Payday loan is a more commonly used term for a cash loan. This is a short term cash advance loan availed by borrowers as a stop-gap income until, their next payday. One’s eligibility for a cash loan is dependent on their previous payroll and employment records. The APR for a cash loan is much higher than a traditional loan, with 35-40% generally being the norm.
The process is generally as follows:
In the retail model, the borrower visits the lender to apply for a cash loan. Upon meeting the requirements, the loan is granted- it needs to be paid in full at the next pay day along with the fees levied. As a security measure, the lender procures a post-dated cheque from the borrower for the required amount, which would be redeemed by the lender in case the borrower does not make the payment. In the case of insufficient funds or untimely funds availability, the borrower will face additional charges from their bank and lender.
There are many online cash loan lenders. The process from application to receiving funds, everything is done online and is much swifter. The loan repayment amount is also electronically withdrawn from the borrower’s bank account.
Criticism on cash loans:
The main criticism of a cash loan is that it leads to money being drained from low-income families. These social groups are found to have low credit scores and are unable to procure a traditional loan. Cash loan being short term unsecured loans, charge a higher interest rate, thus contributing to the financial decline of these communities.
Another criticism of the cash loan is its nature to roll over to another term with additional fees if the repayment is not made in full. This feature makes the payday loan expensive for the borrower who is already financially strapped.
The methods used by lenders to collect their payment amount has to adhere to the fair debt collection practices act (FDCPA). In spite of this, some lenders use unsavory methods that inadvertently prohibit the borrower from paying back on time and thereby incurring more fees.
All cash loan lenders charge their borrowers the maximum fees and rates allowed by local law so as to have a consistent market rate and prevent competition.
In spite of the many potential pitfalls of a cash loan, the fact remains that those who avail this have already exhausted the other alternatives. To avoid seeking illegal sources to meet financial needs, a cash loan borrower must be well equipped with the process involved, so that the best option can be chosen.
There are companies that work on collecting and maintaining credit information of consumers. These are known as credit reporting agencies (CRAs). There are three such major CRAs in the country, namely Equifax, Experian, and TransUnion. Apart from these, there are other smaller-scale agencies too that specialize at the job. If you’re worried about “where to get my credit score?,” the larger CRAs are the most reliable bets.
These major CRAs obtain information from companies that you hold business and transactions with. People or companies that lend you money regularly report to these CRAs on your repaying status. There is also detailed information on the amount you are indebted and whether you have ever defaulted on your payments. Aside from the reports obtained from lenders, these companies also tally your general records based on certain other aspects. Some of these aspects are your public records from the local and state judiciary. These include your tax records and bankruptcy information. This information makes up an important chunk of your credit score and its report.
Equifax
Present in 24 countries, Equifax is an agency that offers consumers protection against identity theft and credit fraudulence. They also sell credit reports and credit monitoring assistance to businesses.
Experian
Experian started off in London and is now a trusted agency in 39 different countries. It provides you with a credit score, credit report, and even credit tracker on subscription. The agency uses FICO 8 system of credit score calculation. Experian was a part of Forbes’ “World’s Most Innovative Companies” in 2018.
TransUnion
Based across 30 countries with a database of over 1 billion consumers, TransUnion is another CRA giant. The agency, like the other ones, will provide you with your credit score and your credit reports. In case you decide to freeze your TransUnion credit report, it will also go the extra mile to notify Equifax and Experian, which frankly is a big help especially in case of identity theft and credit fraud.
So, the next time you are sat wondering “where to get my credit score?,” think of these three giants that provide you with an annual credit score and credit report for free once each year. However, if you are looking for more frequent updates, you can subscribe to their services and receive your monthly updates.
Did you know that you have more than a single credit score? Agencies calculate your credit score based on the data in your credit reports. If you are wondering, “where to get my credit score?,” there are three main credit reporting agencies. These can have different credit scores for you if your information on each of their credit reports is different. Also, these agencies charge a fee to reveal your credit score.
Recently, it has become easier to track and get hold of your credit score without paying any fees. You can get it from your credit card company, your loan provider, and even from a non-profit counselor. Here are a few tips you can use to check your score.