A helpful guide to payday loans

Planning on taking out a Payday loan? Here is some useful information 

Are you planning on taking out a payday loan because you are a little strapped for cash but not sure how to completely go about it? Here we have some useful tips to guide you in the right direction.

First we will like to say payday loans should be your last resort, only take out a payday loan if you feel you have tried all other avenues and you know you will be able to repay the amount you’re planning on lending within the agreed term. Otherwise you may get taken for high interest rates which leave you in the same position you started. We strongly advice you shop to around and look at different borrowing methods you can take to get the money you are in need of I.e. Credit cards or even asking a friend or family member ensuring you have a written agreement with them.

Having looked at other ways to borrow the money if it has been narrowed down leaving you with having to take out a payday loan then definitely shop around being sure to look into the APR that different creditors are offering, the repayment methods and the full amount you will be having to pay back. To assure you’re not taking a risk with your creditor you can check if your lender is registered with the Office of Fair Trading.

Think, do you really need a payday loan at this time? If you think you’re able to just hold out that bit longer and wait till your payday for the money we strongly advise you to take that path. If not then we also advise you to not take out a payday loan until you need the cash over the next couple of days after receiving the credit, doing so will leave you a longer period to gather the repayment back together on time. If you take out a loan knowing you won’t need the money until a week after application then you run the risk of leaving yourself with less time to get the payment together for the agreed repayment date possibly driving you into high interest rates on a debt you may struggle to pay off keeping you in the red.

What makes payday pixie different from other payday loan lenders is that we will always advise you on alternative borrowing methods if we feel that a payday loan is not quite the right option for you. Although we are passionate about providing as much financial assistance as we can, sometimes it can actually cause an individual greater harm than good.

For any questions regarding Pixie payday loans, please don’t hesitate to contact a member of our team by emailing contactus@paydaypixie.co.uk

How to Improve your Credit Rating

How to improve your Credit Rating

Your credit score is what helps lenders come to a decision on what offer to put on the table for you.

If you want the best loan, mortgage, credit card or even phone contract then having a high credit score is something you’ll need.

Why does a bad credit rating go against you?

A bad credit rating can shorten the list of your borrowing options. County Court Judgments (CCJ’s), bankruptcy orders and defaulted payments all leave a black stamp against your name whilst you look for credit varying from as big as a mortgage to as little as a phone contract.

Missing payments on your energy bills, credit cards or other payments in that area can result in you getting a mark next to your name for future reference and this could come back to cause you problems.

Collecting credit footprint after credit footprint can also make matters worse you can receive credit footprints when applying from credit cards so if a company turns you down its best not to go right ahead and apply with other companies. We always advise you to do your research on the best credit card for yourself instead of just applying for the last thing you heard of on the radio or the TV. You can also use such sites as www.moneyexpert.co.uk To find out the best rates on credit cards at the current time.

Usually, if holding a poor credit score the only type of credit available for borrowers is through what’s known as the sub-prime market, where lenders tend to charge the borrowers high rates of interest to lower the risk they’re putting up on themselves.

How to improve your credit score?

There are some simple steps you can take to increasing your credit rating:

• Be sure that all of your debts are registered under your correct name and current home address .

• Make sure that your file is completely mistake free, i.e. other people’s debts and payments.

• Only apply for credit you are likely to get, asking for a rate first before having them do a credit search, ask the lender to only do a ‘quotation search’.

• Do everything you can to keep up to date with your agreed repayments such as setting up your direct debits and also if you’re finding it too difficult to keep up with the payments ask if you can have smaller repayments extended over a longer period of time.

• Prove to lenders that you’re a responsible borrower, you can do this by taking out a credit card which you may have to take on a high interest rate but just use a small amount each month being sure you can clear the balance off full at the end of each month so you don’t get hit with the high interest rate. You will need to do this for at least 6 months.

• Close down any credit agreements that are no longer live.

• Register for the electoral roll from your home address.

• If you have a joint finance with somebody with a bad rate this will effect your credit rating. So if you split from this person be sure to inform and let the debt agencies know you’re no longer in joint finance with that person.

Things lenders look for on application forms:

– Long term employment history.

– Monthly Expenditure and outgoings

– Long time living in one place, own a home instead of renting one, long-term record from the same bank.

Data protection

Under the Data Protection Act if a lender refuses you credit they must state why if your credit scores were used to help the lender come to that decision. If so, you’re able to ask for a review of your application, giving you chance to look over your rating and pin point what areas you need work on building up towards a higher credit rating. This also gives you a good chance to point out if there are any mistakes that are on your record and get them corrected and looked over.

It isn’t the end of the world if your rating isn’t strong, although it may take time and patience to repair, details on bankruptcy will stay on your record for up to six years but for the minor problems it should only take up to a year to get yourself back up to a healthy rating if you have a steady year of good credit habits.

Faulty information

If you notice any of your information is wrong then you simply need to contact the credit agency to inform them. Let them know which details are incorrect and ensure that it is all the correct information.

