The post 3 signs your partner may be struggling with money appeared first on Credit Simple.

A personal loan is a monetary loan you can get from a credit provider such as a bank, credit union or online lender – usually for a specific life purpose like renovating your home, paying for a holiday or consolidating several smaller loans.

Lenders approve personal loans by evaluating your creditworthiness.

When you enter into a contract for a personal loan, you typically receive money in a lump sum and agree to repay the lender back the money in regular instalments over a specific length of time.

You also pay interest on the amount you borrow, and in some cases, you may pay fees and other charges. These interest rates, fees and charges can vary from lender to lender, loan to loan and borrower to borrower.

How do personal loans work?

If you’re considering a personal loan, you should become familiar with some of the details, including how much you can borrow, how to apply and how much they cost. Here are some of the main concepts to remember:

• The amount you can borrow. Personal loan amounts can be very small or very large. We’ve seen lenders offer loans as little as $500 and as large as $70,000.
• The application and approval process. You can apply for some personal loans online in a matter of minutes and be approved (or denied) just as quickly. With others, you may have to visit a branch and it may take days for the approval process to complete.
• The cost. On top of requiring you to repay the loan amount, lenders make their money by charging you in a number of ways. These may include interest on the loan, as well as fees like an establishment fee, monthly fees, late payment fees and early discharge fees. Your specific combination of charges will be described in your contract.
• The loan term. This is how long you’ll be paying off the loan. We’ve seen loan terms as short as 3 months or as long as 7 years.
• The amount of repayments and when they are due. Your loan amount, interest rate and loan term will be set in advance, so it’s easy for the bank to calculate exactly what your regular payments will be and when they are due.

Types of personal loans

Here are the main types of personal loans you may encounter:

• Unsecured personal loans. Your standard personal loan you can use toward various life projects like a holiday, home renovation or medical bill.
• Car loans and other secured loans. A personal loan where you offer up an asset as collateral in case you can’t make your payments. This collateral is officially known as the security. Take for example a car loan, where the purchased car serves as security that the bank can repossess if you can’t make your payments
• Debt consolidation loan. A special type of personal loan you would use to pay off several smaller loans.
• Line of credit. A personal loan where a specific amount is available for you to borrow, but you don’t have to borrow it all. You only pay interest on the amount borrowed.
• Quick cash loan. A personal loan that doesn’t have a strict acceptance criteria so that people with lower credit scores can get the loans they need. These often come with higher interest rates and fees.

How much do personal loans cost?

The cost of personal loans will differ from person to person and loan to loan. A large part of this comes down to your creditworthiness. For example, someone with a higher credit score and a more positive borrowing history will often pay less for the same loan than someone with lower marks.

Here are some factors that will determine how much you’ll pay:

• Interest rate. This the percentage your debt will increase every year. Most personal loans will charge an interest rate. The Australian Securities & Investments Commission has capped interest rates at 48% but we’ve seen rates as low as 5.75%.
• Fees. Many loans will also charge fees on top of the interest, such as a one-off establishment fee to set up the loan or even monthly fees. Some very small loans might do away with an interest rate altogether in favour of one set loan fee.
• Comparison rate. This is simply a loan’s interest rate when fees are factored into it. Since not all loans charge the same fees, this comparison rate makes it easy for you to compare the loan cost of several loans side-by-side.
• Length of loan. Since your interest rate adds to your balance each year, the longer you have your loan, the more you’ll end up paying in the long run (all else being equal).
• Amount borrowed. Generally speaking, the more you borrow, the more you’ll end up paying for the loan.

How do you apply for a personal loan?

1. Decide how much you want to borrow. Work out how much money you need for your holiday, home renovations, debt consolidation or whatever personal project you need the funds for.
2. Work out how much you can afford for payments. Use a loan calculator to work out how long you’ll need to pay back the loan, based on how much you can afford to pay back per month.
3. Compare personal loan options. Identify a few lenders with loans that meet your criteria from the first two steps. You can find special loan offers for Credit Simple users here.
4. Gather your paperwork. Gather together any paperwork the lender asks for. This may include ID, bank statements and proof of address.
5. Apply. You can apply for most personal loans conveniently online.

Does applying for a personal loan affect your credit score?

