Annie Button offers her advice on debt management and how investment stacks up against simple repayment.

It is an interesting question that many people will have to face at some point in their lives: if you have some extra money, is it best to use it to invest in something that will hopefully give a profitable return, or pay off previous debts that you have accumulated?

As with virtually all matters of money, this is very much a question that can be answered only by looking at your personal circumstances. Your current budget and your plans for the future have a serious effect on the best moves to make with your money. 

Investing can provide you with a greater amount of money than when you started, which could conceivably make it easier to pay off debts in the future. But at the same time, large debts mean expensive interest payments, and these can actually hinder your ability to save extra money and continue investing. 

Here we take a look at your options when it comes to using extra money in the wisest way: should you invest, or should you pay off debts?

Not all debt is created equal

Debt is a real problem. In the UK, households have an average of over £60,000 in debt as of October 2020. And yet, this is an inevitable part of living. Without taking on debt, the majority of the country would not be able to buy a property or make major purchases such as cars. 

Sometimes, unforeseen events force individuals to take on debt - such as in the case of needing emergency repairs to a property. Credit card debt is also very common, with many preferring to make purchases and defer payment to later.

However, it is important not to lump all debt together. Some debts - such as mortgages or student loans - come at a relatively low rate of interest compared with others such as personal loans or credit cards. 

Without taking on debt, the majority of the country would not be able to buy a property or make major purchases such as cars. 

Pay off high-interest debt as a priority

Credit report providers Experian state that “prioritising the debt with the highest interest rate will save you more money and allow you to redirect funds to other financial goals faster”, and this is a good place to start. 

In general, it is always best to pay off any high-interest debt as soon as possible. This is simply because any investment that you might make needs to achieve a better return than the rate of interest that you are paying on your debt. This is clearly harder with high-interest debt. 

The value of investing

It can be very tempting to look at the extra money that you have available - whether it comes from savings, disposable income, or a financial windfall - and see the opportunity to turn it into more. 

This is especially true coming out of 2020, where many people have seen their financial situations change drastically. But is 2021 the right time to invest? 

Of course, everyone is facing uncertainty due to the COVID-19 pandemic and while this can be worrying it can actually make things interesting from an investment point of view. Typically the market responds poorly to uncertainty and challenges.

We are in a situation where the pandemic has caused shares in many previously profitable and successful businesses to fall dramatically. With vaccines now available, and a more positive outlook on the horizon, it may not be long before the stock market begins to stabilize. As such now could be an ideal time to invest. 

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Always get financial advice

No matter your financial situation, it is a great idea to take financial advice before making any move relating to investments or debt. As mentioned above, this really can come down to the specifics of your situation and a financial adviser can help with this. In fact, it can be advisable to look at specialists offering wealth management services.

“Wealth management is important,” says Jonathan Baggot of Numeric Accounting; “it is all about aiming to sustain and grow long-term wealth. The financial market is complex, so wealth management specialists have the knowledge needed to explain plans and schemes clearly and concisely while offering impartial and unbiased financial planning advice”. 

Final thoughts

Paying off debt is important - but making smart investments as early as possible is best if you wish to reach your financial goals. Everyone’s individual financial situation is different, so following the advice of professionals is a great way to make smart decisions. 

This is likely because of the common misconception that any form of debt is bad. While it's true that debts have negative effects, they are also good for several reasons.

Financially responsible consumers take out personal loans to purchase their dream home, finance their car or fund their education. Debts have positive outcomes if you know how to manage them responsibly. But it should be noted that debts, such as personal loans, are not for everyone. They can be a smart move, but only depending on your situation.

Nevertheless, knowing how you can benefit from a personal loan is an excellent place to start to decide if a loan is right for you. Here, we discuss the potential advantages of getting one.

Use It For Multiple Purposes

One of the notable benefits of personal loans is their flexibility. Unlike other types of loans, there are no restrictions on how you will utilise a personal loan. You can use the fund for almost anything. However, it's worth noting that not all purposes are financially healthy for you.

If you want to make use of personal loans to your advantage, here are some of the sensible options:

Emergency Expenses

It's always good to have a fund set aside for emergencies. But that is not always the case for everyone. Many people don't have the cash to cover unforeseen expenses like a sudden car repair or medical bill, based on a report. If you find yourself in the same predicament, you can use online installment loans from a direct lender to take care of financial emergencies immediately.

Unlike other types of loans, there are no restrictions on how you will utilise a personal loan.

Finance A Large Purchase

There are also instances when you have to fund a major purchase, such as buying a necessary household appliance or installing a new furnace. Paying for such a large purchase on a higher interest credit card can be too expensive. Taking out a personal loan can be your cheapest option without having to put up any collateral unless you have spare cash.

Consolidate Existing Debts

If you're having a hard time paying off existing debts with high-interest rates, you can consolidate them through a personal loan. With a low-interest personal loan, you can save money and reduce financial stress. Because instead of paying different loans with different due dates, you will only be paying one debt every month.