Where can I start on getting my credit rating back to full health? 

First and most important, make sure you’re making the payments to creditors on time, if you’re unable to make a payment then be sure to contact your creditor explaining this and come to an agreement to make the payment the following month, if you have any outstanding defaults then pay them off.

You should contact a credit reference agency such as Experian and obtain your credit history from them so you can look through and make sure all is correct and up to date.

If a bankruptcy order is annulled make sure that a copy of the discharge or annulment is sent to the credit agencies.

Reference agencies also give people the chance to explain why they may have had a period of bad credit performance, consumers may attach a notice of correction on their credit report to explain why they have failed to make past payments on time.

Some lenders will search your credit report multiple times during a single application if so then you should then alert credit reference agencies.

Being on the electoral roll correctly is essential, something as little as a mix up in the house number can cause you serious problems, people can often find that simple measures such as filing out credit reports correctly or making sure you’re on the electoral roll will give you a nice jump for your rating.

Why are more families turning to payday loans during school holidays?

Finishing school on the last day before a long 6 week school holiday was one of the best feelings you could experience as a child. As an adult, the start of the school holidays also signals the start of increased costs for many UK families with children.

It’s no secret that many businesses throughout the UK will massively increase their prices during the school holiday season due to an increase in demand. Holiday companies especially have come under criticism for lowering their prices when children are in school and massively hiking them up as soon as the schools break up.

For many working people, booking a family holiday is only a possibility when children have broken up from school due to the Governments newly imposed laws that mean any parent can be fined for taking their child out of school in term time to go on holiday.

When you look at the price increases that many UK holiday companies adopt during the school holidays, it is completely understandable why many working families take the approach to take their children out of school during term time, simply because it’s the only time they can afford to.

It’s not just holiday companies that seem to increase their prices in the popular months, local swimming baths and family activity centres have been revealed to do exactly the same.

While many people would expect the busy Christmas period to be the most popular time to take out a payday loan to cover the costs of presents, food and drink; it is in fact the school summer holidays that many working families will turn to payday loans as an additional finance source.

5 reasons why working families turn to payday loans throughout the school holidays

  • UK businesses increase their prices during the popular summer months as the demand increases – Holiday booking companies, family activity centres have all been revealed to increase prices during busier periods.
  • Children need more entertainment when they are not at school – With no more school children will tend to look for something else to take up their time, whether it is giving them pocket money to go out with their friends or taking them down to a local park for an ice cream or a spot of lunch.
  • During the Summer holidays, working parents will usually have to switch to a part time basis in order to look after their children who would otherwise be at home on their own. Switching from full time work to part time will also mean a reduction in wages
  • Parents who cannot afford to take a drop in wages by switching to a part time basis will more than likely find themselves having to pay for a Children’s summer camp of some sort. Summer camps are a great way to keep your children busy and having fun throughout the summer break. However summer clubs for children can be quite expensive.
  • Summer holidays – the summer months are the most popular time of year and in most cases the only time of year that many working families will get to have a holiday. Whether you are visiting a UK resort of travelling over to a European destination, both can be very costly.

There is no doubt that the school summer holidays create additional costs for many working class families. Sometimes there is no other option but to turn to additional finances such as payday loans.

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Overdrafts are more expensive than payday loans according to Consumer Group

In a recent study conducted by consumer group Which, found the cost of borrowing £100 from a bank in the form of an unexpected overdraft to be more than double the cost when borrowing from a payday lender.

In early 2014 the Financial Conduct Authority imposed a price cap on all UK payday loans meaning that the cost of borrowing £100 over 28 days will be £22 maximum. When you compare that figure to many of the UK’s largest banks, some of which charge a set fee of up to £5 per day, payday loans are seen as a far more cheaper and effective method of borrowing.

In response to the recent findings, the Consumer Group Which have written to and approached 13 of the UK’s high street banks asking them to explain their charges and come clean to their customers.

“Consumers need to know exactly what they are being charged for especially when it comes to overdrafts with hidden high costs” said Mr Tyrie of the Treasury Select Committee.

Payday Loans compared to overdrafts

As well as comparing the costs of borrowing £100 for 28 days through either an overdraft or payday loan, Which Consumer Group also compared the daily costs imposed by many of the Banking giants.

Pixie payday loans compared to overdrafts

Figures released by the Competition and Markets Authority found that British banks made a total of  £1.2 billion from overdraft charges and has already begun proceedings to impose a daily price cap and maximum monthly charge.

In response to the recent findings conducted by Which Consumer Group, the British Bankers Association has issued a statement claiming that overdraft charges have plummeted since 2008 and now save UK consumers over £900 million in charges every year.

The CMA will release their full dossier of findings to the public in early August. It will be interesting to see what steps will be taken in relation to banks overcharging their own customers. We have previously seen banks paying the price of unnecessary charges with the PPI scandal the biggest of them all. Could overdraft charges be the next big financial penalty for UK banks?