Credit is a method of borrowing that enable you to buy something now and pay for it later. For example, if you make a purchase with a credit card or take out another type of line of credit, you’re required to pay that money back in the future. With almost all forms of credit, the borrower has to pay back more than they were originally lent. Generally, they do this by paying interest on the amount borrowed.

What is credit?

Credit is a type of borrowing — with most forms of credit, the borrower has to pay back the lender more than they originally borrowed. This ensures that offering credit is profitable for the lender. Generally, the cost of borrowing comes in the form of interest that the lender charges on the amount borrowed.[1]

Credit can be extended to individuals, businesses and governments. Since the rules that govern credit can be very different for governments and businesses, this glossary page will focus primarily on personal credit.

How does credit work?

The three most common forms of credit are loans, lines of credit and open accounts.[2] Loans involve a lump sum of money that is issued to borrow, while lines of credit involve a pre-determined credit limit that the borrower is able to borrow up to.

Open accounts are used for utilities like electricity, gas and cable. With an open account, there is a balance every month that has to be paid in full. Because the accounts have to be paid off in full and cannot be extended past the due date, there is no interest. The cost of lending is included in the amount that is charged. Charge cards also use an open account model.

A person’s ability to borrow money will often rely on their credit score, which states how likely they are to meet their credit obligations based on past behavior. Many lenders report payment (and nonpayment or late payment) to credit bureaus, which are businesses that track a person’s history of credit usage and put it all into a document called a “credit report“. Credit scores are based off of the information in a person’s credit report, so failure to repay or consistently being late on payments could cause your credit score to suffer. This would then affect the kinds of credit and interest rates that you are able to qualify for in the future.

What is interest?

Interest is an amount of money that the borrower pays the lender beyond the original amount borrowed. It is the cost the people pay for the privilege of borrowing money.

However, Interest is different from a normal flat fee. More specifically, interest is a percentage of the amount borrowed that is charged over a certain period of time. [3] For instance, a loan could have a monthly interest rate of 1%. This means that, for every $100 that’s borrowed, the borrower owes $1 every month until the loan is repaid. Now, this interest rate could also be expressed as a 12% annual interest rate, because getting charged 1% per month for 12 months would come out to 12% per year.

When taking out a loan or line of credit, it is always a good idea to check the interest rate. However, it’s also a good idea to find out the loan’s annual percentage rate, or APR. The APR for a loan or line of credit includes not just the interest rate, but also any additional fees that the lender is charging. It will give you a better idea of the loan’s actual cost.

What is secured and unsecured credit?

Some credit is secured by collateral, which is a term for any valuable asset that the lender can claim if the borrower does not repay their loan or line of credit. Common forms of collateral are houses, real estate and motor vehicles. Many larger loans and lines of credit are secured by collateral to protect lenders against the risk that the borrower will not repay. Using collateral also allows lenders to charge lower interest rates for these loans. Credit that is backed by collateral is called “secured credit”.

There are also forms of credit that are not secured by collateral. These loans and lines of credit typically have higher interest rates as they are a bigger risk for the lender. Because the lenders cannot count on the collateral in the event of nonpayment, the lenders rely on a person’s credit score to determine whether or not they can repay the loan. Credit that is not backed by collateral is called “unsecured credit”.

How does a loan work?

With a loan, the borrower is given an amount of money that they then pay back over time plus fees and interest. The amount that they are lent is called “the principal”. Loans usually come with a specified term, or period of time, over which the loan is to be repaid. For instance, a loan with a six-month term would be paid in full within six months, whereas a loan with a 12-month term would be repaid within a year.

Common kinds of loans include mortgages, auto loans, personal installment loans, payday loans and small business loans.

What is an installment loan?

An installment loan is a loan that comes with a schedule of regular payments through which the loan is repaid over a set period of time. Each payment that is made goes towards paying off both the interest and the principal. The first payments that are made go primarily towards the interest, with each payment paying more and more towards the principal. This process of paying off the interest and the principal according to set schedule us called “amortization”.

Some loans do not come with regularly scheduled payments. These loans simply have a due date, by which time the loan is to be repaid in full. Many of these loans have much shorter terms than installment loans. For instance, payday loans have an average term of just two weeks.

What is a line of credit?

With a line of credit, a person is given a maximum amount that they can borrow, called a credit limit. A borrower is not given any money up front with a line of credit, rather they receive a limit and they are permitted to borrow as much or as little as they care to up to that limit.[4] Though they are allowed to borrow up to the limit, they are not required to.

With lines of credit, a person only has to pay back what they borrow. Plus, they are only charged fees or interest on what they borrow, not on the maximum credit limit. Unlike loans, which usually come with pre-determined repayment periods and payment amounts, lines of credit have repayment periods and payment amounts that vary depending on how much has been borrowed.

With a standard line of credit, the amount of funds available does not replenish when the borrower pays off what’s already been borrowed. For instance, if a line of credit has a $5,000 limit, and a person borrows $1,000, they would only have $4,000 left that they could borrow even if they paid that $1,000 off.

A revolving line of credit works differently. In a revolving line of credit, the borrowing limit replenishes when the borrower makes payments on what they’ve already borrowed. In the previous example, if the borrower made a $500 payment on the $1,000 that they owed, they would then have $4,500 that they could borrow against the $5,000 limit.

Most credit cards are revolving lines of credit. Home equity lines of credit are lines that are secured by the value of the borrower’s home.

What are different kinds of lenders?

Banks are the most traditional kind of lender. In addition to offering checking and savings accounts (as well as investment opportunities), banks issue many different kinds of loans, including personal loans, mortgages and auto loans. Banks are generally seen as very conservative lenders, which means that a high credit score and a regular income are needed in order to get a loan from a bank. Customers with poor credit histories are unlikely to be approved for a bank loan.

Credit unions are another kind of lender. They operate much like a bank in many ways, with a few key differences. Credit unions are non-profit, member-based institutions. Whereas banks will do business with anyone who is deemed credit-worthy, credit unions have additional criteria for membership. Membership in a credit union might depend on where you live or work, what church you attend or what civic groups you belong to.

