Cents of Community: Building Your Credit Score - ARLnow

Cents of Community: Building Your Credit Score - ARLnow


Cents of Community: Building Your Credit Score - ARLnow

Posted: 12 Oct 2020 12:00 PM PDT

This monthly column comes from the Arlington Community Federal Credit Union as part of their mission to financially empower the community. Credit unions are not-for-profit member-owned cooperatives and anyone who lives, works, worships, volunteers, goes to school, or does business in Arlington, Falls Church, Alexandria, or Fairfax County is eligible to join ACFCU.*

Credit scores are a three-digit scoring system that financial institutions and other lenders use to determine whether you qualify for loans and what your interest rate will be.

Building up your credit score is critical for saving money long term with lower interest rates and insurance premiums. It also helps to ensure that you will be able to access credit when you need it. Most lenders use a FICO score, which ranges from 300-850, and is based on your reported payment history from all your creditors.

Here are some of the key components that make up your credit score and things you can do to bring your score up:

  • Payment history: A history of paying bills on time is the biggest component and accounts for 35% of your score. Set up autopay to ensure your bills are always paid on time.
  • Utilization: 30% of your credit score is determined by how much of your available credit you are using. Pay down credit card and line of credit balances until you are using 30% or less of your available credit (for example 30% of your total credit card balance) to help build a healthy score.
  • Length of credit history: Starting a credit history early is a great way to get a head start on building your credit score for the future. Your total length of history counts for 15% of your score. One way to start building credit is with a secured credit card. Secured credit cards require a deposit and your credit limit is based on the amount that you are willing to deposit. Make sure to use your credit card responsibly!
  • Credit Mix: Credit scores consider the mix of types of credit on your credit report (e.g. mortgage, car loan, credit card). This makes up 10% of your score. Having a few different types diversifies your credit, but secured credit is generally a stronger indicator for your score. Secured credit means that there is collateral associated with your loan. Secured loans include mortgages and auto loans.
  • New Credit: Opening several accounts in a short period of time (e.g. multiple credit card applications within six months) may reduce your credit score, especially if you have a short credit history. New credit accounts for 10% of your score. However, the score will recognize if you are shopping for rates (e.g. applying for a car loan with multiple lenders) within a limited period of time. Applying for credit or opening a new account can have a negative impact on your credit score but this drop is typically small and doesn't last very long.

If you're applying for a loan or credit card, consider having a conversation with your lender about your credit history and score. If your score isn't where you want it to be, they may be able to offer suggestions to help you raise your score.

* Membership eligibility requirements apply. Federally insured by NCUA.

Hoping to be LatAm’s top digital bank for SMBs, Xepelin launches a lending and revenue management service - TechCrunch

Posted: 12 Oct 2020 12:30 PM PDT

There's another entrant in the startup race to provide financial services to Latin America's small and medium-sized businesses.

Financial services have been a huge opportunity for startups coming out of Brazil, Colombia, and Mexico in recent years, and now Xepelin, a new company from Chile, is looking to join the fray.

Xepelin's founders, Sebastian Kreis and Guillermo Molina Carvallo, launched their company with the vision of creating a new kind of online bank for Latin America's small businesses.

Sebastian Kreis, chief executive officer, Xepelin. Image Credit: Xepelin

The company's pitch to business owners depends on a variation of the lending tool known as factoring, where small businesses can take out loans based on the income they're expecting to receive. In Latin America, where small businesses have limited avenues to traditional loans, according to Kreis, factoring represents a novel solution.

Xepelin already has a multi-million dollar credit line on the books in addition to a small round of initial financing and the company will be using both the credit line to bring customers in and the equity infusion to continue developing revenue management and resource planning tools for its customers.

Starting in Chile and Mexico, where the two founders have a long history in the financial services world, the company expects to become a player across the continent in line with the growth of private debt services for small businesses.

Other startups, like Portal Finance and Marco Financial are also targeting the lending markets. Like Xepelin, the two companies have secured multiple lines of credit to support their businesses.

Kreis estimates that debt financing in Latin America could grow to 70 times its current size given changes to the regulatory environment and increasing demand for digital financial services over the next decade.

In the first stage we developed the new standard for SMBs' working capital financing in LatAm, focusing on our client's user experience, financial needs (not only transactions) and the way they manage their working capital. Xepelin gives SMBs access to capital in an easy and efficient way.

Mexico is a good indicator of the potential size of the market, according to Kreis. There only 300,000 businesses — out of more than 6 million registered companies — have sales and account executives offering revenue management and credit lines.

These money managers ahve a portfolio of 300 companies that they work with, while mid-market companies may work with as many as 1,000 to 5,000 small businesses.

