used for “want” purchases.

19. Principal

Principal is the amount of money due on a loan before interest.

20. Time value of money

Time value of money, or TVM, is the concept that money available now is worth more than an identical amount in the future. This is because money that’s invested has the potential to grow, and the longer that it’s invested, the more it will appreciate. Money that’s acquired later has less time to grow through investments, and is thus considered less valuable.

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What terms would you include in a financial literacy guide? Let us know over on Twitter at @OppUniversity.