Because credit unions are not-for-profit, they turn any profits they earn into benefits for their members. This means that a loan from a credit union will likely come with lower interest rates than a loan from a bank. Many credit unions also offer small-dollar loans that can serve as an alternative to costly payday loans. However, all of their loans are only available to members of the credit union.

There are some lenders that specialize in only one kind of loan. This is most common with mortgages and auto loans. Some of these lenders are associated with other businesses. For instance, an auto lender might work together with a car dealership to secure financing for their customers. Some of these lenders are actually brokers. This means that they arrange the loans and collect a fee, while financing is secured by a separate lending institution. Brokers are very common when it comes to mortgage loans.

There are also peer-to-peer lenders that facilitate loans between private individuals. They pair people who are looking to make an investment through lending money with people who are in need of a loan. The advantage for the investors is that they can earn more from these loans than they could from more traditional investments. The advantage for borrowers is that peer-to-peer lenders will often extend credit to borrowers who would not qualify for a loan from a traditional lender. However, due to this increased risk, peer-to-peer loans often come with higher interest rates than traditional loans.

There are some lenders, like OppLoans, that lend entirely online. It is rare for traditional lenders like banks or even credit unions to lend solely online; many of them still require that their borrowers come and visit a local branch in person. Online lending allows for increased speed and convenience in securing a loan. However, it’s a good idea to do lots of research when taking out a loan online, as there are many online lenders that are considered predatory.

What are predatory lenders?

Predatory lenders are lenders that take advantage of people in desperate circumstances. They target low-income communities where people have meager savings and not-so-great credit scores. Because these are people that have fewer options when securing a loan, predatory lenders can charge incredibly high interest rates. Oftentimes, the APRs for predatory loans can be 300% or higher.

The two most common types of predatory lenders are payday and title lenders. Payday lenders offer short-term, small-dollar loans with high interest rates that can come out to an APR of 400% or higher.[5] Title lenders offer larger loans that use the borrower’s motor vehicle as collateral. Their average APR is 300%.[6]

Predatory loans can trap borrowers in a cycle of debt. This happens when a person cannot afford to repay their loan on time and the lender offers to “rollover” the loan, extending the due date in return for charging additional fees and interest.[7] When the person cannot afford to pay the additional costs of the loan, the lender offers to rollover the loan again, which means even more fees. Eventually, the person owes far more than they could ever hope to repay. In many instances, they will have their wages garnished in order to pay back what they owe.

Payday and title loans are illegal in some states, but there are many states where they are still permitted. Additionally, there are many predatory mortgage and auto lenders that offer dangerous loans to customers with low credit scores.

What is a Credit Score?

A credit score is a three digit number that measures a person’s credit-worthiness. The most common kind of credit score is a FICO score, which was created by the Fair, Isaac Company in 1989. The FICO score is so common that “credit score” and “FICO score” are often used interchangeably.

A FICO score is based on a scale from 300 to 850. The higher the score, the more credit-worthy a person is deemed.  A person’s credit score is based off of the information in their credit report.

What is a Credit Report?

A credit report is a document that tracks a person’s use of credit over the past seven years. These profiles are created and compiled by the three major credit bureaus: Experian, TransUnion, and Equifax. The companies gather information from businesses like lenders, collections agencies, and landlords, as well as from the public record.

The reports contain information such as how much credit a person has taken out, what different kinds of credit they’ve used, whether or not a person paid their bills on time, whether they have any outstanding collections against them, and whether or not they have filed for bankruptcy.

By law, the credit bureaus are required to provide people with one free copy of their credit report per year upon request. To request a free copy of your credit report, visit Credit reports can and do have errors in them. If you find an error in your credit report, please read this helpful guide from the Consumer Financial Protection Bureau.

How does a FICO Credit Score work?

FICO credit scores not only include information from your credit history, but they also weigh some factors more heavily than others. The scores are weighted like so:

Payment history is 35%. Have you paid your bills on time and in full? If you haven’t, this could have a major effect on lowering your credit score.

Amounts owed are 30%. People who have a lot of debt relative to their income are going to have lower credit scores.

Length of credit history is 15%. The longer you have been responsibly using credit, the better.

Credit mix is 10%. Do you have a mix of student debt, mortgage debt and credit card debt? Or does the majority of your debt originate from one source? For instance, a heavy amount of credit card debt could be a sign of poor credit use.

New credit inquiries are 10%. Have you made other recent credit inquiries? If your record shows that you have been trying to take out a lot of different loans or credit cards in recent months, lenders might take it as a sign that your finances are in trouble.[8]

What does my FICO credit score mean?

FICO credit scores are based on a scale between 300 and 850. The higher a person’s credit score is, the better their credit. Here are the basic ranges:

720-850 – Great Credit. People with credit scores in this range are able to score better loans that come with lower interest rates and more favorable terms. There are very few loans for which they will not qualify.

680-719 – Good Credit. People with credit scores in this range will qualify for most loans. They might have to pay slightly higher interest rates, but the terms in general are still going to be favorable.

630-679 – Fair Credit. People with credit scores in this range are definitely going to have to pay more in order to borrow and there are many larger loans that they either will not qualify for, or will be too expensive for them to afford.

550-629 – Subprime Credit. People with scores in this range have trouble getting approved for a majority of loans. When they do get approved, the loans are oftentimes going to be very expensive. People with scores in this range should be on the lookout for predatory lenders.

300-549 – Poor Credit. People with credit scores under 550 are going to have trouble securing any loans at all. The only loans they will qualify for are going to be dangerous, high-interest payday and title loans that don’t require a credit check. It is important for people with scores in this range to avoid predatory lenders and to work to improve their credit rating.

Where can I find my credit score?

It is important that you know your credit score, as it has a massive impact on your ability to borrow money. To obtain a free copy of your credit score, you can always sign up for a website such as or These websites are free, but you will also be signing up for a lot of emails and advertisements if you join them. You can also sign up for a paid account with any of the credit bureaus or with FICO.

How can I improve my credit score?

