The credit card application process is a mystery to many consumers. US News talked to several experts to help demystify what happens before, during and after you apply for credit.
Before You Apply for Credit
Check your credit report and dispute any inaccuracies to the credit bureaus. Five percent of American consumers had an error on one of their credit reports that could result in them paying a higher interest rate on an auto loan or insurance, according a Federal Trade Commission study released in 2013.
Knowing where your credit stands can also help you set realistic expectations and apply for a credit card best suited for you. Someone with an extremely high credit score, above 750 or 800, will likely qualify for better terms because they have better credit histories and theyve become less a risk of default, says Dave Pommerehn, vice president and senior counsel of the Consumer Bankers Association. Someone with a score between 750 and 660 might qualify for a card with higher interest rates and fewer rewards. And someone with a credit score below 620 might be a candidate for a secured credit card, says Bruce McClary, a spokesman for the National Foundation for Credit Counseling.
secured credit card is analogous to training wheels for credit with the hope that youll eventually raise your credit enough to qualify for an unsecured credit card. The holder of an unsecured credit card pays an upfront deposit to secure the card in case they default, creating less risk for the issuer. Because the available balance is based on the size of the deposit, secured credit cards typically carry low limits. Utilizing that card is going to be extremely difficult sometimes because its a $200 limit, [and] you dont want to max it out, says Wayne Sanford, owner of New Start Financial Corporation, a credit consulting firm in Allen, Texas.
Depending on the lender, you might have other options beyond a secured card – even with little credit history. For instance, Grow Financial Federal Credit Union in Tampa, Florida, offers secured and unsecured credit cards, but underwriting manager James Esner says they try to steer most members toward an unsecured card. Most people dont have the money to put in a secured account, he explains. If someone had a low score with lots of charge offs, then they might be better suited to a secured credit card, he adds.
While Your Application Is Reviewed
When you apply for a secured credit card, Sanford says the issuer will mainly look at your income, but with a regular credit card, theyll focus more on your credit history. Typically, a tax lien or open [collections] judgment is going to be a red flag thats going to disqualify you from both, he adds.
In reviewing credit applications, Esner says his credit union looks at the
applicants FICO score, annual income and unsecured debt ratio – all their balances that are outstanding on other credit cards in relationship to their income, he says.
In general, lenders want to see that you have stable income to pay your bills. Theyll also consider lifestyle factors, such as having a regular job, living in the same place for a while [and] consistency in employment, McClary says.
On top of that, lenders will review a consumers repayment history, delinquencies and amount of debt outstanding. This information on their credit profile contributes to the amount of credit theyll receive if approved. A younger person will probably not get a $30,000 credit line, whereas a more sophisticated creditworthy person with no delinquencies might get higher credit lines, Pommerehn says.
Fortunately for many borrowers, the newest version of FICOs credit scoring model
de-emphasizes medical debt, and many lenders do the same as theyre reviewing applications. If we see medical collections, thats not the end of the world, Esner says. A lot of times those are just bickering [disputes] between an insurance company and a hospital, so we dont really let that ding you so much from a credit perspective. If we start seeing nonmedical collections, thats a concern.
After You Get an Answer
Applying for new credit temporarily lowers your score by a few points. New credit inquiries make up 10 percent of your FICO score, and inquiries impact your score for 12 months, which is usually not enough to be a major concern.
credit application is rejected, youre entitled to know why and receive a free extra copy of your credit report to review. The lender should send you a letter with reason codes (for instance, your balances were too high or you have a history of missed payments), and you can review your credit report so youll know what
areas to target for improvement.
VietNamNet Bridge – Bank shares and state-owned enterprises’ (SOEs) IPOs (initial public offering) have become highly attractive to foreign investors.
The bank share price has increased by 23 percent on average in the last three months, which represents the sharpest increase since 2013 and a two-fold increase compared with the region’s.
According to Bloomberg, the Vietnamese bank share price has seen the sharpest increase in Asia.
Investor confidence in Vietnamese commercial banks increased after the Vietnam Asset Management Company (VAMC) announced it had bought VND123 trillion worth of bad debt, helping the bad-debt ratio of the Vietnamese banking sector fall from 17 percent to 3.25 percent after three years of restructuring.
Meanwhile, at the Mamp;A (merger and acquisition) forum held recently, chair of the State Securities Commission (SSC) Vu Bang said that the legal document on lifting the foreign ownership ratio ceiling would be released in August.
According to Deputy Governor of the State Bank Nguyen Kim Anh, 12 weak credit institutions have been eliminated in a plan to restructure banks and the gold market.
Meanwhile, an analyst, though saying that bank shares are attractive to investors over the long term, said investors still hesitated to buy bank shares.