Save On Lower Interest Rates

Interest rates on personal loans are usually reasonable. In fact, their rates are typically much lower than credit card rates. If you have a good credit score, you can get as low as single digit interest rates on a personal loan.

Remember that the interest you pay on loan is the cost you pay for borrowing. Thus, the lower the interest rate is, the more money you can save. What's good about personal loans is you have various options to pick on since many lenders offer them. By shopping around different lenders, you can easily find the best rate for you.

Easy To Manage In Your Budget

Taking on debts can be stressful. You have to make adjustments in your budget to ensure that you can make monthly repayments on time. Else, you can incur penalties and more interest on your debts. But you can minimise this emotional toll with a personal loan because it has a fixed interest rate and predetermined term.

It means that you know exactly how much interest you'll pay and when you will be done paying off your debts. With a set rate and payment schedule, you can easily manage personal loans in your budget and stay in control of your finances.

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Boost Your Credit Score

Like any other loans, personal loans may be able to help you boost your credit score if you use them responsibly. Consolidating your debts in a single personal loan is the most obvious way it can help you improve your credit score. But then again, only if you make your payments on time and pay the full amount required.

Another thing is that replacing your credit card debt with a personal loan can also boost your credit score. Note that lenders may consider you a higher risk if your credit utilisation is too high. But since a personal loan is an installment loan, it is not factored in your credit utilisation ratio.

Avail Of Tax Benefits

There is no particular rule that allows you to deduct personal loans automatically on your tax bill. However, there are possible cases where you gain tax benefits under a personal loan. If you use the loan to invest in a business, you can claim the interest paid as an expense, which you can deduct from your taxable income.

You can also claim a tax credit if you take out a personal loan to purchase a home because the mortgage interest is deductible, provided that it is your primary residence. The same applies when you use the loan to fund a college education.

Wrapping Up

Personal loans come with certain benefits. However, it is always important to remember that it depends on how you utilise the loan. To ensure that you're making a sound decision. It would be best to consider your purpose in taking out the loan. Doing so can help you maximise the advantages of personal loans.

The Fair Debt Collection Practices Act protects consumers from unfair debt collection practices. This law applies to third-party debt collectors for personal debts. It doesn’t involve creditors who are legally attempting to recover debts owed to them.

The laws in your state may also protect you beyond this act. In addition to certain practices for collecting being annoying, many are also illegal. As a result, it’s helpful to know about these five unlawful debt collection practices and how to spot them.

Attempting to Collect Debts Not Owed

One of the biggest complaints consumers have is being asked to pay debts they do not owe. By law, if you don’t owe the debt in question, you have a legal right to request, in writing, that you want verification of the debt. You can also request that the debt collector cease all contact with you. Doing this in writing is wise as it ensures that you have proof that you made the request.

In many cases, when collectors try to claim a debt that you don’t owe, you may be a victim of identity theft. Always check your credit report to see if there are any mistakes or unusual activity.

Not Providing Written Notification of Debt

By law, a collector must provide you with written notice of the debt they are trying to collect from you within five days of the first contact. They must include the amount of that debt, the original creditor to whom the debt is owed, and a statement of your right to dispute the debt. If you do not receive this notification, you can file a complaint with the Federal Trade Commission. If you do receive written notice, it should include all the details of the debt.

Harassing Communication Methods

Collectors are prohibited from harassing you when they call or contact you by any other means. This is the law. At the same time, the FDCPA doesn’t specify a set number of calls debt collectors can make within any given time frame. Instead, the court can determine what is appropriate and what is considered harassment.

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You can take note of the days and times you receive calls and record messages as evidence. Collectors also cannot legally contact you before 8 AM or after 9 PM unless you’ve expressly allowed them to do so.

Threats of Legal Action

According to the law, debt collectors are not allowed to threaten legal action or wage garnishment even if you do owe a debt. Likewise, they aren’t allowed to threaten you with jail time or a poor credit rating unless they have the authority to do so. Such threats violate the FDCPA. Collectors must first sue in court and actually win their cases before they can take any legal action against you.

You can look up a list of debt collectors in the United States and read up on the actions they can legally take.

Making False Statements or Representations

Debt collectors are prohibited from using false statements or representations to force you into cooperating with them. This rule holds true even if you owe a debt. If they claim an affiliation with a government or state, tell you that you will face prison time, lose property, or have your wages garnished, or even imply that you committed a crime, it violates the FDCPA.

If you have been harassed by debt collectors who are violating the law, you need the assistance of a skilled attorney.

In that case, bankruptcy serves as a last resort that will allow you to make a fresh start.

While filing for bankruptcy is a solution for many people in bad financial situations, you must be able to qualify for either a Chapter 7 or Chapter 13 bankruptcy. This guide will help you determine which option is best for your situation and what to do with your fresh financial start.