There is only one real solution to improving your credit score, and that is by making responsible financial decisions moving forward. Paying bills on time, budgeting, making a plan to consolidate and/or pay down debt and not relying on credit to finance everyday expenses; these are all behaviors that can lead to an improved credit score. Remember, a person’s credit score only goes back seven years, which means that poor decisions from the past can fall off your credit report and be replaced by better decisions.

Unfortunately, this solution is going to take some time. There is no quick fix to improving your credit score. For this reason, you should be wary of companies that you see advertising credit repair services.

What If I have too much debt?

People who have more debt than they can afford would do well to try a credit-counseling service. These are not-for-profit companies that can help with financial and budgeting advice. They can also negotiate with a person’s creditors in order to secure lower interest rates or amounts owed.[9]

If the creditors agree to these new terms, the credit counseling agency can execute a Debt Management Plan (DMP). This is an agreement between all parties that lays out the new terms under which the debts are to be repaid. DMPs should not negatively affect a person’s credit score.

To find a list of HUD-approved credit counseling services, check out the US Department of Housing and Urban Development’s website. Avoid credit counseling agencies that are not HUD-approved. It is also best to avoid debt settlement companies. These provide a similar service to credit counseling agencies, but they are for-profit, run a higher risk of damaging a person’s finances, and are far more likely to take advantage of their customers.

People with too much debt who have no other options can also file for bankruptcy. This is a legal procedure wherein a plan is made to settle their outstanding debts. Bankruptcies, as previously mentioned, can have a very negative affect on a person’s credit score. However, sometimes getting out from under a burden of debt is worth the hit.


  1. “Credit.” Investopedia. Accessed April 21, 2016.
  2. Goldstein, Mike. “Types of Credit and Their Influence on Your Score.” July 11, 2014. Accessed April 22, 2016.
  3. “Interest.” Investopedia. Accessed April 21, 2016.
  4. “What are the differences between revolving credit and a line of credit?” Investopedia. Accessed April 21, 2016.
  5. “How Payday Loans Work.” PayDay Loan Consumer Information. Consumer Federation of America. Accessed April 22, 2016.
  6. “Driven to Disaster: Car-Title Lending and Its Impact on Consumers.” Center for Responsible Lending. February 28, 2013. Accessed April 22, 2016
  7. “What does it mean to renew or roll over a payday loan?”  Consumer Financial Protection Bureau. Accessed April 22, 2016.
  8. “What’s in my FICO Scores?” Accessed March 15, 2016.
  9. Choosing a Credit Counselor.” Consumer Information. Federal Trade Commission. Accessed April 22, 2016.

Your OppLoans Road Map to Personal Loans: The Dangers of the Road (Part 2 of 3)

Road Map v5

So you’re ready to hit the road and find the best personal loan for you. But are you prepared for the potholes, hazards and detours that may await you on your journey? You’ll save time, money and energy if you know what to watch out for before you set out on your personal loan road trip.
There are many types of personal loans out there to choose from and they all offer different rates, terms and conditions. And there are many lenders who will take advantage of you by trapping you in a cycle of debt. Think of them as those shady mechanics telling you your car needs a brand new engine even though you’re really just low on, say, windshield washer fluid.

Here are the hazards to watch out for on your journey through the world of personal loans:

High interest rates

Getting a loan with interest rates you can’t afford is like planning a three-month Appalachian Trail hike even though you get winded just looking at a flight of stairs. It’s just not good common sense. And unfortunately, there are a lot of personal loans out there with very high interest rates. One way to avoid this is to have a good credit score, because a good credit score shows lenders that you’re trustworthy and likely to repay the loan on time. The better your score, the lower your interest rate (read more in What You Should Know About Interest Rates).

But what if you don’t have a credit score? If your credit score is your car, a brand new Audi will get you to your destination faster than a 1988 Ford Tempo. But not everyone can go out and get a brand new Audi. They’ll have to save up for one.

And the same is true for your credit score. There are no easy fixes. Paying your bills on time, only taking on as much debt as you can handle and paying off any outstanding balances you have as quickly as possible are the best ways to improve your credit score. But it will still take time.

For people who already have a good credit score, remember that you can definitely qualify for lower interest rates on homes, auto loans, personal loans and more. For people whose credit scores are not-so-good, remember that a better score is within your grasp.

Paying off a loan on time is a great way to raise your credit score. And having a good credit score is definitely worth it. In the long run, it will mean that you’re saving money. Someday, you might even be able to afford a real Audi.

Unnecessary fees and penalties

You’re cruising along the highway, then BAM! You get a flat tire. That jolt of adrenaline and fear is exactly what it feels like when you discover some hidden fees on your personal loan.

Make sure you read the fine print so you know exactly what you’ll be charged and why. For instance, some lenders will charge you simply for paying off your loan early. They call this a prepayment penalty.

But shouldn’t it be a good thing to pay off a debt early? It’s good for you, but probably means less money for the lender. Other fees to watch out for are application and origination fees. But you can avoid all of these hazards all together by going a different route…

Payday loans

These are the number one personal loans to avoid. Payday lenders are dangerous hitchhikers on your personal loan journey. They may promise some gas money, but that doesn’t mean that picking one up is a good idea. With payday lenders, their intentions are quite clear: make money off of borrowers through unfair, costly loans.

Getting a payday loan usually involves writing a post-dated check for the amount you’re borrowing, plus additional fees and interest. The lender will then give you cash and deposit your check on the due date to get their money back.

Usually these loans only last a couple weeks, but they come with ridiculously high interest rates that make them difficult to pay back. How ridiculous? Try 400% annually—or even higher! These predatory loans trap many people in a seemingly endless cycle of debt. Like picking up a hitchhiker that just won’t leave. He’s going along for the ride, and there’s nothing you can do about it.

The road to a personal loan can be a dangerous and scary place, so keep your eyes peeled out there. Knowing best practices for personal loans will help keep you safe, keep more money in your pocket and keep you on the road to your destination: financial security.