When you apply for any loan, your credit score can dip slightly. However, with Australia’s Comprehensive Credit Reporting system, regular on-time payments can help your score go right back up.

Some lenders will advertise something along the lines of “free rate quote that won’t affect your credit score.” This means they will quote you a rate based off of basic info like your income and the amount you want to borrow – without doing a credit check.

But this is not the same as applying for the loan. If you want to apply for the loan based on the rate quoted to you, you will usually have to go through a credit check and your score may dip as a result.

Who should get a personal loan?

You should only get a personal loan if you have a specific purpose in mind for the money: to help pay for a special project, purchase or life event, or to help out in a time of emergency.

Taking out a lump sum without any real purpose for it could lead you to squander it and end up with a large debt with not much to show for it. For regular ongoing purchases you plan to pay off regularly, you could consider a credit card instead.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual or business. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post What is a personal loan? appeared first on Credit Simple.

The post Debt consolidation loan vs. balance transfer credit card – which one to choose? appeared first on Credit Simple.

If you’ve ever wondered what your credit report looks like, wonder no more. This guide will give you insight into your credit report, including what information it contains, how to read it, and why it’s so important.

There are three main credit reporting bureaus in Australia, and you can access their version of your report in a number of ways, including in a written/physical format or through an online dashboard.

Each variation may differ slightly in the way it’s presented, but the bulk of the information will be the similar. For this guide, we’ll be using the convenient (and free!) Credit Simple online credit report dashboard to explain what your credit report contains.

Credit Simple gets its data from the credit reporting bureau illion.

Your credit score

When you first login to Credit Simple, you will see your credit score. This is a reflection of your credit-worthiness boiled down from a heap of lending data into a simple number.

Your credit score and score trend

illion scores range from 0 – 1,000 and the higher the score, the more creditworthy you’re determined to be.

Here’s how the scores break down:

• Score of 0. This is the lowest score you can get and means you’re the riskiest kind of borrower. People with a score of zero either don’t have a credit history at all or have experienced a very negative credit event like bankruptcy.
• 1-499. You have a below-average score and are considered very risky to lend to.
• 500-699. You have an average score and with a few small changes to your borrowing behaviour, you could easily improve your score.
• 700-799. You have a good score and lenders are likely to give you favourable treatment. However, you may want to limit the number of applications you make, as this is what is likely keeping you from having an excellent score.
• 800-1000. You have an excellent credit rating and are considered the least risky to lend to. This puts you in a great negotiating position with lenders.

Your credit history

Your credit score isn’t a magic number that is pulled out of thin air. It is the result of a calculation that incorporates heaps of data around your borrowing habits. The data that your credit score pulls from is called your credit history.

Credit Simple also provides your credit history, broken down into the following categories:

• Personal information. Your name, date of birth, address and previous address.
• Accounts. The accounts you have open including mortgages, credit cards, utility accounts and even equipment hire. It also includes details like the amount you owe and a complete breakdown of your payment history.
• Enquiries. The times you’ve authorised a lender or a utility to do a hard enquiry into your credit history (a hard enquiry is an official inquiry related to an application for a loan). Looking at your own credit history (soft enquiry) won’t decrease your score, but too many hard enquiries can lead to a small deduction.
• Authorised agent enquiries. The times you’ve allowed an authorised agent, such as a mortgage broker or a car dealer, to do a credit enquiry on your behalf.
• Defaults. Any payments that are at least 60 days overdue (or were at least 60 days overdue at the time of payment).
• Serious credit infringements. Situations where a lender believes you fraudulently tried to obtain credit or tried to fraudulently avoid your credit obligations.
• Judgements and Summons. Publicly available court records pertaining to your debts.
• Personal insolvency. Publicly available data from the Australian Financial Security Authority related to bankruptcy.
• Other public record information. Other publicly available information that may be useful to potential creditors when determining your creditworthiness.
• Company directorships. Publicly available information from the Australian Securities and Investment Commission about any previous or current directorships you’ve held in any company.
• File notes. Notes placed on your credit history (at your request) explaining or disputing the circumstances surrounding information on your report.

Here’s what it looks like in the tool:

The categories of reporting in your credit report.

