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Everything you need to know about money

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It’s easy to feel freaked out by money, but getting on top of your finances doesn’t have to be scary.

Searching for the best savings accounts or mortgage rates among the sea of products out there can be overwhelming, and it’s probably not surprising that 57% of us don’t even know how much is in our bank account.*

It's never too late to start saving

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It’s never too late to start saving

But help is at hand, as our guide helps break down exactly what to do with your money at every stage of your life – and it’s never too late to start making smarter financial moves.  

Kick-start your kids’ savings

When planning for a child’s future, even small amounts can make a big difference.

Emily Young, financial advisor at Lycetts, says the best way to save is by opening a Junior ISA, in which you can invest up to £4,368 each year, tax-free.** 

TSB’s Junior ISA has an interest rate of 3.25% and Halifax gives 3%, while Santander offers 3.25% if you already bank with them. 

Clever budgeting can be a life saver later in life

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Clever budgeting can be a life saver later in life

“Junior ISAs mean parents can set their child up for a good financial start to life,”Emily explains.

“If started at birth and contributed to regularly, these funds can build up to a significant amount over the years.”

For example, putting in £20 a month from birth could add up to £5,800 by the time they’re 18, based on an interest rate of 3%. 

And these tax-efficient savings accounts can’t be dipped into until the child turns 18. 

While children can open their first current account from the age of 11, they can’t open an adult ISA until they hit 16 – however, from then they can pay in up to £20,000 per year, paving the way for regular saving as an adult. 

And a junior account will be rolled into an adult ISA at 18.

“From a practical point of view, getting a child into the habit of saving early takes a lot of the fear out of finances,” explains Emily.

Pay it by Direct Debit, so you don’t miss a payment

Steven Bates

“This means they’re more likely to take a sensible approach to money as they get older.” 

Don’t panic! If you’ve yet to start saving for your children, Steven Bates, Practice Principal at Giraffe Financial, advises putting a Junior ISA in place ASAP. 

Saving £10 a month is a good start and you could set up a Direct Debit to transfer the money just after pay day.

The Money Advice Service says that if you put away £10 a month into a basic kids’ savings account with an interest rate of 2%, over the course of 18 years you could accumulate over £2,500. 

Start Taking control from your 20s.

Adulthood brings with it the reality of financial responsibility, from paying bills to buying a car.

At the root of borrowing any money is your credit score, which is a financial rating telling a lender whether you are likely to pay back borrowed cash. 

A bad credit history is a common issue, and could stem from something as simple as missing a credit card payment. 

Getting a good credit score is important as you hit 18, according to Steven, as it’s needed for everything from getting a phone contract to securing a mortgage.

“A strong credit score across credit reference agencies Experian, Equifax and Call Credit is an essential start to a successful financial life,” he explains.

One way to kick-start this is by taking out a small and manageable mobile phone contract. 

“Pay it by Direct Debit, so you don’t miss a payment,” says Steven. “If you do this alongside receiving a regular wage, your credit score should remain high throughout your adult life, which will make it easier to apply for your first car finance and mortgage.”

You're never too young to start saving for your pension

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You’re never too young to start saving for your pension

The same goes for credit cards – although be careful that you have the means to pay them back before you use them.

According to Steven, a credit card can be useful in increasing your credit score, so consider applying for a card that has 0% interest and using it to pay for small purchases only when you have the funds to settle these amounts in full. 

You should also make sure you’re registered on the electoral roll, so lenders can easily confirm your name and address when applying for credit of any kind.

Don’t panic! If you’re concerned about your credit score, you’re entitled to a free report every 12 months from Experian or Equifax.

Checking your credit score won’t affect it, but multiple enquiries from various lenders such as mortgage companies can. 

If you find you have a low credit score, first make sure you don’t have any outstanding debt, such as an unpaid bill or parking ticket. 

Then set up all your outgoings to be paid by Direct Debit just after your salary hits your account each month.

Building up a nest egg in your 30s

As the current State Pension of £164.35 per week (that’s just £8,546.20 per year) isn’t going to cut it for most people once you hit your autumn years, it’s important to have a pension. 

Ideally, we should all start saving into one in our 20s, but the reality is many people only start in their 30s. 

However, YouGov’s Bridging the Young Adults Pension gap report found that 22% of 35-54 year olds have no pension at all.