Filing Chapter 7 Requires Passing a Means Test

A Chapter 7 bankruptcy is often the most desirable form of debt relief because it involves discharging or dismissing all of your unsecured debts. Typically, any assets you own will be seized by the court and liquidated to relieve some of your creditors. Anything else will be discharged.

In recent years, federal laws have been updated to ensure only those in severe financial distress can qualify for a Chapter 7 bankruptcy, so a means test has been initiated.

In order to pass the means test, your monthly income cannot equal or exceed the average income for families in your state. If you fail the means test, the court will assume you have enough money left over each month to pay your debts off, and that will disqualify you from declaring bankruptcy.

Can You Qualify for Chapter 13?

If you believe you will fail a means test, professional bankruptcy lawyers recommend their clients file for Chapter 13 bankruptcy. This is different from Chapter 7 because your debts are not discharged. Instead, you and your attorney will have to draw up a payment plan that consolidates your debts under the court's supervision.

There are a few requirements you'll have to meet in order for the court to allow a Chapter 13 filing. First, you'll have to show that you have a regular source of income that will enable you to meet the obligations of a repayment plan. Additionally, the plan must be structured to ensure your debts will be fully repaid in three to five years.

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The court also restricts the amount you can seek in debt relief. You can owe no more than $394,725 in unsecured debt and no more than $1,184,200 in secured debt. You are also not allowed to have filed for Chapter 7 over the last four years or a Chapter 13 within the past two years.

What to Do After Filing for Bankruptcy

Even though your debts have been discharged, you may still have some work to do in rebuilding a good financial profile. This will likely include attending a court-ordered credit counseling course. You should also make a habit of checking your credit reports with the three main credit bureaus to make sure your debts have been discharged.

Any remaining debts should be paid off as quickly as possible but be sure to make all the minimally required payments on time. Just one late payment can destroy your credit rating and sabotage any progress you have made so far.

Even though a Chapter 7 stays on your credit report for 10 years and a Chapter 13 stays on your credit report for seven years, you can start rebuilding your credit score immediately. In addition to paying debts on time, getting a secured credit card can help you establish good credit sooner.

You can also help your credit score by maintaining lower balances on any credit cards you still have. All of these methods can be combined to show lenders that you're a low risk client, while also boosting your credit score over time.

Conclusion

Following this guide can help you start a new life for yourself, but, if you don't learn financial responsibility, you'll end up right back where you started. Even if a bankruptcy judge doesn't order it, taking a personal finance course can give you a more thorough understanding of the concepts related to financial responsibility. When you complete the course, you'll know how to build and maintain good credit, which is one of the keys to obtaining a better financial flexibility.

The lower your credit score, the higher the chance potential lenders see you as a high-risk borrower.

If you’ve found yourself in this exact predicament, you might be wondering if there’s anything you can do to solve the problem. Credit repair companies might be able to help, but it’s worth putting time and effort into choosing the right one. Here are some factors to consider.

Their Professionalism

Some credit repair companies can be in a hurry for you to sign on the dotted line – even before you know what you’re getting into. What you will notice with some of the best credit repair companies is that they put time and effort into ensuring you understand what they can do for you. They explain how they look for errors, review negative items, and negotiate with creditors on your behalf.

It can also be worth learning more about debt and credit scores by checking out the Federal Trade Commission website. You can then gain an understanding of the documents to expect from your chosen company, such as a Notice of Cancellation and a copy of the Consumer Credit File Rights.

Services Offered

Some credit repair companies will offer the full package, such as credit-counseling, loans, creditor engagement, and credit bureau communication. However, some will just offer a few of the many services you may require to improve your credit score.

Before you decide on the company you’d like to work with, explore their website to determine what they can do for you. There’s also no harm in asking them questions about their offerings and whether they can assist with particular problems, like getting a mortgage with a bad credit score.

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Customer Reviews

Many things can impact a brand or business’s reputation. However, at the top of that list is customer reviews. Do your homework online to establish what people’s experiences have been with that particular credit repair company.

Take note of what is being said on social media, Google, and even in news articles. These factors can help ensure you choose one of the best credit repair companies for your needs.

Guarantees

In most cases, consumers feel more comfortable working with businesses that offer guarantees. They can often provide the illusion of safety and security, not to mention the peace of mind that you’ll get the results you desire.

Regarding credit scores, guarantees of improvement can have the opposite effect. It’s rarely possible to predict how credit bureaus or creditors react to requests for information and changes.

If you’re viewing a credit company that guarantees a credit repair in as little as x number of days, look elsewhere. As stressed as you might be about your financial situation, you can’t always expect the miracles that some credit repair companies try to offer.

Just as you would do your due diligence before choosing a bank, lending company, or any business, it pays to do the same with a credit repair company. Compare services, reviews, and professionalism levels before you make your final decision.

What Is a Tradeline?

Tradelines or AU tradelines are credit accounts that appear on your credit report. Credit agencies use the information within those tradelines, such as their payment history, balance, activity, and creditor’s name, to form your credit score.