Blog Series: Your OppLoans Road Map to Personal Loans
Part 1: Getting from A to B
Part 2: The Dangers of the Road
Part 3: The Perfect Trip

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Credit Bureau

Credit Bureau
Credit bureaus are businesses that compile your credit history and calculate your credit score. They provide this information to lenders—among others—who use it to decide whether to grant you a loan.

Credit Bureau

How do Credit Bureaus work?

There are three main credit bureaus in the United States: Experian, TransUnion, and Equifax. They gather your financial information to create your credit report. The information in your credit report dates back seven years and paints a thorough picture of your finances, debt, and payment behavior. The credit bureaus use this information to calculate your credit score, which is also known as a FICO score.

Credit bureaus provide your credit report and credit score upon request to lenders, landlords, employers, and insurance companies, among others. (Basically, anybody with a “permissible purpose” can obtain your credit report.1) Your credit report and score can be sought by many different businesses and used for many different reasons. Lenders might use them to decide whether you receive a loan, an insurance company might use them to determine the rate you pay, and a landlord might use them to decide whether or not to rent to you.

You can view what’s in your report by obtaining a free credit report, which you are entitled to do once a year from each of the three credit bureaus.

Credit bureaus are also known as “credit reporting agencies,” or CRAs.

What kind of information do Credit Bureaus collect?

Credit bureaus collect four basic categories of information:

Identity: Your name, age, address, employment, and social security number.

Credit: This consists of information about your past and present loans and credit cards. Credit bureaus collect information like the loan amounts, how much of the credit limit you used, and whether you regularly made payments.

Public record: Any bankruptcies, tax liens, or court judgments you might have.

Inquiries: How many times other lenders and credit card companies, among others, have checked your credit report. If they’ve checked it a lot, it probably means you’ve applied for and been denied credit a number of times, and this can lower your credit score by a few points.2

How do Credit Bureaus calculate my credit score?

Credit Bureaus use the information in your credit report to calculate your credit score. Your credit score is a number between 300 and 850, and the higher it is, the better your credit.

Credit bureaus look at a number of factors to determine your score. Here’s how the FICO score breaks down:

Payment history: This counts for 35 percent of your score. It’s very important to lenders (and others) that you have a history of making payments on time.

Amounts owed: This counts for 30 percent of your score. Owing too much on your loans will negatively affect your score.

Length of credit history: This counts for 15 percent of your score. In general, a longer history of using credit is good. However, a longer history of using credit irresponsibly will lower your score.

Credit mix: This counts for 10 percent of your score. Your credit mix takes into consideration the different kinds of loans and credit accounts you’re currently using.

New credit: This counts for 10 percent of your score. If you have a number of recent credit inquiries, a lender might see that as a potential risk.3

Do Credit Bureaus determine whether or not I get a loan?

No. They do not. The ultimate decision is up to the businesses that request your credit report. Credit bureaus do not decide whether you are going to get a loan, rent an apartment, or be offered a new job. All they do is compile and distribute your credit report and score.

Do I have to pay a Credit Bureau to receive a copy of my credit report?

No. All three credit bureaus are required by law to provide one free credit report per person on an annual basis. This means that you can get three free credit reports every calendar year. To get a free copy of your credit report, visit

Are Credit Bureaus government agencies? Are Credit Bureaus nonprofits?

No. Credit bureaus are not operated by the government and they are not nonprofits. They are private companies that make money by analyzing and selling data. They offer four main products:

Credit services: Credit bureaus sell your credit report to lenders and other businesses that request it. Typically, any application fee you pay—say, when you apply to rent an apartment—is intended to cover this expense.

Decision analytics: Credit bureaus review your credit history and provide lenders with an analysis to aid them in making decisions about granting you a loan, for instance.

Marketing: Credit bureaus sell credit reports to lenders who make pre-approved offers (like a pre-approved credit card, for instance) and want to review them.

Consumer services: Credit bureaus offer consumer services like credit monitoring, identity theft protection, and fraud prevention.4

How often Credit Bureaus update information in credit reports?

Credit bureaus update the information in your credit report continuously. New information—if there is any—may be added multiple times a day.5

Where can I file a complaint about a Credit Bureau?

You can file a complaint about a credit bureau with the Consumer Financial Protection Bureau.

If you find errors on your credit report, you can correct them by writing a letter to the credit bureau that produced it as well as the business (your lender, for instance) that provided the inaccurate information. Use a sample dispute letter and follow the instructions that the government provides on how to dispute errors.

Bottom Line

Credit bureaus play a critical role in the consumer credit system. The information they collect can have a huge impact on your life—whether you receive a loan, what interest rates you pay, and whether a landlord decides to rent to you, for instance. Request a free credit report so you know what’s in your credit report and what information is being shared about you.


1 “Who Can See My Equifax Credit Report?” Equifax, Accessed 15 March 2017.

2 Lee, Jenna. “The Difference Between Hard and Soft Credit Inquiries.” U.S. News Money, 24 July 2014, Accessed 15 March 2017.

3 “What’s In My FICO Scores?”, Accessed 15 March 2017.

4 “How Do Credit Bureaus Make Money?” Investopedia, 28 Oct. 2014, Accessed 15 March 2017.

5 “Credit Information Is Updated Continuously.” Experian, 15 July 2016, Accessed 15 March 2017.

Bad Credit

Bad Credit
“Bad credit” means a borrower has a low credit score. Any score between 300 and 630 is generally considered bad. Late payments, bankruptcy, and maxing out a credit card can all contribute to a lower credit score, and bad credit.

What is Bad Credit?

Bad credit is simply a description of a borrower’s credit score. There is no hard-and-fast point at which bad credit occurs, but generally, credit is considered bad if a borrower’s score falls between 300 and 630. The most common type of credit score is called a FICO score, after the Fair Isaac Corporation. FICO scores range from 300 to 850, and the lower the score, the worse a borrower’s credit1.

FICO Score Range

FICO RangeQuality
720-850Great Credit
680-719Good Credit
630-679Fair Credit
550-629Subprime Credit
300-549Poor Credit

How did I get Bad Credit?