He said that unclear information about bad debt settlement and bank restructuring has made investors reluctant to inject money into banks.
The Saigon Asset Management (SAM), for example, a large investment fund, has invested in bank shares, but it has also withdrawn capital.
SAM’s President and CEO Louis Nguyen said bank share prices go up and down all the time, while they still cannot see stable growth. Banks’ profits were also unstable in the restructuring process.
The representative of another foreign investment fund also noted that Vietnamese commercial banks were meeting certain difficulties while settling debts. The bad debts have forced banks to make higher provisions against risks.
Foreign investors now keep a close watch over SOE equitization and IPO plans, hoping to find great opportunities in the enterprises.
According to Nhu Dinh Hoa, CEO of Bao Viet Securities, about 380 SOEs will make IPOs. These include profitable businesses, such as MobiFone, a telecom giant, Sabeco, a big brewery company and the Vietnam Cement Corporation.
Hoa believes that in order to push up the SOEs’ IPO, the government should think of raising the share proportion to sell to investors.
A source said the Ministry of Finance was considering amending the regulations on SOEs IPOs.
Once SOEs shift to operate as joint-stock companies, they will list shares on UpCom market first, and launch an IPO and list on the bourse when they sell all their capital.
While the success of a film depends a lot on the story as well as the cast of the movie, the budget also plays an instrumental role. In 2014, 2 States, which was made on a budget of Rs 25 crore, became a blockbuster after it grossed Rs 110 crore at the box office. Similarly, Heropanti (2014) was made for Rs 15 crore, but it earned around Rs 55 crore. Also, Highway (2014) was made on a budget of Rs 9 crore and it earned Rs 30 crore.
Sajid Nadiadwala’s upcoming film, Phantom, which features Saif Ali Khan and Katrina Kaif, is rumoured to have been made on a budget of Rs 40 crore. He explains, “Last year, films like Highway, Heropanti or 2 States worked because they were cost-effective.So, the budget plays an important role in film-making today.”
Sajid feels that smart budgeting is an important requisite for producing movies. “Also, it’s important to have a great team. I want to credit my team, as they worked on (low to mid budget) films like Highway, Heropanti and Phantom on one hand, and pulled off a biggie like Kick (2014) on the other,” he says.
The film-maker, who directed Kick, says that the team of Phantom helped him plan the film’s budget smartly. “It has been done very intelligently, thanks to Kabir (Khan; director) and my EPs (executive producers). Although they filmed in around six countries, and about eight [international] cities, it was all intelligently planned. Everything worked out well,” says Sajid.
He adds that actors also contribute to the smart budgeting of a film. “I also want to credit the actors. People have realised that films like Phantom have different remuneration structures. I am glad that actors like Saif and Katrina, and even Kabir as a director, were really cooperative. And above all, having partners like Siddharth Roy Kapur and his team, gives us the courage to green-light a film like this (Phantom),” he says.
Read: There is a shortage of talent, says Sajid Nadiadwala
If you run a small business, its likely that youre operating on a relatively limited budget. Whether you bootstrapped your business or are trying to pay back loans you took out to cover your startup costs, its in your best interest to conserve money wherever you can.
Without a thorough budget plan, however, it can be difficult to track and manage your finances. This is especially true for any unexpected business expenses that may come up, as they often do. A 2015 survey by small business credit provider Headway Capitalfound that although 57 percent of small business owners anticipated growth this year, nearly 19 percent were concerned about how unexpected expenses would impact their business.
If you want to keep your business operating in the black, youll need to account for both fixed and unplanned costs, and then create and stick to a solid budget. Experts offered their advice for small business owners looking to keep their finances in order. [4 Tips for Reducing Startup Costs]
Define and understand your risks
Every business venture has a certain degree of risk involved, and all of those risks have the potential for a financial impact on your company. Paul Cho, managing director of Headway Capital, said that small business owners need to consider their long- and short-term risks to accurately plan for their financial future.
How will changes in minimum wage or health care requirements impact your workforce? Cho said. Do you operate in a geography at high risk of a natural disaster? Do you rely heavily on seasonal workers? Understanding the potential risks facing you on a short- and long-term basis is important for all small businesses. Once youve mapped out the threats to productivity, a clearer picture can be built around emergency planning, insurance needs, etc.
Overestimate your expenses
If your business operates on a project-to-project basis, you know that every client is different and no two projects will turn out exactly the same. This means that often, you cant predict when something is going to go over budget.
Every project seems to have a one-time cost that was never anticipated, said James Ontra, CEO of presentation management company Shufflrr. It usually is that one unique extra item [that is] necessary to the job, but [was] not anticipated when bidding the job.
For this reason, Ontra advised budgeting slightly above your anticipated line-item costs, no matter what, so that if you do go over, you wont be fully unprepared.