If you’re in permanent employment, your employer is obliged to automatically enrol you into a private pension scheme and, if you contribute 5% of your wage, they will add a minimum of 3% on top.

“You can always opt out of your workplace pension, if you need to take a temporary break for financial reasons,” Steven explains. 

“However, look into the packages your company offers, as sometimes if you pay more into it than the standard 5% your employer’s contribution may also increase.”

If something sounds too good to be true, it usually is

Steven Bates

Alternatively, if you have your own business or are self-employed, David Cook, managing partner of Northern Spire financial services company, suggests you speak with a pension professional, as you won’t have the same company benefits that employees do.

Another milestone – and probably the biggest financial challenge you’ll face – is getting on the property ladder. 

Steven recommends prioritising saving for your first home over other big expenses such as weddings or cars. 

“It will be your most sensible financial move,” he points out. Steven adds that a Lifetime ISA is a great tool for first-time buyers. 

These can be opened between the ages of 18 and 39, and you can put £4,000 in per year up to the age of 50. 

The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year, although you can only withdraw money when you buy your first home, are aged 60 or over or are terminally ill. 

The best interest rate out there at the moment is the Moneybox Lifetime ISA, which offers 1.4% interest AER, while Nottingham Building Society offers 1.25% AER.

Research the different mortgage offers and rates available before making a decision

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Research the different mortgage offers and rates available before making a decisionCredit: Getty – Contributor

Independent financial adviser Kathryn Turner says there are other changes you could also consider making if saving to buy a property. 

“For example, you could downsize your current rental property or house share, so you pay less rent.”

Steven also advises keeping a back-up pot of money when you do buy a house, so that a failed MOT or a broken boiler don’t leave you in dire straits and unable to pay the bills. 

Don’t panic! Some lenders offer first-time buyer mortgages, specifically to help you get a leg up. 

This type of deal often includes incentives such as cash-back and a lower deposit. 

Also 95% mortgages are becoming readily available again, meaning you only need a 5% deposit.

Future-proofing mid and later-life finances

As you head into your 50s and beyond, Steven suggests you should aim to have four assets in place for a stable financial future.

“For example, pension, property, ISAs and stocks and shares,” he says.

David adds: “As you get older your greatest risk is inflation, which will erode the value of your cash. 

“So look at ways of investing money with a return greater than inflation, such as in stocks, shares and corporate bonds as, unfortunately, it’s unlikely that a savings account alone will do this with interest rates currently so low. 

“Make sure you seek professional advice first, however.” 

There is no minimum amount to invest in stocks and shares, and it’s another case of how much you can realistically afford and being aware of the risks. 

You can even get apps on your phone for trading, such as Interactive Investor (free on App Store).

Emily says you also need to review your finances annually, being sure not to put too many in one place, so you spread the risk in case one area of the market fails.

Debt charities such as StepChange can help you if you've got into debt

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Debt charities such as StepChange can help you if you’ve got into debt Credit: Getty – Contributor

The main thing to remember is to avoid all schemes that are not regulated by the Financial Conduct Authority, such as unregulated investment opportunities.

“As a general rule,” Steven says, “if something sounds too good to be true, it usually is.”

Finally, David says everyone should also have a will in place. 

“As we are all living a lot longer it’s important to look at lasting powers of attorneys and choose a person to make decisions on your behalf if and when you’re unable to,” he says.

He recommends using a STEP (Society of Trust and Estate Practitioners Association) qualified solicitor. 

“They are specifically trained to give the best advice and know all the rules and regulations,” he explains. 

“It might feel a bit maudlin, but not having a will leaves chaos for those left behind.”

Don’t panic! If you haven’t yet set up a pension or started saving, you can still secure money for retirement. 

By putting a pension in place now, there’s still opportunity for you to accrue a sizeable amount per month – better late than never. 

For example, if you’re 50 and start saving £100 per month, based on an interest rate of 5%, you could build up £22,000 by retirement at 67.

Alternatively, stretching yourself to putting £250 a month aside would mean a potential pension pot of £55,000.

‘I finally bought my first house aged 52’

Buying a house can be wise investment for your money

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Buying a house can be wise investment for your money Credit: Getty – Contributor

Jane Carson, 59, a writer and film maker, lives in London with her seven-year-old daughter and her partner, 50.

“As I’m self-employed, my income has always been erratic. 

I don’t have a wage that I can rely on and payments aren’t regular, which made it hard to save when I was younger.