A low credit score—and bad credit—are determined by a mix of factors: payment history, outstanding debt, credit history length, and types of credit used, for instance. Financial troubles like delinquency, default, bankruptcy, and a history of maxing out credit cards can all contribute to a lower credit score.2 Credit bureaus compile this information and use it to create a borrower’s credit report, which is the basis for calculating credit score and whether the borrower has bad credit.

Who fixes Bad Credit?

Ultimately, the only person who can fix bad credit is the borrower who has it, and the process isn’t quick. The best way to do it is for borrowers to improve their financial habits: make payments on time, reduce outstanding debt, stop borrowing until debt is paid off. has a great list of tips and advice on how borrowers can improve their credit score.3 Borrowers should remember to be patient, as repairing credit takes time.

Another option is to contact a credit counseling service. They help borrowers improve their credit by offering financial education and sometimes negotiating with creditors. But not all are reputable, and companies that promise to quickly repair a borrower’s credit are most likely scams. Working with a credit counseling service will not lower a borrower’s FICO score, but certain actions that the service might suggest—like settling debts for less than what the borrower owes—could have a negative impact, even if they’re the best course of action for the borrower to take.

When does Bad Credit expire?

The negative information that causes bad credit stays on a borrower’s credit report for seven years. It will eventually be erased, but if borrowers continue to miss payments and default, the new information will need another seven years to clear.

Ultimately, bad credit does not go away until borrowers improve their financial habits. Things like making payments on time and paying off delinquent debts will improve their credit score and contribute to good credit.

How does Bad Credit affect me?

Lenders look at credit scores when reviewing credit applications, and a borrower with bad credit is considered less likely to repay a loan. This means that borrowers with bad credit will have difficulty getting approved for loans or credit cards, and if they do, they’ll almost certainly have to pay higher interest rates.

Bad credit can have an impact on other areas of a borrower’s life as well. Types of insurance like auto insurance and homeowner’s insurance are typically more expensive for people with bad credit. Landlords also usually check the credit history of potential renters and are less likely to offer a home to those with bad credit. And cell phone carriers typically check a customer’s credit history, too, and are less likely to offer a contract to those with bad credit history.4

How do I know if I have Bad Credit?

The best way to check credit is to order a credit report. There are three nationwide companies that compile the credit history of borrowers: Equifax, Experian, and TransUnion. Each of these companies is required by law to provide a free credit report once every 12 months if a borrower requests it. allows borrowers to order a credit report from each of the three companies individually, or all three at the same time.5

Who accepts Bad Credit?

Borrowers with bad credit will have a much harder time getting approved for credit, as banks and credit unions will likely turn down loan applications. With limited options, borrowers may be more willing to accept exorbitant interest rates and inflexible terms. Lenders who try to take advantage of borrowers with bad credit are considered “predatory lenders.“

Predatory lenders—like payday loan and car title loan providers—operate online and in storefronts. These lenders offer “no credit check loans” because they don’t care—or even don’t want— the borrower to be able to repay the loan. They’d rather use rollover to walk the borrower into a cycle of debt. Borrowers are always advised to avoid predatory lenders.

Are Bad Credit loans safe?

Borrowers with bad credit should be very careful when applying for loans. Payday loans and title loans are notorious for trapping borrowers in a cycle. For borrowers with bad credit who need a loan now, a personal installment loan is likely to offer better rates and terms. Unlike payday and title loans that require a single lump-sum payment, installment loans allow borrowers to spread their payments over a period of time. OppLoans offers personal installment loans without a traditional credit check that can hurt a borrower’s credit score. Loan decisions are made quickly, and the money is delivered into a borrower’s bank account as soon as the next business day.


  1. Detweiler, Gerri. (2015, January 29). What is a Bad Credit Score? Retrieved from
  2. Langager, Chad. How is my credit score calculated? Retrieved from
  3. How to repair my credit and improve my FICO scores. Retrieved from
  4. Martucci, Brian. 7 ways a bad credit score can negatively affect you – how to track your credit score. Retrieved from
  5. FTC. Free credit reports. Retrieved from

Credit Repair: It’s time to Renovate, Remodel and Rebuild!

Does the word ‘repair’ get you excited to break out the toolkit, turn up the 80s rock and start busting through walls with a sledge hammer?

Or maybe it makes you think about all the ways to procrastinate until your house falls down and you have to move away. Any repair project can be long, strenuous and intimidating. But in the case of credit repair, it’s always better to start sooner rather than later.

Credit repair simply means fixing your credit to improve your credit score. The better your credit score, the better the interest rates banks and lenders are likely to give you, and then the more money you save. Think of it like home renovations — the better condition your home is in, the higher the resale value. And if lenders know you’re reliable, they’re more likely to give you reasonable terms on your personal loan. But if your credit score is the equivalent of a dilapidated old shack, you’ll have a tough time getting traditional bank loans. In these cases, you might be tempted by predatory lenders offering dangerous “bad credit loans” or “no credit check loans.” Many of these financial products are actually debt traps in disguise, designed to take your bad credit situation and make it much, much worse.

But fear not! No matter how bad your credit may be, there are ways to get it back into shape. And you won’t even have to break a sweat.

The first step to repairing your credit is knowing that it needs to be repaired. You might not see the mold hiding under the sink, but that doesn’t mean it’s not there. To find out, you’ll want to order a credit report. There are three companies that keep track of your credit history — Equifax, Experian and TransUnion — and they’re each required to give you one free credit report every 12 months if you request it.(1) You can request a copy at Go ahead. We can wait.

Ok great. Now that you found the mold, it’s time to get rid of it. There are a couple different ways to do this.

The safest way to repair your credit is on your own. There are many companies out there that promise to improve your credit — for a fee of course. But anything they can do, you can do yourself at little-to-no cost. Making payments on time, avoiding a maxed out credit card and reporting inaccuracies on your credit report are a few ways to improve your credit over time. The Federal Trade Commission has a great guide called Credit Repair: How to Help Yourself. This will detail the steps you can take to repair your credit without paying someone to do it for you. So strap on your tool belt, turn on the DIY channel and get to work. We also have a post on our blog, 15 Tips for Improving Bad Credit, which can help you build your credit back up.