Your credit score is a figure that measures how credit-worthy you are. If you have made payments on time, have been responsible with credit, and kept your balances low, then you may have a high credit score. Banks and lenders may then be more likely to look favorably at you for lending. However, if you have too many tradelines open or haven’t made the best decisions regarding your credit, your credit score may be low.

To combat a low credit score or build a positive payment history, you may decide to purchase tradelines. These can improve a low credit score and allow you to build up a payment history. As common as this practice is, it’s easy to make some of the following mistakes.

Mistake #1: Not Knowing How Tradelines Work

You may have heard that tradelines can improve your credit score. If you don’t know a lot more than that, it can be easy to purchase too many tradelines, the wrong ones, or be led into making tradeline purchases that aren’t in your best interests.

Mistake #2: Expecting Instant Results

When you add an authorised user tradeline to your account, you may think your credit score will immediately increase. You may then put plans in place to secure a mortgage or take out a loan. Tradelines are not instant. Instead, when you purchase an authorised tradeline, it can take up to 30 days to see an improvement, as long as you’ve selected one that can improve your credit score.

Mistake #3: Thinking Tradelines Repair Your Credit

Many people don’t understand their credit score. Sometimes, it’s only when you go to take out a loan that you come to realise it’s not as high as you expected it to be. If your credit score is surprisingly low, a tradeline is not a way to repair it. Instead, it’s a way to add information to your credit report to potentially increase your score. If you have a low credit score and you’re unsure why, you have the right to question it. You may be able to correct anything that appears to be wrong and subsequently lift your score.

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Mistake #4: Adding Tradelines With Credit Freezes or Fraud Alerts On Your Account

If a credit bureau has put a fraud alert or credit freeze on your account, any tradelines you purchase will not be posted to your credit report. Before you go down the tradelines route, contact the associated credit bureau to have those alerts removed.

Mistake #5: Choosing the Wrong Tradelines

Each tradeline is going to have a different effect on each person’s credit report. Its power will depend on what your credit report already outlines. The goal is to choose a tradeline that has better features than what you already have. For example, if your accounts’ average age is eight years, a five-year-old tradeline is not going to benefit you as much as one that has an average age of 10 years.

When the time comes to request a loan or a mortgage, it helps to understand as much about your credit report as possible. You can then learn about ways to improve it, repair it, and use it to your advantage.

Matthew Glickman, VP of Customer Product Strategy, Financial Services at Snowflake, examines the benefits that the data cloud can bring to financial services.

In the wake of COVID-19, financial services have had to adapt almost overnight to the economic challenges presented by the pandemic. With cities across the world going into lockdown, consumers expect banking to deliver digital-first experiences that match their usual expectations. Digital innovation is very much at the heart of this transition. To navigate and thrive in the current climate, capitalising on the data cloud will enable fintechs to respond nimbly to customer demands and remain competitive.

According to an Accenture survey, over half of respondents in the retail banking industry believe cloud technologies have the biggest impact on improving operational efficiency, and 40% believe that it can also generate business value for the industry. The data cloud can provide the foundation on which companies can build a technology stack that delivers business agility and growth. Here are three ways financial services companies can benefit from harnessing the data cloud.

Personalising Customer Experiences

The cloud offers companies the opportunity to house all their various types of data in one secure place, enabling them to personalise services for customers. By using the data cloud,  companies have a consolidated governed location for all types of data (for example, clickstream, transactional, and third-party) that can ingest data from new sources such as IoT devices. This enables organisations to gain a 360-degree view of customer behaviours and preferences from multiple inputs.

The cloud offers companies the opportunity to house all their various types of data in one secure place, enabling them to personalise services for customers.

A full customer view is fundamental for a successful personalisation strategy as it enables organisations to pinpoint high-value customers and ensure they have a good experience at every touchpoint. Without real-time visibility into customer interactions, providing the best possible customer experience just isn’t possible.

Over time, digital banking platforms will evolve to incorporate ML predictive models to drive even more personalised banking behaviours. This will only be achievable for organisations who successfully tap into the data cloud, as the success of ML models will require support from ever increasing volumes and access to datasets, both within and external to an organisation. The more an organisation can tap into customer personalisation, the better equipped they will be at customer retention and remaining competitive.

Boosting Data Visibility

To ensure fintechs can continue providing the best possible customer experiences, and adapt to any demands posed by the pandemic, having an acute awareness of all data available will be key for these insights. Adopting a cloud data platform that offers the direct and secure sharing of data without the complexity, cost, and risk associated with legacy data warehouses is one such solution. With simpler, enhanced data sharing, companies can quickly and easily add new data products, and get near real-time insights across the business ecosystem on how this is operating. Offering a standalone data product to data consumers can lead to substantial revenue. For example, financial companies that collect tick-by-tick stock market data can use a cloud data platform to create a data project that they can sell to hedge funds.

A cloud data platform can also reduce the manual effort and copying that is necessary with traditional data sharing tools. Instead of physically transferring data to external consumers, companies can provide read-only access to a segment of their information to any number of data consumers via SQL. By breaking through barriers between disparate data systems, companies will find new sources of revenue and opportunity.

