The industry is plagued by predatory lenders and practices designed to trap vulnerable borrowers. As a borrower with bad credit, the options for loans are limited and usually not very good. Within the available loan option, as a smart borrower be aware of the reigning pitfalls. Be proactive at the beginning of your personal loan journey thus preventing trouble along the way.
Most common pitfalls and scams to stay away from:
Roll over of the loan to another term As many people have difficulty in repaying the loan within a short span of time, the loan usually rolls over for one more term thereby making the original loan more expensive. This may also lead you to a vicious cycle of debt. To avoid this mishap always ensure that you can repay the loan in its entirety on its due date.
Astronomical APR
As a borrower with bad credit, you will be eligible only for pay day style short term loans and they usually have very high-interest rates (ranging from 230% and upwards) leaning on shark loan territory. Ensure to avail these loans only in true emergencies.
Multiple fees structure
Especially online lenders levy a variety of fees like origination fees and various other range of fees. Always read the offer document carefully.
Accreditation
Check if the lending company is accredited by the BBB. The newer online ones are usually not. Many lenders do not offer secured loans.
Add-ons
Expensive insurance add-ons that ensure that the loan is paid back if you die or get disabled, are slipped in by some lenders.
Upfront fees
It is illegal for lenders to charge you fees for just filling up an application form.
Guarantees
Lenders with the intention of scamming the borrower usually advertise approval of a loan without knowing your credit history, income, and personal information. This is not a legitimate lender – stay away.
Uninitiated contact
Another tactic used by illegitimate lenders to lure vulnerable borrowers is by constantly getting in touch through emails and calls. This is another red flag.
Name imitations
Disreputable lenders may use similar sounding names of legitimate lenders. If they have to borrow the reputation of the legitimate lender, it goes to show how unethical their practices are.
Collecting personal information
Please provide your personal information only to reputed companies so as to avoid identity theft and another misuse of data.
Undue pressure
Lenders may use scare tactics to pressurize you into making a deal before having considered all available options.
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.