You can expand each section to see much more detail about each. Here we are looking at payment history of a specific account listed in the accounts section:

A detailed repayment history for an example account

What can you do with this information?

As you can see, a credit report is quite straightforward although it can contain quite a bit of information. The good thing about a tool like Credit Simple is that it allows you to have all of this information at your fingertips and dig through it systematically.

Going through your report with a fine-tooth comb can help you in a number of ways. You can:

• Identify areas where you could improve. If you see that late payments are hurting your score more than you thought they were, it’s likely to propel you to make changes.
• Identify errors in your report. If you see something reported that you dispute, you can bring this up with the lender or the credit bureau. Credit Simple lets you lodge a dispute right through the tool.
• Negotiate better terms. If you see that you have a good score, you can have more confidence in negotiating with your lender for better terms like lower interest rates and reduced fees.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post Here’s what a credit report actually looks like appeared first on Credit Simple.

The post Knowing what affects your credit score will give you the power to improve it appeared first on Credit Simple.

So business is booming and you’re not content to just maintain the status quo…. you want to grow your business into something bigger. Well, strap in because you’re in for an exciting ride that will expand your skills, test your mettle and ideally put your business on the trajectory toward bigger success.

Here are some tips that any small business, sole trader or freelancer can use to grow their business, regardless of industry.

Decide how you want to grow

There are many ways to grow your business, so you need to decide how you want to grow. Here are some examples.

You can:

• Add new products or services to your offering. A piano teacher has a unique and effective method of teaching and decides to develop an instructional app that utilises this method. Or a craft brewery decides to expand the number of varieties of beer it brews.
• Open up a new physical location. The brewery’s owner is a hit in his home town and he sees an opportunity in a location a few towns over.
• Go premium. A photographer realises her work is unrivalled, so she drastically increases her prices and targets the premium market. A move like this could significantly change the way you do business.
• Hire another “you”. The piano teacher hires a former student to teach her method to students, allowing her to double the number of students she can reach.

Take advantage of credit

Most of the examples above will probably require a financial investment: to fix up the new physical location, to boost your marketing, to develop the app or to hire the new employee.

If you have your sights high, now’s the time to start thinking about building your business’ credit history.

If you’re registered as a company with the Australian Securities and Investments Commission (ASIC) and you have an Australian Company Number (ACN), your business will have a credit file – which may or may not be empty depending on how much borrowing you’ve done.

As long as you are in a position to pay it back on time, getting a loan is a good way to build your credit history – as is signing up for utilities (phone internet, power, etc) in your business’ name.

This can be beneficial for the following reasons:

• It helps with future loans. When/if you need bigger loans in the future, lenders will want to see a positive credit history.
• It helps with partnerships. Potential partners can also access your credit score to determine if they want to do business with you, so a good track record does much more than help you get loans.

Before you get any new loans, it’s good to know where you currently stand. If you sign up for Credit Simple for Business, you can see your business credit score and history for free, forever. You must be a director in your business in order to access it.

Build processes

This means developing a series of repeatable steps that help you achieve a particular outcome for your business, for example, a six-step process for vetting a supplier.

Having processes in place will free up time for you to focus on growing your business, make training new employees a lot easier and help you avoid costly mistakes (like taking on an unreliable supplier).

You can build processes into almost every business function: customer service, public relations, accounting, IT, operations and more.

Learn marketing

Many small business owners are skilled in a specific area related to their product or service, and that has been enough to keep them operating on a small scale.

Maybe you’re a photographer whose stunning family portraits and fair pricing drive enough word of mouth to keep you employed. But if you want to drastically increase your business, you’ll need to improve your website, advertise, network and possibly partner with other service providers such as a makeup artist.

The skill set required for these activities is different than that required to take stunning photos, so you’ll need to adopt a sales and marketing mindset sooner rather than later.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post Here’s how to grow your business if you want to take it to the next level appeared first on Credit Simple.

Up to 6 million Australians could save up to $40,000 over the life of an average 25-year mortgage, following the introduction of new laws by the Australian Government, according to consumer advocate group www.creditsimple.com.au.