I rented in London in my 20s and stayed in the same block of flats for 30 years as the rent was cheap. 

When I met my partner and we decided to look for a bigger place, we realised that rents had rocketed in the area, so buying seemed like a wise option.

We tried to save up a deposit, but that felt impossible, especially when our daughter was born in 2012 and finances grew even tighter as I didn’t get any maternity leave as I was working as a freelancer.

In the end, we managed to buy a dilapidated house to renovate in 2013, after my dad passed away and left me some money that I put towards the deposit.

However, the bank initially made it tricky for us to get a joint mortgage as I was 52 and only 15 years away from the state pension age at that time. 

After much searching though, we finally found a mortgage provider willing to help us.

But it’s not been easy, as the house renovations have cost tens of thousands of pounds. 

I was only able to afford that when my mum helped me out with money.

I’m so glad now that we have our own place for my daughter to grow up in, without worrying about rent hikes or having to move out at a landlord’s say-so. 

If I hadn’t inherited that money, I would have been stuck renting forever.”

‘I started saving at five’

Rochelle used her savings to start her own business

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Rochelle used her savings to start her own business

Rochelle White, 33, owns her own PR firm and lives in Milton Keynes.

“My parents opened a Halifax kid’s account for me when I was five, and I’ve been saving ever since. 

Birthday and Christmas cash would be invested into it and by 18, I’d saved £4,520.

Studying fashion and events and working part-time, I lived at home and was careful with my student loan – I always knew what was in my account and I’d save as much as I could, whether it was £20 or £50.

This meant I was able to set up my own PR business at 30, using my savings of £6,000. 

Right now, across two accounts, I save around £200-300 per month and this has built up to a total of £14,000. 

I’m saving to buy my first house, but that balance does dip from time to time with any extra business costs.

I also keep a money pot to save any excess change – whether that’s 1p or a fiver, then when it’s full I’ll put all the cash into my house fund.

Feeling secure in my finances means I know where the money I make is going, which gives me freedom and opportunity.”

‘I was left with £12,000 of debt’

Sarah is finally debt free after eight years

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Sarah is finally debt free after eight years

Customer sales representative Sarah Pepper, 39, lives in Ashby de la Zouch, Leicestershire, with her nine-year-old son, 19-month-old daughter and fiancé Dan, 38.

“Working full-time as an admin assistant from the age of 20, I fell into the trap of putting holidays and nights out on credit cards when I couldn’t afford them. 

My then-boyfriend began ‘borrowing’ hundreds of pounds from me which he failed to pay back. 

Relying on credit cards, personal loans and overdrafts, I was constantly juggling payments from one to the other, leaving me feeling lost, stressed and alone. 

By the time my son was born in 2011, I couldn’t keep up with any repayments. 

Living hand-to-mouth, I felt ashamed and couldn’t face telling my family why I was in debt. 

My son was eight months old when I finally contacted debt charity StepChange.

Together we worked out my total debt was £12,000. 

Speaking to them gave me the courage to open up to my parents, who have been amazingly supportive.

It took eight years to repay my debts with StepChange’s debt-management plan, but it cost £80 less per month than the previous minimum payments I couldn’t afford. 

I finally cleared my debt last November and I can’t thank StepChange enough. 

My credit score was affected, but over the past year it has improved substantially, meaning I will be able to borrow again for a house in the future.

Now I’m debt-free and in a more financially stable situation. 

Dan and I organise our finances using a budget and track all incomings and outgoings. 

My next goal is a mortgage and we are on a steady and sensible path to reaching it.”



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Cleaning up your credit safely

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TUCSON, Az. (KGUN) — Americans who are dealing with financial hardship because of job loss and aftermath caused by the pandemic could be struggling to make ends meat and in some cases they might be racking up credit card debt or they’re simply late on paying bills.

KGUN 9 caught up with Sean Herdrick with the Better Business Bureau of Southern Arizona who says there are ways to get your credit fixed but you have to be careful about who’s handling your situation because they can take your money and leave you with bad credit.

“To see how many 1-star ratings there are for credit companies is frightening. They promise you they will do all of this stuff for your credit, get things taken off. Negotiate with your creditors. They’ll ask for a fee up front, you send them the fee and they never come back to you,” Herdrick said.

According to the BBB you can check their website to find out details about how a company operates. And while there are three common ways to fix your credit. It’s also a good idea to get schooled on extra fees.