Cross-Collaboration

The rise of digital-first banks, the increased availability of online services and the ongoing surge in mobile banking all represent the modern evolution of how customers now interact with their finances. To meet the demands of today’s customer, financial organisations will see big benefits in collaborating with other finservs through real-time access to data. For instance, if a customer is using a third party fintech to track their finances, a financial institution must share data with that fintech organisation so their customers can access their accounts.

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Last year, 65% of banks and 76% of credit unions said partnerships with fintech companies will be an important part of their business strategies in 2020. These numbers represent an increase from 49% and 60%, respectively, in 2019, showing a clear trend towards a more open banking landscape. Financial institutions that do not take steps to improve the accessibility of its data risk frustrating their customers or losing them to a more agile and collaborative financial institution.

Data collaboration can also help improve instances where investment banks may otherwise have been forced to hold excess capital. This is because aligning on risk exposures and liquidity is executed through nightly correspondances instead of what could be real-time data sharing through the cloud.

With fully governed, secure data sharing, companies can also easily determine who sees what and ensure all business units and business partners access a single and secure copy of their data. Not only does this enhance efficiency, but centralising data into a single source of truth, rather than in separate locations, will boost data security.

Data is the lifeblood of the financial services industry. By migrating to and capitalising on the data cloud, companies can build a future-proofed technology stack that delivers business agility, enhanced customer experiences and data sharing capabilities that ensure business continuity during this volatile economic period. Prioritising these digital-first experiences for customers will ensure financial organisations have the competitive edge that these times demand.

However, before signing up for a personal loan, you have to know its categories first and assess which one would best suit your financial needs.

Secured Personal Loans

If you have financial assets like stocks, bank deposits, mutual funds, and cash, you can certainly sign up for a secured personal loan right now. Moreover, tangible physical assets such as properties and expensive commodities can make you eligible for personal loans.

The assets mentioned above will function as collateral that will qualify you for the loan amount according to your financial capability. These will often serve as the alternative payment to the financial institution if you fail to settle your debt on the agreed loan term.

High-priced collateral would grant you a favourable loan amount. Since collateral is at stake, a secured personal loan will most likely be claiming fewer risks. Therefore, this will be quite fair for borrowers with low credit scores.

Unsecured Personal Loans

Apparently, this one is the total opposite of a secured personal loan. One example is the pre-approved personal loans, where creditors would look to see if the borrower’s credit is worthy, instead of requiring the financial assets as collateral. The credit rating will serve as the grounds if the application is approved or declined.

This type of loan poses a higher risk for the lenders. Secured personal loans allow lenders to take over the collateral if the borrower has neglected the loan terms that were agreed upon during the application period. In unsecured personal loans, lenders would only bank on the borrower's word and the credit scores they boast so much about.

This type of loan poses a higher risk for the lenders.

Fixed-Rate Loans

If you want a stable interest rate over the agreed payment term, a fixed-rate loan is the best option you can go for. If you’re on monthly repayments, you’ll never suffer from fluctuations in the interest rate every month. If you do it this way, then you can sustain consistent financial control since you’ll be allocating the same monthly payment amount for your personal loan.

Variable-Rate Loans

In this type of personal loan, your economic circumstances would determine your personal loan’s interest rate. For this reason, you aren’t entitled to the power to manage your finances as the interest rate fluctuates every month, depending on the market interest rates.

Unlike fixed-rate loans, the high risk is now charged to you. However, most variable-rate loans offer low-interest rates at the beginning of the payment term. The interest rate would change gradually as the term progresses.

How to Become Eligible for Every Loan

Here’s what you should do to become eligible for different types of loan:

Settle Your Current Loans Before Applying for Another

An existing loan doesn’t directly turn down your application for another lender. However, lenders would prefer potential borrowers with a clean credit history upon application. If you have signed in with multiple lenders, then you should consider reconciling all of these debts before applying for another.

A borrower with ongoing financial obligations will raise the risk for both the lender and the borrower. On the lender’s part, the assurance that the borrower could still put up with another loan is disputable. Of course, for the borrower, conflicts of interest could emerge amongst multiple lenders that they signed in with.

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Apply for a Fair Loan Amount

The lenders will definitely rely on your credit history. Therefore, you should secure a copy of your credit record before your loan application. You should assess and verify the figures in your credit history so that you’ll still have time to correct any errors that you see.

The loan amount will be heavily based on your financial capacity. If you think you have a clean credit score, then you can expect an agreeable loan amount. However, if you have a stained credit history, you should assume a lower loan grant.

Maintain a Good Credit Score

To sustain an outstanding credit score, you should be prompt when the time comes to pay your bills and other financial obligations. All of your financial transactions will be registered in credit bureaus.

Your payment history can tell whether you’re creditworthy or not. Hence, being branded as a delinquent payer would hinder you from applying for another loan in the future. Whether or not you plan to get a personal loan, building a good credit score must be taken seriously.