So far, Xepelin has raised $3.5 million in early stage funding from investors including Oskar Hejertonsson, Manutara Ventures, Ignacio Canals, Gonzalo Rojas, FJ Labs, Diego Fleischmann, and Daniel Undurraga. The most recent capital infusion, a $2.5 million round led by Impact Ideas VC closed earlier this month.

New blockchain credit facility launched by Ripple | Financial Services (FinServ) - FinTech Magazine - The FinTech & InsurTech Platform

Posted: 12 Oct 2020 08:15 AM PDT

A leading blockchain enterprise company has launched a new credit line that will benefit up and coming fintechs.

Ripple, which has 500 employees and nine offices worldwide, specialises in commercial products that are currently used by customers in more than 55 countries. 

Line of Credit is a new beta service on RippleNet that enables customers using On-Demand Liquidity (ODL) to access 'capital on demand', and to facilitate cross-border payments via XRP – its native digital asset.

Ripple customers have access to 'alternative liquidity solutions' via the company's worldwide network which uses the XRP Ledger and the XRP digital asset, to create seamless and speedy credit payment services globally.

Companies using ODL on RippleNet can buy XRP from Ripple on credit. They can then receive credit approvals faster than via traditional routes. Already piloted by RippleNet customers, the scheme has proven highly successful because it provides businesses with the opportunity to utilise capital freed from pre-funded sources. This enables them to reach customers in new markets.

The benefits are explained in a statement released by Ripple, which states, "Limited access to working capital is one of the biggest barriers to growth for many companies. Unlike incumbents who have large balance sheets that allow them to scale their business quickly, many fintechs and small and medium-sized enterprises (SMEs) lack the capital and resources to compete. 

It continues, "Faced with stalled growth, customers turn to creating bespoke credit arrangements – with each partner, in each destination market. Each arrangement requires additional overhead and management, making it a slow, burdensome and an ultimately inefficient process."

The new Line of Credit service solves these challenges for customers because it enables immediate access to capital for all sectors via a one-step credit agreement. Line of Credit also operates through existing financial systems, which means businesses can improve their payment infrastructure, but do not need to replace it.

The statement concludes, "Line of Credit is the latest step in Ripple's vision to enable the Internet of Value and break down the barriers in finance. It's an exclusive new service that financial institutions and money service providers can use to consistently provide customers with cost-effective, real-time cross-border payments."

Axis Bank collaborates with Google Pay, Visa to launch a new ACE Credit card - BusinessLine

Posted: 12 Oct 2020 04:43 AM PDT

Axis Bank on Monday announced the launch of its ACE Credit Card in India in collaboration with Google Pay and Visa.

The card meant to help with digital payments. From application to issuance, with the entire user journey for the credit card application will be done digitally.

For essential use cases, including mobile recharges and bill payments made via Google Pay, users can earn a cashback.of 5 per cent. The company is also offering 4 per cent-5 per cent cashback for expenses on food ordering, online grocery delivery, cab rides for transactions made on partner merchant platforms such as Swiggy, Zomato, BigBasket, Grofers and Ola.

There is also an unlimited 2 per cent cashback on other transactions (terms and conditions applied).

"Users will be able to get cashback directly into their ACE Credit Card accounts. The tokenization feature enabled in partnership with Visa will allow Google Pay users to use their ACE Credit Card to make payments through a secure digital token attached to their phone without having to physically share their card details," explained an official release.

Sanjeev Moghe, EVP & Head, Axis Bank Cards & Payments said: "This collaboration and product construct will help us widen our footprint through Google Pay and broaden credit card penetration, contributing to our commitment towards the vision of Digital India and the country's evolution to a less-cash society".

Eligible users can avail the card through the Google Pay app.

"Users will start seeing the 'Credit Card' option in their Google Pay app as we start rolling this offering out across India. We will continue to refine the product as we get inputs from the users," added Ambarish Kenghe, Senior Director - Product Management, Google Pay.

"Consumer attitudes towards credit cards are fast-changing," said TR Ramachandran, Group Country Manager, Visa, India & South Asia said,

"This, combined with the large headroom that exists for expanding credit access and affordability, represents a significant opportunity. Today's digital-first consumers expect simple, secure and intuitive payment experiences from credit cards – from application to issuance and transactions to rewards, and in online, in-app or in-store environments. We are excited to partner with Google Pay and Axis Bank to launch the ACE Credit Card, to enable secure, convenient and compelling product experiences for today's customer," Ramachandran further said.

A joining fee of ₹499 which is applicable from the second year of use will be waived for all users who apply for the card in 2020. In 2021, joining fee will be reversed if spends exceed ₹10,000 within 45 days of issuance, the bank said. The annual fee of ₹499 will also be waived off if for users who reach ₹2 lakh spends in the year.

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