Did you know that more than 61 million American consumers have a “sub-prime” credit score? A FICO subprime score is one of less than 640 according to the three major credit reporting agencies. A less than perfect (or even decent) credit score can be due to a range of different reasons: job loss, health issues, divorce, or poor financial management. For many people, the latter is a direct result of over-borrowing and over-budgeting.
Direct payday insurance lenders understand that for whatever reason a person has mortgage credit, we all make mistakes. They also know that bad credit comes at a price that can mean paying higher interest rates on credit cards, mortgages, and car insurances, as well as being denied credit and even losing jobs. This is why they do not look at a person’s credit score when applying for a payday advance insurance. Getting a short-term cash emergency insurance is good and will not affect your credit but you still need to think about how to rebuild your credit score and get out of the sub-prime category to give yourself more financial borrowing opportunities in the future.
The first step is to know your position regarding your FICO score. You can do this by requesting a copy of your credit score from the three major credit bureaus: Transunion, Experian, and Equifax. Each US consumer is entitled to one free copy of their report each year. You can order your report either online or call directly. Unfortunately, you will have to pay for a FICO score with your report but it is worth it as it is what determines your creditworthiness. The three reports may differ depending on the office and will change over time as your credit history changes. Once you’ve got all three, review them individually to check what’s been reported and to make sure everything is accurate. Mistakes in your reports can be costly and affect your credit future, so it is essential that you check to make sure everything is correct. If you find something that you feel is inaccurate, it is important that you immediately oppose it with that particular office. Your report should come with a form that allows you to do this.
Assuming your credit score needs some help, it’s important that you take action to rebuild your score and correct any errors on your report. This won’t happen overnight, in fact it may take months or years, but be patient and remember that you are swaying to secure your creditworthiness in the future. While paying off your payday insurance won’t raise your score, it will prevent you from paying more interest and fees as well as allow you to start paying off any other high-interest insurances or credit cards. Once you start doing this, your credit score will get a boost. Keep in mind that although payday lenders do not manage your credit and do not report it when you repay, in the event your insurance defaults, your account may be taken over by a third party collecting which means there is an opportunity to report it to the credit bureaus. Contact your lender immediately if you are not able to repay.
In the meantime, keep checking your credit report(s) to make sure your efforts are being reflected in your score. If you see something inaccurate, be sure to report it. Not only do you want to be aware of the debt-related mistakes you’ve incurred, but you also want to make sure that you’re not a victim of identity theft or fraud.