Choose the Right Lender

You should look into the rates offered by your prospective lenders. Comparing the proposals from multiple lenders could help you decide on where to apply. The loan document should be appraised. As a borrower, it is your responsibility to figure out whether a lender is legitimate or not.

Get the Requested Documents Ready

The lender would need the borrower to supply proof of identification, address proof, and bank statements issued by a valid financial institution. You have to prep all of the documents so that the lender will have a positive initial impression of you. You have to begin by presenting yourself as an accountable person.

Takeaway

Personal loans aren’t only about picking a lender and accepting the loan. There’s a lot of preparation on your part so that your loan will be approved. Hence, you need to have a good credit score sufficient to secure a personal loan without a hitch.

Ammar Akhtar, co-founder and CEO at Yobota, explores the steps necessary to the creation of successful fintech.

The first national lockdown in March highlighted the importance of the quality and functionality of digital banking solutions. Indeed, most of us quickly became accustomed to conducting our financial affairs entirely online.

Financial services providers have needed to adapt to this shift, if they were not already prepared, and consumers will continue to demand more. For instance, Yobota recently surveyed over 2,000 UK adults to explore how satisfied customers are with their recent banking experiences. The majority (58%) of banking customers said they want more power to renegotiate or change their accounts or products, with a third (33%) expressing frustrations at having to choose from generic, off-the-shelf financial products.

Consumers are increasingly demanding more responsive and personalised banking services, with the research highlighting that people are increasingly unlikely to tolerate being locked into unsuitable financial products. This is true across all sectors of the financial services landscape; from payment technologies (where cashless options have become a necessity as opposed to a trendy luxury) to insurance, the shift to “quality digital” poses challenges throughout the industry.

Providers and technology vendors must therefore respond accordingly and develop solutions that can meet such demands. Many financial institutions will be enlisting the help of a fintech partner that can help them build and deploy new technologies. Others may try to recruit the talent required to do so in-house.

The question, then, is this: how is financial technology actually created, and how complicated is the task of building a solution that is fit for purpose in today’s market?

Compliance and regulation

The finance sector is heavily regulated. As such, compliance and regulatory demands pose a central challenge to fintech development in any region. It is at the heart of winning public trust and the confidence of clients and partners.

Controls required to demonstrate compliance can amount to a significant volume of work, not just because the rules can change (even temporarily, as we have seen in some cases this year), but because often there is room for interpretation in principle-based regulatory approaches. It is therefore important for fintech creators to have compliance experts that can handle the regulatory demands. This is especially important as the business (or fintech product) scales, crosses borders, and onboards more users.

The finance sector is heavily regulated. As such, compliance and regulatory demands pose a central challenge to fintech development in any region.

Businesses must also be forthcoming and transparent about their approach towards protecting the customer, and by extension the reputation of their business partner. Europe’s fintech industry cannot afford another Wirecard scandal.

Compliance features do not have to impede innovation, though. Indeed, they may actually foster it. To ensure fintech businesses have the right processes in place to comply with legislation, there is huge scope to create and extend partnerships with the likes of cybersecurity experts and eCommerce businesses.

The size and growth of the regulation technology (regtech) sector is evidence of the opportunities for innovations that are actually born out of this challenge. The global regtech market is expected to grow from $6.3 billion in 2020 to $16.0 billion by 2025. Another great example would be the more supportive stance regulators have taken to cloud infrastructure, which has opened up a range of new options across the sector.

Addressing technical challenges 

It is the technical aspect of developing fintech products where most attention will be focused, however. There are a number of considerations businesses ought to keep in mind as they seek to utilise technology in the most effective way possible.

Understanding the breadth of the problem

The fintech sector is incredibly broad. Payment infrastructure, insurance, and investment management are among the many categories of financial services that fall under the umbrella.

A fintech company must be able to differentiate its product or services in order to create a valuable and defensible competitive advantage. So, businesses must pinpoint exactly which challenges they are going to solve first. Do they need to improve or replace something that already exists? Or do they want to bring something entirely new to the market?

The end product must solve a very specific problem; and do it well. A sharp assessment of the target market also includes considering the functionality that the technology must have; the level of customisation that will be required from a branding and business perspective; and what the acceptable price bracket is for the end product.

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Knowing your client

In the same vein, as a vendor it is important to be specific and strategic when it comes to pursuing the right clients. A fintech might consider itself to be well-positioned to cater to a vast selection of different businesses; however, it’s important to have a very clear target client in mind. This will ensure product and engineering teams have a clear focus for any end goal.

The value of a good cultural fit should also not be underestimated. The business-to-business relationship between a fintech and its client (a bank, for example), particularly at senior levels, is just as important as finding the right niche. There must be a mutual understanding of what the overall vision is and how it will be achieved, including the practical implementation, timeline and costs.