The second way to repair your credit would be to hire a company to help you. But just like building contractors, there can be frauds. Before choosing a credit repair company, make sure you know the warning signs of a credit repair scam:

  • Insisting they receive payment before doing any work for you
  • Advising you not to contact the credit reporting companies
  • Advising you to dispute info in your credit report, even if it’s correct
  • Advising you to give false information on credit/loan applications
  • Not explaining your legal rights.(2)

Learn more about credit repair scams by visiting the FTC Credit Repair Scams page.

The important thing to remember when setting out to improve your credit score or repair your home, is that it won’t happen overnight. Be patient and work hard. Eventually you’ll start to see your credit score climb and your interest rates drop. You can’t build a house in a day — at least not a house anyone would want to live in.

If your credit is less than perfect and you need a loan, OppLoans can provide fast cash and the opportunity to improve your credit score. Our fixed-rates and longer terms make monthly payments more manageable. Let OppLoans help build your credit!

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Works Cited:

  1. “Credit Repair: How to Help Yourself” Federal Trade Commission. Accessed February 23, 2016.
  2. “Credit Repair Scams” Federal Trade Commission. Accessed February 23, 2016.


Credit Check

Credit Check
A credit check is an official review of the credit history listed in your credit report. Lenders, credit card companies, and others conduct credit checks to determine how likely you are to make payments on time.

What is a Credit Check?

A credit check—also known as a “credit inquiry”—is an official review of your credit report. Your credit report contains a range of financial information such as whether you’ve made payments on time and if you’ve defaulted on loans. Credit reports are created by the three major credit bureaus: Experian, Equifax, and Transunion. The information added to your report remains there for seven years.

Are there different kinds of Credit Checks?

Credit checks come in two varieties: hard and soft.

Hard credit checks are used by credit card companies, lenders, and landlords to determine your creditworthiness. Essentially, these people want to know if you’re going to make payments on time, and they choose whether to offer you a credit card, loan, or apartment based on what they see.

Soft credit checks are typically used by financial institutions who want to offer you a pre-approved offer. For instance, if a credit card company sees that you’re good about making payments, they may pre-approve you for a card.

Who can conduct a Credit Check?

Under law, anyone with a demonstrated need can access your credit report. If it’s requested, the credit bureaus can send your report to lenders, employers, government agencies, investors, or the courts.

Soft credit checks can be done without your permission. Hard credit checks, however, must first be authorized. A hard credit check will typically be required if you apply for a loan, credit card, or rental property.1 When you submit your application, you usually also sign an agreement that allows access to your credit report. Hard credit checks are recorded on your report, and if you have too many of them, they can lower your credit score by a few points.2

How long does a Credit Check stay on my credit report?

Both hard and soft credit checks stay on your credit report for up to two years. They are visible to anyone who views your report. Hard inquiries only have a negative impact on your credit score for 12 months.3

How can I see my credit report?

You can request a free credit report from each of the three credit bureaus once a year. What you see on your credit report is exactly what lenders and landlords will see if they conduct a credit check. If your credit report shows that you have delinquent payments or outstanding debt, it’s a good idea to take care of them as soon as you can.

Why is it important to check my credit report?

Your credit report—and the credit score that is calculated based on your credit report—play a large role in many decisions that have a big impact on your life. Based on a credit check, a lender will decide how much interest you’ll pay for a loan, and a landlord will decide whether or not to rent you an apartment.

If you don’t know what’s in your credit report, it’s a good idea to request one and address any negative information as soon as you can. Occasionally, credit reports contain errors, and if you find an inaccuracy in yours, you should take action to correct it. You can do so by following the Federal Trade Commission’s step-by-step instructions.

Bottom Line

Credit checks are used to make decisions that have a big impact on your life. Consider requesting your credit report so you know what’s in it.


1 “Who May Request my Credit Report?” Consumer Financial Protection Bureau, Accessed 30 March 2017.

2 “The Difference Between Hard and Soft Credit Inquiries.” TransUnion, 12 Dec. 2014, Accessed 30 March 2017.

3 “The Difference Between Hard and Soft Credit Inquiries.” TransUnion, 12 Dec. 2014, Accessed 30 March 2017.

A Free Credit Score is Nice, but a Free Credit Report is Better…

The Credit Bureaus may think they have your number. But do they? No one knows your payment behavior better than you, here’s how to make sure you’re being represented accurately.

If you watch TV, you’ve seen ads for credit checking services. They’re everywhere. If you added up all the “Get Your Credit Score” ads and all ads starring Peyton Manning, you’d have approximately 10,000% of all commercials on TV. Why are there so many of these services? And what’s the point of using one?

Know Your Score

A quick Googling of “free credit score” will bring up links for sites like,,, and, um, (They also give you a free credit score. What, you couldn’t figure that out from their name?)

A lot of these sites will indeed give you a free FICO credit score. When you sign up for their service, they do not ask you to enter your billing information. In fact, if you happen to encounter a site that does make you enter your billing information in order to receive a credit score, run the other way. It might be a scam. The only exceptions are the sites for FICO and three major credit bureaus—Experian, TransUnion and Equifax.

Read Your Report

While knowing your FICO credit score is nice, it’s even better to know your credit report. After all, your credit score is really just a summary of what your credit report contains. To properly monitor your credit history for inaccuracies, fraud and secret messages from aliens, you’ll need all the information, not just the numerical grade.

(And this is important to do… monitoring and protecting your credit can keep your finances safe and your credit score high— which will provide you more affordable access to credit, so you can avoid often dangerous products like bad credit loans and “no credit check loans.”)

Here’s the good news: you don’t need to sign up for anything to get a free credit report. Unlike your credit score, you are already entitled to three of them per year, one from each credit bureau (read more in Have Bad Credit? Check Your Credit Report!). These free annual credit reports are mandated by the Fair Credit Reporting Act (FCRA), which is enforced by the Federal Trade Commission (FTC).

