There are lots of people that would like to try different things to improve their credit score. This is because a credit record can be looked at by many different people such as potential employers, landlords and lenders and so you want to make sure that it looks good. However, there can be some confusion as to what t do to improve the credit score. This is partly because different people are looking or different things when they examine your credit report and there is no standard way of scoring, but there is also misinformation out there as well. It is therefore really important to make sure that you are very careful when trying out things and that you make sure that you get the information from a trusted source and that you think it through carefully. So, if you think that having a credit card will help, then you need to be sure that advice is correct.

Advantages of Having a Credit Card

Some people struggle with getting a decent looking credit record because they have never borrowed money before and so they might think that getting a credit card will help them because it will show that they have had some credit. This will be the case so if you have a credit card, use it a bit and repay it in full each month, it will show that you are capable of managing a card and making the repayments and it could be the case that lenders will look favourably on this. They might be more likely to lend as they will feel that you have already shown that you are capable of making the payments.

Disadvantages of Having a Credit Card

The first problem though, might be that without a good credit record you might struggle to get a credit card in the first place. If you do get one, then you will have to make sure that you always repay it on time and in full if you want to prove that you can do this. There is always going to be a risk that you will be in the situation that you cannot afford to repay the card and this will reflect badly on you. You may also find that some lenders will see that you have some form of borrowing and will wonder whether you will be able to afford to repay theirs as you have already got a commitment.

How to Reduce the Risks

Fortunately, there are things that you can do which will reduce the risks that you take on when taking on a credit card. If you set up a direct debits o that the card is automatically repaid in full on the da that you get paid, then there will be no risk that it will not be paid. If you keep a track of your spending on the card, then you can make sure that you do not spend more than you can afford on the card. So, either by noting down what you are using it for and adding up what you have spent or regularly checking the balance, you will be able to make sure that you can afford the repayment. It can be wise to have a think and actually decide on a budget. So look at your bank statement and see what money you have coming in and going out each month and then you will be able to work out how much you have left and that will allow you to know what you can afford to spend on the card as you will have to use this money to repay it.

If you have a bank that you really like you might wonder whether you should take out all of your financial products with them. These days banks will offer current accounts, savings accounts, mortgages, loans and credit cards and they may even offer insurance as well. You may wonder whether you should stick with the same place for all of these or whether you should go to different places for different products. There are advantages and disadvantages of each and it is a good idea to think them through so that you can decide what will be the best decision for you.


It can be extremely convenient to have all of your products with the one bank. You will easily be able to deal with them all in one go, whether that is with one visit to a branch or one login online or one phone call. It can be easier to budget and track the money that you have as well and it will take less time. Having to log in to lots of different places or visit lots of different bank branches can feel tiresome and you might find it harder to check your balances and keep a check of what is going on with your money if it is not all in one place.


It is likely that you trust the bank that you currently bank with and that means that you will be happy to use them for other products. Using a bank that you have not used before can be scary as you may not know what they will be like. You could, of course, read reviews and talk to others about them first, but it sometimes can still make it tricky to decide whether it is worth using a different one. 


If you stick with your bank, then you might be missing out on products that are better cost wise. For example, if you are taking out a loan, then you could find that there are other places that offer that loan which are a lot cheaper than the one that you are using. This could mean that by sticking with your regular bank you will end up paying out a lot more money than necessary. The same could be true for a savings account here you could end up getting less interest on your savings if you stick with your bank, compared with using a different one.

Value for Money

Value for money is also important. For example, when it comes to a loan, even if the cost is the same between your bank and another, there might be other features that could be better. Perhaps repayments are smaller so easier to manage or the customer service is better. Therefore, you need to think about every aspect of the process, not just the cost of it and then you will know for sure whether it is a better product or not.

It could therefore be a wise decision to not just choose your bank for every product that you take out. It is a good idea to have a good look around at what is available everywhere and that will enable you to make a good choice. You need to think about the fact that even if you trust your bank and they are convenient, they might not be providing you with the best value for money because they might be more expensive or not giving you such a good service for the money that you are paying. It is therefore worth spending a bit of extra time comparing the items available to be sure that you are getting the best deal.

It can be tricky knowing when to use different types of loans especially if you have not done a lot of borrowing before. It is therefore a good idea to have a think about the different loans that are available and think about who they are for. This means that when you come to borrow, you will have a much better understanding of your options and will be more likely to make the best decision when picking between the different loans. Considering the different features of a loan should help you to be able to more easily understand them.

How Much Can be Borrowed?

It is good to start with knowing how much you can borrow with different types of loans. Although lenders will vary in how much they will allow people to borrow, there are general guidelines to have a think about with regards to how much the type of loan will normally give. For example, a mortgage will give massive amounts of money, hundreds of thousands of pounds, but an overdraft will normally only be a few hundred. So make sure that you are aware of how much you would expect to borrow, within a range of figures, for different loans.

What are They for?

It is worth thinking about whether the loans have a specific purpose. There are some loans types which have a very specific purpose such as a mortgage can only be used to buy a home. However, there are also a lot of loans which do not have a specific purpose and so you will be able to use these for anything that you wish. However, the way that the loan works can have some influence on what it can be used for as you could not use an overdraft to buy a house because you cannot borrow enough money, for example.

How are They Repaid?