Balancing “best tech” with (perceived) “best practice”

Leveraging the newest technology is not always the best approach to developing a future-proof proposition. This has been learned the hard way by many businesses keen to jump on the latest trends.

Shiny new technology like particular architectures or programming languages can have an obvious appeal to businesses looking to create the “next big thing”. But in reality, the element of risk involved in jumping on relatively nascent innovations could set back progress significantly.

The best technology systems are those that have been created with longevity in mind, and which can grow sustainably to adapt to new circumstances. These systems need to run for many years to come, and eventually without their original engineers to support them, so they need to be created in modern ways, but using proven foundational principles that can stand the test of time.

Curating a positive user experience

To revert back to my original point, fintech businesses cannot forget about the needs of the end customer. There is no better proof point for a product than a happy user base, and ultimately the “voice of the customer” should drive development roadmaps.

The best technology systems are those that have been created with longevity in mind, and which can grow sustainably to adapt to new circumstances.

Customer experience is one of the most important success factors to any technology business. Fintechs must consider how they can deftly leverage new and advancing technology to make the customer experience even better, while also improving their underlying product, which users may not necessarily see, but will almost certainly feel.

Another important consideration is ease of integration with other providers. For example, identity verification, alternative credit scoring, AI assisted chatbots and recommendation algorithms, next generation core banking, transaction classification, and simplification of mortgage chains – these are all services which could be brought together in some product to improve the experience of buying a mortgage, or moving home.

Progressive fintech promotes partnerships and interoperability to reduce the roadblocks that customers encounter.

The human side of fintech

Powerful digital solutions cannot be created without the right people in place. There is fierce competition for talent in the fintech space, especially in key European centres like London and Berlin. Those who can build and nurture the right team will be in a strong position to solve today’s biggest challenges.

In all of these considerations, patience is key. It takes time to identify new growth opportunities; to build the right team that can see the vision through; and to adapt to the ever-changing financial landscape. Creating fintech is not easy, but it is certainly rewarding to see the immense progress being made and the inefficiencies that are being tackled.

Unfortunately, many people these days have seen their credit score and history slide, often due to financial illness or money problems that have left them in a difficult financial situation. If your credit is in a bad state, you may be considering taking steps to improve it, and this includes using a credit repair agency.

Not everyone uses a credit repair agency, as some people decide to work on their credit reports themselves. If you do decide to use one, there are lots of options you can choose from, but you need to ensure you find a reputable credit repair agency for something as vital as this. It is also worth reading recommendations for the best credit repair services to suit your needs.

But what exactly do these credit repair companies do and how can they help to fix your credit?

How the Process Works 

The idea behind using a credit repair service to fix your credit is that you will have industry professionals that will check, monitor, and deal with any issues when it comes to your credit report. Now, it is worth noting that this is something that you can do yourself. However, it does mean that you will need to regularly order and check your credit report, be familiar with how to decipher the information, and stay on top of identifying problems and getting them resolved. All this can be time-consuming and stressful when you have other commitments to juggle such as work and family. So, this is where a credit repair agency can step in.

As experts within this field, credit repair companies can go through your credit report thoroughly and can pick up on any issues such as mistakes, outdated information, suspicious transactions, and more. If there are any issues on the credit file that they pick up on, they then liaise with the credit bureaus on your behalf to get them resolved. They can also sometimes get negative accounts removed depending on the situation, and this is done by making contact with the relevant bureaus.

Because these professionals do this on a full-time basis, they are able to focus on the situation and get things done far more quickly than you would be able to do when trying to sort out your credit in between other commitments. This means that you can benefit from faster results and see your credit improve more quickly.

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Why Do People Use Credit Repair Agencies?

So, why do people turn to credit repair agencies to sort out their credit rather than trying to do it themselves? Well, there are many reasons behind this, and some of the main ones include:

Saving Time

The truth is that many people these days simply do not have the time to sort out their own credit, as fixing your credit can be a time-consuming and challenging process. When you have to work full-time, have family or other commitments, and have a social life, you will struggle to find the time to deal with your credit issues. This is why a lot of people turn to experts for assistance, as it can save them a lot of time.

Expert Assistance

Not everyone is familiar with credit reports, how to read them, and how to determine if there is an issue. This is another reason why people turn to credit repair agencies. The experts are used to dealing with credit reports from all the major bureaus, so they know exactly what to look for and how to analyze the report to gather the necessary information. So, by using a professional, you can be sure that the credit report has been properly checked and any problems are picked up.

Reduced Stress

For some people, trying to deal with their credit issues is too stressful for them, so they just let the problems continue. This then has an impact on their future and causes even more stress. Credit repair service professionals will take all the stress out of the process and will even deal with the credit bureaus on your behalf to make things even easier.

Giving You a Better Chance of Success

In short, using a good, reputable credit repair specialist can boost your chances of success when it comes to improving your credit. The processes they use are designed to help improve your credit and score, as well as your financial future.

These tips can help you get the funding you need even if your credit is not the best.