I go by the cost-moon-stars theory, he said. If you think it will cost the moon, expect to pay the stars.
Pay attention to your sales cycle
Many businesses go through busy and slow periods over the course of the year. If your company has an off-season, youll need to account for your expenses during that time. Cho also suggested using your slower periods to think of ways to plan ahead for your next sales boom.
There is much to be learned from your sales cycles, he said. Use your downtime to ramp up your marketing efforts while preventing profit generation from screeching to a halt. In order to keep your company thriving and the revenue coming in, you will have to identify how to market to your customers in new and creative ways.
Plan for large purchases carefully and early
Some large business expenses occur when you least expect them a piece of equipment breaks and needs to be replaced or your delivery van needs a costly repair, for instance. However, planned expenses like store renovations or a new software system should be carefully timed and budgeted to avoid a huge financial burden on your business.
Substantial business changes need to be timed carefully, balancing the risk with the reward and done with a full understanding of the financial landscape youre operating within, Cho told Business News Daily. An up-to-date budget and data-driven financial projections are important components that help guide when to make large investments in your business.
Remember that time is money, too
One of the biggest mistakes small businesses make is forgetting to incorporate their time into a budget plan. Ontra reminded business owners that time is money, especially when working with people who are paid for their time.
Timing underestimation directly increases costs, Ontra said. For us, the biggest underestimation is allotting time for client feedback. It is a Herculean effort sometimes to meet a deadline with lots of people focused on a single task. Then, the client needs to give feedback for us to proceed. If the client is distracted with other issues, feedback planned for a three-day turnaround, can become a week or longer. Not only do you start to lose time to the delivery schedule, your team also loses momentum as their collective thought shifts focus to another project.
Ontra recommended treating your time like your money, and set external deadlines later than when you think the project will actually be done.
If you believe the project will finish on Friday, promise delivery on Monday, he said. So, if you finish on Friday, deliver the work early and become a star. If for some reason time runs over, deliver on Monday and you are still a success.
Constantly revisit your budget
Your budget will never be static or consistent it will change and evolve along with your business, and youll need to keep adjusting it based on your growth and profit patterns. Cho suggested revising your monthly and annual budgets regularly to get a clearer, updated picture of your business finances.
Regularly revisiting your budget will help you better control financial decisions because you will know exactly what you can afford to spend versus how much you are projecting to make, Cho said. Take into account market trends from the previous year to help you determine what this year may look like. Once you have a clear understanding of your businesss budgetary needs, you can accurately forecast what can be set aside for an emergency fund or unexpected costs.
Surveillance video from top retailers caught what police called fraud in action.
Egberto Nieves was getting ready to go on a shopping spree with someone elses credit card. Authorities say how he did it was fairly easy in this era of identity theft.
Victims who had their identities, in essence, taken from them where you have an individual who adds themselves as an authorized user, receives a card issued in that persons name and goes on a shopping spree, got cash advances, said US Postal Inspector Kimberly Hairston.
Victims often dont find out if their accounts were hijacked until they receive their next statement.
But, theres another layer to this scheme.
Victims werent receiving statements because of the change of address, Hairston revealed.
Suspects would add themselves on the credit card as an additional user and make change of address. So, victims werent immediately alerted to problems.
While that prompted flashbacks to the grim days of the 2008 financial crisis for many investors, the two situations are vastly different, Dudley said. The crisis was based in the US, where it was caused by a surge in mortgage-lending to buyers with weak credit histories.When those borrowerswere unable to repay theirloans in mass numbers, intricate securities linked to the mortgages plummeted in value, threatening major US financial institutions, freezing credit and causing markets to plummet.
The volatility of the past few days, on the other hand, is linked to turmoil abroad rather than to the US economy, Dudley said. China has a challenging task ahead of them, he noted. Theyre trying to reorient their economy from investment to consumption.
Chinas size alone makes its challenges significant to the US economy, Dudley noted, reiterating comments he made in Rochester, NY, earlier this month.
Whats going on in China has huge implications for the rest of the world, he said then. The Chinese economy is basically the same size as the US economy now, although per-capita GDP is still much higher in the United States.
On the whole, existing economic data makes a decision to begin raising interest rates less compelling when the Federal Open Market Committee meets in September, said Dudley, who is a voting member of the panel. A movecould, however, become more compelling by the time of the meeting as we get additional information on how the US economy is performing and more information on international and financial market developments.
Dudley remained optimistic about raising interest rates this year, as long as the job market continues to improve and the economy meets the Feds 2% inflation goal.
Lets see how the data unfold before we make any statements about when that might occur, he said. A large portion of traders had been betting the Fed would raise rates, which have hovered near zero since the financial crisis, as early as next month. That shifted to December, and then to next year, as Chinas economy slowed and US markets gyrated.