The introduction of Comprehensive Credit Reporting (CCR) means Australian banks are about to load millions of records with the credit bureaux, and lenders will now be able to see the positive records of the country’s 6.4 million home owners for the first time.

www.creditsimple.com.au CEO David Scognamiglio said the introduction of millions of new consumer spending records will generally see credit scores improve.  

“Until the introduction of CCR in 2014, banks could only judge how much to lend to home buyers based on their ‘negative’ credit score – for things like defaulting on their credit card – which gave an unclear picture on what they could actually afford to borrow.

“Good qualities like paying their credit card or car loan on time were never included, he said.

Registries like illion would now house the new data, allowing up to 90 percent of home-owners to qualify for better mortgage deals.

“Home-owners may be able to get up to 0.5% off their current mortgage rate once their positive credit history is included on their credit record.

“For the average $372,902 home loan, that works out to be a saving of $112 per month, or $40,000 over 25 years.

“Better data gets you better deals, with some of the lowest in the market now being offered at 3.2%.  A lot of people have a 4 in front of their mortgage now, when they should see a 3, and in some cases even a 2.

“Until now, your bank has held all your positive credit or payment information. Under the new system, that information will be held by the credit bureau and shared with other lenders, encouraging new entrants into the market and breeding more competition,” he said.

Mr Scognamiglio noted the system would also help protect more vulnerable consumers as more data also helped the Banks know when not to lend.

“It is more important than ever to make sure you pay your loans on time – missed payments will make your score go down.

“A good score means you are a valuable commodity to a bank.

“Banks will see you are a great payer even if your history is with another bank. That’s a game changer, and will breed new competition into the market, which means rates will get better.

“You should get a better rate if you have a good score, and you should use it as an opportunity to get a better rate,” he concluded.

To obtain your free credit score and report, visit www.creditsimple.com.au

For media enquiries contact Apollo Communications on (02) 9660 4995 or after hours on 0417 170 084.

The post Six million homeowners could get a better mortgage appeared first on Credit Simple.

Is 600 a bad credit rating? How about 500? Or 400?

Without context, calculating your creditworthiness based on your score alone is difficult. Fortunately, we’re here to help you better understand your credit rating, particularly if you suspect you have a bad score.

Repayment history information, including any late payments, stays on your file for two years before you’re free and clear.

The good, the bad and the ugly

Your illion credit score via Credit Simple ranges from 0 to 1,000. The closer you get to zero, the less creditworthy you are deemed to be by banks and other lenders.

But at which point does your score sink from good to bad (via so-so)? Here’s a quick rundown of our scale from first to worst:

• 700 and above: Be proud. You’ve got a good or great score.
• 300 to 699: Depending on your exact rating, you range from slightly below average to average.
• 1 to 299: We can’t deny it. You have a bad credit score.
• Zero: Oof. Your credit rating is in a state of emergency.

Why do I have a bad credit score?

If you’re at the lower end of the scale, you’re probably wondering what you’ve done to get a bad score and how long it will take to rectify.

You may need to request your credit report for a full breakdown of your financial situation, but bad scores are usually due to:

• Late and missed payments
• Credit defaults
• Bankruptcies
• Writs, summons and court judgements
• Multiple credit enquiries in a short space of time 
• Debt agreements.

Repayment history information, including any late payments, stays on your file for two years before you’re free and clear.

You’ll have to wait five years to survive some of the more serious black marks on your record though, such as defaults, bankruptcies, writs, summons and court judgements. Credit enquiries also remain for five years.

Can I still access credit with a bad score?

On a good day, a bad credit score means you’ll struggle to get the best deals, but you also risk your applications being rejected entirely.

However, some lenders specialise in mortgages and loans for people who have a less-than-stellar credit rating, although you’re likely to face much higher interest rates.

Credit cards are particularly difficult to obtain with a bad credit rating, and every rejected application could bring down your score further.

Which is why you may want to spend some time building up good credit karma to balance out any black marks on your file before attempting to borrow.

The post How do I know if I have a bad credit score? appeared first on Credit Simple.

The post Where can I get my credit report? appeared first on Credit Simple.

Where are people flocking to within Australia?

What are Australia’s households like now?

The cost of servicing a loan has dropped since the last Census.

The post The 2016 Census results are in: How do we look? appeared first on Credit Simple.