• Credit Scoring

    The Definitive Guide to Credit Scores

    Chances are you have wondered what a good credit score is and why it is so important. Your credit score will determine your eligibility for getting a home loan, credit card, personal loan and much more. It plays an important role in your financial future, so it stands to reason that you’ll want to learn everything you can about it. In this article you will get some very valuable information and advice regarding credit scores that can make a hugely positive impact on your life.

    The Basics of Credit Scores

    Your credit score serves as a way for lenders such as Emu.co.uk with who you apply with to determine how much of a liability you are going to be. It is the sum total of your credit history, which includes things like payments, bankruptcies, loan defaults and much else. The higher your credit score is, the easier it will be for you to obtain financing when you need it. Your credit score is impacted every time you are late on paying a bill or don’t pay back a loan you have taken out. It can be positively influenced when you take care of your debt or bills in a timely manner.

    How Credit Scores are Calculated

    There are a number of factors that go into calculating a person’s credit score, and you will need to know about each of them.

    Some of these things include:

    • Credit history: Your credit history consists of things like outstanding debt/loans, credit limits, repayment history, and how many credit accounts you currently have.
    • Inquiries: An inquiry is put in your credit report whenever you apply for a loan. This is why it is generally not a good idea to fill out a lot of loan applications within a short span of time.
    • Public records: Something like a bankruptcy or legal judgement would be considered a public record, and it can have a huge impact on your credit.

    Where Credit Agencies get Their Information

    A credit rating agency won’t ever contact you directly to get information that will later go in your report. Instead, they rely on banks, credit card companies and businesses that you have been involved with financially. This can be positive or negative information, depending on the situation. One example would be late payments, which can and do affect your credit rating once they go in your report. You have no control over what is put into your report, except if there is a mistake of some kind.

    There is no Single Number for Your Credit

    You will need to keep in mind that there isn’t a universal credit rating for any person. This means that not all lenders have the same number for you or anyone else. When you apply for a loan, the lender will use their own methods to determine what your credit is like. This is something that a lot of people don’t understand, despite the fact that it affects them greatly. A huge loan like a mortgage will have stricter standards for examining a person’s credit than a small year-long loan. It all depends on the lender and the amount you want to borrow.

    What is a Good Credit Score?

    There are three main credit rating agencies in the UK, and each of them have different standards when it comes to what is considered a good score.

    • Experian: A very poor credit score is between 0 and 560, while a great score is between 961 and 999.
    • Equifax: A very poor score is between o and 278, while a great score is between 467 and 700.
    • Callcredit: A very poor score is between 0 and 550, while a great score falls between 628 and 710.

    Credit Scores Are Always Changing

    You also need to keep in mind that your credit score is constantly changing. This number changes based on a lot of different things, including how good you are about paying back your loans on time. It is a reflection of how responsible you are when it comes to taking out lines of credit.

    How to Improve Your Credit Score

    There are tons of ways that you can improve your credit score, including just paying your bills and accounts on time. The better you are about consistently doing this, the faster your credit rating will rise. You can’t be late on making your loan payments all the time while expecting to maintain a healthy rating.

    It is also important that you make a point of looking at your credit report a couple of times a year to check for mistakes. Sometimes errors are made by credit rating agencies, so you have to take a close look at your report once in a while. By doing this you could potentially raise your rating by quite a bit.

  • Savings

    How to Effectively Save Money for Your Children

    All parents should start saving money for their children’s future as soon as possible, and there are many ways to do so. If you want your child to have money for a college education when they grow up, it is important to know what your options are. In this article you will learn about some of the best methods of saving for your kids. The more you learn about these options, the easier it will be to ensure that your kids have a bright future.

    Open a Savings Account for Your Child

    Almost all banks and credit unions offer children’s savings accounts, and it’s something that you’ll want to look into. Your child will be able to take control of their account when they get older, but in the meantime you will be able to manage it yourself. This is a good way to put money aside for your kids while teaching them how to be fiscally responsible.

    You can put just a single pound in the savings account to start off. As long as your child is under the age of 18, you can open this type of account for them.

    The two different types of children’s savings accounts you can open include:

    • Instant access: An instant access account means that you or your child will be able to take money out or deposit it without any restrictions. These accounts typically come with a lower interest rate, which isn’t ideal.
    • Regular savings account: A regular savings account stays open for a specific amount of time and will help you teach your kids the importance of saving. Some of these accounts only stay active for a year, but it depends on the financial institution. You typically get a higher interest rate than with instant access accounts.

    It is important that you take the time to review both of these account options before deciding which one to open for your child.

    Get them a Piggy Bank

    If you want to teach your children the value of money and how to save effectively, you might want to buy them a piggy bank. This will help them understand how much each coin and note is worth, which is certainly a valuable lesson that will benefit them into the future.

    A piggy bank will also provide your child with some extra spending money that they can use to buy themselves something once in a while. The best thing about this method is that it will provide them with a tangible way of saving money. Sometimes putting money into a savings account doesn’t have the same effect as using an actual piggy bank in their room.

    Stocks and Shares

    Opening a Junior ISA for your child can also be a good idea for numerous reasons. Junior cash ISAs are similar to savings accounts, but there is no tax on the interest that accumulates until they are 18 years of age. Every child can have a single Junior Cash ISA as well as a Junior Stocks and Shares ISA until they officially become an adult.

    One of the great things about Junior ISAs is that they enable you to purchase bonds, shares and other things for your child. These investments can accumulate quite a bit, depending on how careful you are about your choices. Keep in mind that you the maximum amount for Junior ISAs is £4,260.

    Friendly Societies

    A tax-exempt savings plan through Friendly Societies is something else that you should carefully consider. You will be able to put money into your plan for either 10 or 25 years. All of the money that you put into the plan will stay in an investment fund for the period of time that you have selected. You can contribute up to £300 every year.

    In order for your child to get the money that you have put into the plan, it must be fully matured and they have to be at least 16 years of age. You also have to pay into the plan for at least ten years. This is by far one of the more effective ways to save money for your child in the long term.

    Open a Trust Fund Account for Your Child

    The money that you put into a Child Trust Fund belongs to only your child, and they cannot touch it until they have reached 18 years of age. There are a few different types of accounts that you will want to look into before deciding on one in particular. Your child won’t have to pay any taxes on the money in this account at any point. The money they get won’t have any impact on your tax credits or benefits. This is one of the more popular savings instruments for children in the UK.