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At long last, public sector bankers are beginning to say they see the bad loan stress reducing. However, they still worry that signs of growth are still weak. Credit offtake, for one, is expected to be muted this year.
Whether it is an RBI Governor speech or a Finance Ministry press conference, the dominant worry has been the rising bad loans of banks.
Last week, Finance Ministry officials admitted gross non- performing assets of public sector banks have risen to 5.43 percent as on March 31 this year, compared with 4.72 percent in 2014. But at long last bankers say this trend may be changing for the better.
Rajnish Kumar, MD, State Bank of India, says, I would say that in the last two years, this has been a pretty intensive exercise as far as bankers are concerned. And a large portion of the bankers time is going in managing the stressed assets. There are signs that stress is levelling out.
There seems to be renewed confidence that slippages will come down. In fact, in a bid to reduce NPAs, several banks are in talks with asset restructuring companies. While corporation bank aims to sell around Rs 1,000 crore worth of NPAs this quarter, Union Bank has put assets worth Rs 1,200 crore on the block for sale to ARCs.
Arun Tiwari, CMD, Union Bank of India, said, My take is, for Union Bank, the peak was September 2014. Thereafter every quarter we have been truncating that. I mean the slippages have been contained. And going forward, I think they will remain at that level or lesser.
While NPLs may be declining, growth is still a far cry. The consensus among bankers is that loan growth for FY16 will at best be 10.12 percent. And with the advent of payment banks, even securing deposits could get tougher.
DEMAND. Vice President Jejomar Binays spokesperson Joey Salgado (middle) asks acting Makati Mayor Kid Peña (left) to demand Makati Action Center officer-in-charge Arthur Cruto (right) to liquidate his outstanding cash advances. File photos from Rappler
Merchant Cash USA announces it will not be working with Independent Sales Organizations (ISOs) and their agents, and instead will be a direct lender of cash advances to small businesses across the US
Las Vegas, NV (PRWEB) August 21, 2015
Merchant Cash USA announces it will not be working with Independent Sales Organizations (ISOs) and their agents, and instead will be a direct lender of cash advances to small businesses across the US
ISOs are lead generation companies that use agents to connect funding sources with business owners, thus securing a cash advance for these companies. The agent will typically include numerous fees with using this service. Direct lending cuts out the middleman, which can possibly save a small business thousands of dollars. Direct lending means that Merchant Cash USA is the primary source provider of requested capital. Meaning there are no hidden fees involved in contracts, and cheaper interest rates can typically be offered to those that qualify. Advances are dispersed not based on a personal income credit score but by strength of ones business.
During the economic recession, traditional banks approval of small business loans rapidly declined to a rate of less than 25 percent. The merchant cash advance industry was introduced during that time frame as alternative funding source for businesses, but has traditionally held a negative reputation since its inception. Mainly because certain operators would tack on hidden fees, concealed clauses, and high interest rates in contracts. Small business owners that were desperate for capital and denied loans from banks many times turned to these organizations because there were no other options. However, eight years later competition in the industry has led to a major drop in interest rates, while most of the detrimental operators have been shut down.
Today, some major merchant cash advance organizations work with ISOs to match their clientele with funding sources, but many times this can include various registration and monthly processing fees that can potentially equal thousands of dollars. If that same business owner needs multiple cash advances from numerous funders, the ISO agent could potentially charge them those same high fees each time they need to get a cash advance. Those who choose direct lending can avoid these fees entirely and come back for a better rate each time they may need an advance.
Merchant Cash USA wants to become a direct lender of capital to avoid any confusion with improper disclosure of terms, and give the small business owner the most capital for the lowest rate. Bringing better value to the business owner will always be the number one priority. By cutting out ISO agents and working directly in house, the organization is hoping to steer the industry into an even more profitable and positive direction with the small business owner.
About Merchant Cash USA
Merchant Cash USA was founded in 2015 to help businesses grow by obtaining the cash flow they need. The organizations mission is to offer small to medium size business owners cash advances without the hassle of big bank requirements. Visit merchcash.com to find out more of follow us on social media. Facebook and Google Plus: Merchant Cash USA and Twitter: @merchcash.
For the original version on PRWeb visit: http://www.prweb.com/releases/MerchCash/DirectLending/prweb12916179.htm
Will I be accepted?
Credit cards with the most attractive deals such as the Gold Mastercard will receive a large amount of applications.
This means the banks have the pick of the bunch when it comes to accepting borrowers. In addition lenders must only offer the advertised deal to 51 per cent of successful applicants.
Therefore those struggling with a weak credit history may find it harder to get accepted or may be offered a less attractive deal.
- Worried about your credit history? Find out how to check, improve and protect your score