The credit bureaus set up a website, to handle all online credit report inquiries. You can also call 1-877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348.1

That’s all you have to do. You can literally request a free copy of your credit report right now. It’s okay, we’ll wait…


Improve Your Credit

Welcome back! Now that you have your free credit report to pair with your free credit score, you can compare the two and make sure everything’s accurate. If your credit score is not where you would like it to be then you can peruse your credit report to see why exactly that is. And if you’re looking to start building a better credit history with a strategic, affordable loan, click below. Or visit our homepage for more information and read other blog posts for tips on how to improve your finances.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN


  1. Consumer Information: Free Credit Reports.” Federal Trade Commission. Accessed February 4, 2016.

Credit Bureau Files: The Truth is Out There

Do you know every detail of your credit history? The credit bureaus do. But don’t panic, credit bureaus don’t just collect the bad, but also your positive credit history too. Here’s what you need to know:

“If you sign up for one of our credit cards, you can get 10% off today’s purchase. Interested?” Remember those cool cargo shorts you bought at Gap your freshman year? Good, neither does anyone else. But if you’ve ever opened up a retail store credit card for that quick, instant discount, and then forgotten about it as soon as you left the store, that unpaid purchase could haunt you for up to seven years. Why? Because of the credit bureaus.

So what is a Credit Bureau and why should we care?

A credit bureau is a company that collects and organizes credit information and payment behavior and reports it to creditors like banks, lenders and other organizations. So if you bought those cargo shorts and then forgot to pay the balance on your card, that negative information—or black mark on your credit history—gets collected by a credit bureau and reported.1

This can impact you directly in ways like higher interest rates and lower credit limits. (And it can get so much worse: If you have bad credit, you’re more likely to fall victim to companies marketing bad credit loans and no credit check loans—often dangerous and predatory financial products designed to trap you in debt. You can learn more about predatory lenders in our OppLoans ebook “How to Protect Yourself from Payday Loans and Predatory Lenders“.)

The three major credit bureaus are Equifax, Experian and TransUnion. These are for-profit, private corporations cast a wide net (going back as far as seven years into your financial history), looking for information about your purchasing and repayment behavior, constantly asking questions like: do you make your payments on time, do you make your payments at all, have you ever experienced a bankruptcy or negative judgement?

Once they’ve compiled all of this data, they analyze it and produce a credit report. The free credit reports you get often do not include your score, but the ones you get from your bank, credit card company, or the ones you pay for most frequently do include the score. You can learn more about what type of information is included in your credit report here in this Experian post.

The credit report is then sold to third parties like, say, a landlord. The landlord wants to check your credit because he wants to know if you’re responsible with your payments. If you have a history of paying your bills on time and not exceeding your credit limits, then you are a lower risk candidate and more likely to get that sweet apartment with a roof and everything.

This whole business with the credit bureaus sounds kind of impersonal and judgy, doesn’t it? It is. To the credit bureaus, consumers are really just a sum of positive and negative payment histories that equal either high or low risk individuals.

But if the process is so impersonal, isn’t it possible that there are inaccuracies in my credit report? Absolutely. What’s more, credit information can differ between the credit bureaus: information reflected by one company’s report can vary from another’s. It’s important to check your credit reports annually so you can spot fraud and errors faster.

It might all sound like doom and gloom, but remember, positive paying information gets reported too. The best way to improve information on your credit report is through regular, positive payment behavior. If you take out a loan, make sure you can afford the payments  and then repay them on time. Don’t panic, you can always overcome a negative credit history with positive paying behavior. Learn more in The Journey to Turn Your Credit Around.

OppLoans can help you with affordable and strategic installment loans. OppLoans reports your payments to the credit bureaus and offers credit education to help you repair and improve your credit. Click below to get started today!

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Works Cited:

1 “Credit Bureau.” Accessed September 11, 2017.

5 Easy-to-Avoid Credit Card Mistakes

Credit is great, until it isn’t. Here are five common (and easy-to-avoid) credit card mistakes people make every day.

People rely on certain tools for specific situations. Car won’t start in the winter? Jumper cables. Need to tighten a bolt? Wrench. Your dad is Darth Vader? Lightsaber.

But without a doubt, the most common financial tool people use for unexpected situations is a credit card. We all know its real purpose is for emergencies or larger responsible purchases. While credit cards are a great resource, it’s easy to make mistakes. But the good news is that those mistakes are also easy to avoid.

Check out these five common credit mistakes and learn how to pass them by with credit-building practices.

1. Getting Too Many Cards

Some people accumulate credit cards like dust bunnies. In financial circles, this strategy is known as “not good.” While it may seem beneficial to activate a high number of credit cards and get to work using them on many different purchases, this can negatively impact your credit, especially once the balances start to mount. It’s a good idea to have one or even a few credit cards because it shows diverse forms of credit, but mismanaging the cards means a higher debt-to-income ratio, more annual fees, and potential black marks on your credit history.

2. Paying Only the Minimum

Paying the lowest possible amount on your credit card bill is something you should do only when it’s 100% necessary. But most other times, you want to pay the maximum you can afford on your card. The more you pay off, the less you pay in interest. This always looks good to creditors. Doing this will also extend you the benefits of the card (airline miles, gift cards, etc.), as well as keep your credit in tip-top shape. Online credit calculators can demonstrate the long term damage of only paying the minimum.1

3. Missing Payments

Missing a payment isn’t the end of the world. But nothing good can come from it either. Missed payments mean additional fees, damage to your FICO score, and negative information on your credit report that can remain there for seven years. If you do miss a payment, the best course of action is to pay it right away, even if you’re late. Even better, pre-emptively set your credit card to “autopay full balance” every month.

4. Letting Samuel L. Jackson Tell You Which Card to Get

You wouldn’t know it now, but there was a time when celebrities didn’t try to sell you cards every six minutes on TV. Creditors use robust marketing and promotional engines to publicize their offerings. They want you to activate a line of credit with their card, run up a balance, and pay it back with increasing interest over time. Do your homework and find a card, or cards, whose rates you can afford. It’s important that you meet the providers’ credit-worthiness needs and find a low fixed rate APR. Identifying the right card for you means not being swayed by promotions and benefits which may seem great at the time, but actually won’t do anything for you other than burden you with mounting debt.