It is a good idea to know what the expectations for repayments will be with the loans. Some will have regular monthly repayments and that is often how we expect to repay loans. However, there are exceptions to this and these include overdrafts, which are repaid when money gets paid into your current account. It is important to know how they are repaid because you need to be sure that you will be able to afford the repayments and be aware of when you will need to find the money. Whether you repay in a lump sum, instalments or in less formal amounts, can be important and can influence your ability to repay so it is important to know this.

How Long do They Last?

It can be a good idea to also know how long they last. Some people do not like the idea of being in debt and so they want a loan that will not last very long. Other people would prefer to spread out the repayments so that they are easier to manage and do not mind being in debt for longer or even paying a bit more so that they can make this easier.

Who are They for?

Once you have all of this information, you will then be able to identify who the loans are for. You will need to think about the features of the loan and then you will be able to consider what situation they will be used in and that will help you to decide who they are for. It is worth remembering that different people will need different loans in different circumstances. Therefore it is not about recognising a specific individual that the loan is for but a situation and then if you are in that specific situation you will know that is the right loan for you.        

A payday loan is a type of borrowing that some people know little about. They might even just assume it is not for them and then never consider using one when they are choosing between different loans when they are borrowing. However, it is really sensible to have a good idea of how all loans work and then you will be able to think about whether you are making the right choice, when you are picking between loans, the next time you need to borrow.

Main Features of Payday Loans

Payday loans have a few main features which make them very different to other loans and these are the things that are worth noting so that you can be sure that you can easily know whether this loan will suit your needs. The first feature is that amount that you can borrow. With a payday loan you tend to be offered between £100 and £1,000 and this is a relatively small amount which could be handy if you do not want to build up a very big debt. It is good to know though, that if you are a first time borrower, it is likely that you will only be allowed to borrow small amount of money until you have repaid it on time and shown that you can be trusted. This is because the lenders do not worry about your credit record.

Payday loans came about because it was observed that those people with a poor credit record could not borrow money. Therefore, the lenders do not take much notice of the credit report and will lend to most people but they are cautious in the amount they lend as they know that there is a bigger risk that they will not be repaid.

The loans have to be repaid very quickly. The idea is that the money will keep you going until you are next paid and therefore when you next get paid you will be expected to repay all of the money you borrowed plus the interest and fees. This means that you need to come up with a lump sum of money all at once.

The loans can be arranged really quickly. They were designed to help out in emergencies and therefore they have to arranged quickly. It may be possible to get the money that you want to borrow within a few hours, but this will depend on the lender and so you will need to check with them to find out, particularly if you do need the money really fast.

Who are they for?

So, the loans are for people who do not have a good credit record and still need to borrow money, but only those that need a small amount. They can also be handy for anyone that needs to borrow money in an emergency as they can be arranged quicker than a lot of other loans. They are also handy if you only want to borrow a small amount of money or want a loan that will not last very long.

There are other loans that are similar so it is worth thinking about those as well. For example, if you do not want to repay right away an instalment loan is very similar to a payday loan but you spread the repayments over a few months to make it easier to manage. If you have a poor credit limit but want to borrow a bit more money then a guarantor loan could suit you. If you do have a good credit limit then it could be wise to get an overdraft or credit card arranged so there are there in case you need money in an emergency, as you can get money from them immediately.

Whenever you are thinking about whether to take out a loan, it is important to go through a long thought process and lots of research. This is true whether it is a payday loan or not. However, we will deal with a payday loan in this example and work through what you should be thinking about.

Do I Need a Loan?

It is wise to start by asking yourself whether you really need a loan. Borrowing money is expensive and so it is a good idea to avoid it if you can. Think about what you are using the money for and whether you really need it. Consider whether you can wait for it and save up and also think about whether you have savings already that you could use. Using saving is tricky as we might like to have some just in case, we need them or we might be saving up for something specific. But they can be replenished and it will usually be cheaper to use these rather than borrow. If you feel that you will find it too hard to save up, think about a way that might help, such as setting a regular transfer into a savings account.

How Much am I Prepared to Pay?

It is a good idea to think about how much money you are prepared to pay for the loan that you are taking out. You need to consider the fact that all loans have a cost which you will need to pay and you need to consider how much you can afford and want to pay. Think about what you are using the loan for and the cost of that and then how much more you are prepared to pay for it in order to have it and that amount so how much you are prepared to pay for the loan. You might find this hard but start at extremes – you would be prepared to pay a few pounds extra but not a few million pounds and then move more towards a central figure until you have pinpointed a range or amount that you are prepared to pay.

What Can I Afford to Repay?

It is also well worth taking a look at your financial situation in order to calculate how much you can afford to repay. This will vary between different people and you will need to look at your bank statements in order to work it out. Take a look at what you get paid and what you normally have to pay out and this should help you to be able to work out how much you have left to be able to pay out. You may have to cut back on spending in order to do this, so only allow for this if you are completely sure that you will be able to do this.

Is the Loan Type Good Value for Money?

Now you need to look at all of the different loans to see which will fit your needs. Consider things like how much you want to borrow as well as what you can afford to repay and then you will be able to think about which is most likely to offer you the best value for money. This will allow you to be able to identify the best.

Which is the Best Lender?

Once you have decided which loan type will be the best, you will be able to compare the different lenders that are offering this type of loan and you will be able to compare them and choose the one that you feel is best. They are likely to vary in things such as cost and therefore it is well worth doing this as it could make a big difference with regards to the value for money that you get from your loan.