Self-Funding

The best way to fund your business is using your own money, a process known as bootstrapping. You can turn to family and friends or tap into savings. You can even borrow against a 401k to get the funding you need. In fact, more than half of all business owners say that they received financing help from friends and family.

This type of financing is not based on your credit score and, in some cases, borrowing from family may help you increase your credit score if you use the funds to catch up late payments as well as funding your business.

Venture Capital

Another method for funding your business is seeking venture capital from investors. This type of investment is normally provided with a share of ownership in the company. The investor may also want to take an active role in your business. There are differences between traditional financing and venture capital which include:

• Focuses on companies with high growth
• Investments have longer terms
• Investments are in return for equity and are not considered debt
• Higher risk for investor but potential for higher return
• Loss of some control and ownership

There are many venture capital firms who offer funding to business owners. You will need a solid business plan, and there will be a due diligence review. If the investors are interested, you will agree on terms and the funding is provided.

Normally, venture capital is provided as you meet milestones which means you may not get the full amount up front. You will have to meet certain goals included in the terms to receive percentages of the investment over time.

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Crowdfunding

Websites like Kickstarter and GoFundMe allow you to seek investments from a large number of people. The process, known as crowdfunding, lets people donate small amounts to your business to see you succeed. In some cases, you may have to give them a gift or reward as a thanks for the donation, usually a free product, acknowledgement of their contribution or other benefit.

This type of funding is best for companies that produce creative works like art or film as well as those who have created a unique product, such as a high-tech vacuum. There is very little risk to your business and, if your business fails, you are not required to repay the investors. The crowdfunding sites do take a percentage of anything you raise, however.

Traditional Financing

Loans are another popular method for funding a business. However, if there are obstacles to getting a traditional business loan, the Small Business Administration partners with banks to offer loans that are guaranteed by the organisation.

This type of loan is especially designed for those who may have difficulty obtaining a traditional loan, like those with poor credit. There are special requirements and stipulations you must meet in order to qualify, but your lender should have information about the Small Business Loans that will work for your company.

Grants and Gifts

There are many grants and gifts available to help small businesses, but it is important to be careful. Companies that offer to locate a government grant for a fee are often fraudulent and can lead to excessive costs that you will not be able to recover.

There are grants available for specific types of industries, such as technology or retail, but you will need to search in order to find one that works for you. Also keep in mind that grants are very competitive, so you may need to fill out quite a few applications before you are successful.

Gift financing may also be non-cash benefits such as free office space or free services from businesses who want you to succeed.

Further information on business loans is available if you would like to learn more about your options.

If you have been injured in an auto accident, your injuries may prevent you from working, which means you may be struggling to manage your finances. A legal settlement can take months, and sometimes years, before you ever receive any money. While you wait, you must still pay your mortgage, your car payment, and all your other bills. In many cases, you will be doing this while you are missing work due to an injury.

If you’re drowning in debt and struggling to make ends meet after an accident, one option you could take advantage of in your situation is a loan designed specifically for someone in your position. There are some disadvantages to legal funding, such as the fact that you’ll need to pay the loan back with interest if you win, but in many cases it can be a real life saver.

What is Legal Funding?

Legal funding is sometimes known as a pre-settlement loan. You are provided money as a cash advance on money you will receive as part of your settlement or lawsuit outcome. This means you don’t need to wait until the case is over to receive a portion of your settlement and some companies can provide you with funding within a few days. You will benefit from learning all you can about what legal funding is and how it works.

What if You Lose?

No matter how ironclad you think your case may be, there is always a chance you could lose. When you apply for legal funding, the company will research your case and determine what your chance of winning may be. If you lose your lawsuit, you will not be required to pay the money back.

One thing people appreciate about this type of funding is the fact that there are no monthly payments while you wait for your case to wind through the court system. There are no credit checks, as the loan is based on the merits of the case. If the legal funding company doesn’t think you can win the case, they will not lend you the money.

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How Much Will the Loan Cost?

There are companies that charge an application or origination fee, and some of those can be fairly high. Most companies, however, review your case for free. Interest can range between 1.99% to 3.99% per month, but some loans have a cap of 30% to 60% annually. Other companies simply charge a percentage of the settlement amount while still others charge a percentage of the amount of the loan.

Each company is different, and it is important to research in order to find the best rates. Keep in mind the company lending the money is taking a risk that your lawsuit will be successful. Be sure that the actual payback amount is in the contract, as some companies may include escalating compound interest that could have you owing more than your settlement amount.

Does My Attorney Need to Know?

It is recommended that you tell your attorney that you are applying for legal funding. Most attorneys are familiar with the process and, even if your attorney recommends against the loan, it is still your decision. In some instances, attorneys find legal funding beneficial.

If you may receive a large settlement, the other side may try to drag the case out hoping that financial difficulties could lead you to accept a lower settlement offer. With legal funding, you will have the financial ability to wait for the settlement you deserve. Because your lawyer wants you to get the largest settlement you can get, they may support legal funding.