5. Not Using a Credit Card at All

This one might seem strange. We know credit cards are fraught with danger and risk, right? Well, not necessarily. Using credit responsibly (not maxing out the cards, making full payments on time) is an important practice that builds positive credit history. Avoiding it all together means that when you go to make a larger purchase like a home, car, or mega-yacht, you won’t have a clean, responsible-looking credit history to point to. Use credit cards responsibly and you’ll look credit-worthy to lenders.

So What Happens When You Make Those Credit Card Mistakes?

Using a credit card can feel easy… sometimes too easy. Using credit and credit cards well is a little more difficult. That’s why many of us end up making these simple credit card mistakes. So what are the consequences of getting too many cards or missing those payments? The answer is simply bad credit. Your FICO score will take a hit, resulting in a lower credit score and decreased access to affordable credit. For this reason, many people with bad credit turn to dangerous bad credit loans or “no credit check loans.” These are often dangerous financial traps that can walk you into predatory loans you can’t really afford. These kinds of predatory loans can take your bad credit situation and make it much, much worse.

For these reasons and more, it’s important to use and manage your credit and credit cards wisely. You can learn more about the responsible use of credit cards in our ebook “Credit Workbook: The OppLoans Guide to Understanding Your Credit, Credit Report and Credit Score.”

Credit Cards are an important resource that can improve your life and your finances, but they also come with risks. If you have a specific financial need, opening another credit card may not be the answer for you. OppLoans offers safe, reliable and credit-building installment loans with affordable, fixed monthly payments. Apply today and qualify within minutes to receive your funds as early as the next business day.

Related Posts

Fast Cash: The Hows and Whys of Getting Your Money Quickly and Safely.

My Credit Cards are Maxed Out, Now What?

A Free Credit Score is Nice, But a Free Credit Report is Better…

Works Cited:

1 Maluth, Hannah. “8 common credit card mistakes you might be making” USA Today, July 24, 2017, Accessed September 11, 2017.

By the Numbers: Your FICO Credit Score

So you’ve learned your three digit FICO credit score. Mazel tov! Now learn what you can do with it…

There are a lot of numbers that are important in your life: your age, your address and your income level to name a few. But there might not be any three digit number as powerful as your FICO credit score (you can read more about your score and what it means in our blog post.) A bad credit score could mean the difference between being able to afford a house and having to stay in your cramped, one-bedroom apartment.

If you don’t know what your credit score is, the first thing you should do is go find out. Everyone is entitled to receive one free credit report per year from each of the three major credit bureaus.1 To get yours, just visit

But when you look up your FICO credit score, all you’re going to see is a three digit number that falls somewhere between 300 and 850. So what does it actually mean? Well, first of all, if your credit score happens to be under 300, you should probably go the hospital because you might be currently dead. Beyond that, always remember that 850 is the best and 300 is the worst, so a higher score is always better.

720-850 – Great Credit

Congrats! If you have a credit score of 720 or higher, you are going to have access to the best loans at the best interest rates. To get a score like this you need to have little debt or a large, steady income — or, ideally, both — and pay all your bills on time with sniper-like accuracy. If you have a credit score of 850 you might just be the Queen of England.

680-719 – Good Credit

A score in this range probably means you have a few black marks on your credit history—some late payments or more student debt than you would like, especially if you got that MFA in cell phone bedazzling. But while you could be working to improve your score, you are also going to qualify for most larger loans and for good interest rates. The only place you’ll feel a little bit of the hurt is when you’re looking for a larger loan like a mortgage. Even a few percentage points difference in interest on a $300,000 30-year mortgage is going to add up.

630-679 – Fair Credit

This is the point where you’re going to start feeling the pinch. Having a credit score in this range means that you are going to be facing some higher interest rates, but you also aren’t likely to be rejected when you request a loan or a credit card. Make sure you are paying your bills on time every month, deal with any outstanding collections agents who’ve been contacting you and make a plan for paying down your debt.

550-629 – Subprime Credit

This is the range in which you will start feeling not just the pinch, but also the sting of rejection. Traditional lenders, especially banks and credit unions, will likely turn down your applications and credit card offers in the mail will come with eye-popping interest rates—if they come at all. You aren’t going to qualify to buy a house, at least not one that’s in a livable condition. But you know the thing about credit scores? They can be fixed. Cut up your credit cards, make a plan to start paying down your debt and—most importantly—make a budget. You can learn more about building your credit in the eBook Credit Workbook: The OppLoans Guide to Understanding Your Credit, Credit Report and Credit Score.

300-549 – Poor Credit

Don’t panic. If you have a credit score in this range, it might feel like you have no options. You likely have a lot of debt, little or no access to traditional financial tools and it feels like all the collections agencies have your number on speed dial. But you do have options. You can call a credit counselor, talk to your debtors and make a plan to settle your outstanding debts. You can set a budget, cut your spending and find a second job to earn some extra income. Sure, you have a bit farther to go than some other people do, but a good credit score and access to traditional financial tools are still within your reach. Lastly, make sure that you look out for predatory lenders. Lots of dangerous lenders will offer you a bad credit loan—which can sound enticing, but be careful. Plenty of “bad credit lenders” are bad actors, looking to take advantage of those who believe they have fewer options.

You’ll also need to be on the lookout for “No Credit Check Loans.” Lenders who claim they don’t care about your credit score may not actually care if you can afford your loan—usually a sign that they’re a predatory lender. Understand if your lender performs hard credit checks, soft credit checks, or no credit checks at all. There is a big difference between these types of credit checks and they definitely matter. To learn more about no credit check loans (and hard and soft credit inquiries) check out the most recent OppLoans’ No Credit Check Loans articles and expert interviews.

If you’re in need of some extra cash for an emergency, don’t call a payday lender. Instead, apply for an OppLoan. Even if you have less-than-perfect credit, we offer safe, reliable and credit-building installment loans with affordable, fixed monthly payments. Visit our website today and learn if you qualify within minutes and receive your funds as early as the next business day.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Works Cited:

1 “Credit Scores” Accessed September 11, 2017.