“We vet the companies we accredit and if you find an accredited credit business chances are they’re doing a good job and they’re going to help you out. Credit counseling and that’s probably the best way. There’s also debt relief or settlement companies where they offer to settle your debts for you or come up with a plan to do that and a debt consolidation company they will offer a loan at a lower interest rate to help pay off all of your debts at once,” Herdrick said.

The U.S Department of Commerce released data that says Americans are spending their stimulus checks on clothing and sporting goods while others are using it for bills to fend off financial ruin and get their credit back on track.

“Do your research make sure the company you hire can give you what you need,” Herdrick said.

BBB Tip links:

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Taking A Joint Home Loan Can Benefit You. Here’s Why – Forbes Advisor INDIA

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In India, buying a home is mostly the single largest investment made by an individual during their lifetime. As our families expand, we plan for the future and plan to invest in bigger homes that can comfortably accommodate and protect a growing family. However, such dream houses come at a significant cost, warrant access to huge funds, and hence, require key financial planning.

In most cases, individuals need to opt for home loans to fulfil the cost obligation associated with buying a house. Considering the amount and type of loan taken, there are certain eligibility criteria that one needs to be aware of before initiating applications. 

At the time of taking a home loan, your lender or you may wish to add another applicant, also called co-applicant, to your home loans for various reasons and the structure of having a co-applicant is referred to as a joint home loan. 

Let’s understand when and why should you take a joint home loan. 

Role of a Co-applicant in a Joint Home Loan

A lender while considering applications simply wants to check if the borrower can repay the home loan along with their household expenses and existing loans. Therefore, while calculating your eligibility they generally keep aside a certain fixed portion of your income that covers your existing expenses. An individual’s eligibility is decided on the basis of the discretionary amount left post calculating their interest repayments and monthly instalments. 

In a joint home loan, you can add another co-applicant or applicants who becomes liable to pay the home loan along with the primary applicant. Liability of the loan is a collective responsibility on both or all the co-applicants as well. Generally, immediate family members, including father, mother, spouse, children, and brother, are most eligible to become co-applicants in joint home loans. 

With such arrangements the question that mostly arises is whether the co-applicant is also the co-owner of the home being considered. Co-applicant or co-applicants may or may not be the co-owner of the property, however they have a liability to pay back the loan. The co-owner of the property is a joint owner along with other owners. 

As a safeguard and prudent underwriting practice, lenders ask all co-owners to also become co-applicants in home loans, however, the reverse need not be true. This is a decision the pros and cons of which should be carefully considered by the primary applicant while choosing joint home loans.

Why Choose a Joint Home Loan Over Any Other Loan 

There are a number of additional advantages in considering taking a joint home loan as compared to an individual home loan. These include higher loan amount eligibility, lower interest rates and other income tax benefits. 

Higher Loan Amount Eligibility: When you add an income-earning co-applicant to a loan, the lender considers the income level of all the applicants and calculates an eligibility amount higher than that of only one individual applying for a home loan. This allows applicants or families to take a larger home loan amount or purchase a more aspirational home since the room for increasing an applicant budget is possible. 

Lower Interest Rates: In order to avail lower interest rates individuals can add their spouses or mother as co-applicants for a joint home loan and as a joint property owner. This is useful as most lenders in India offer a lower rate of interest to women borrowers. It is up to 10 to 25 basis points lower than the interest rate for male borrowers. 

Tax Benefits: Tax benefits can be enjoyed by all the co-applicants separately. For this to happen, co-applicants should be property owners as well and should contribute to the payment of monthly instalments towards the repayment of the home loan. 

Income Tax benefits that are available to the all co-applicants include: 

  • Benefit under Section 80 C of the Income-Tax Act for the loan’s principal payment up to a maximum limit of INR 1.50 lakh per year. 
  • Benefits under Section 24 of the Income-Tax Act for interest paid on a home loan up to INR 2 lakh per year. 
  • In a joint home loan, both the applicants can claim the above amounts individually and use this as an effective tax planning tool

Co-applicants and first-time loan applicants can utilise the joint home loan as a great tool to improve their credit score, thereby easing the process for future loan applications as and when required for various other purposes. 

Necessary Documents Needed for a Joint Home Loan

Documentation is the most cumbersome and tiring part of taking any loan. However, it is a critical part of any lender’s operations as they would want to make sure that their borrower meets income eligibility and supporting documents are provided. 

There are a number of regulatory guidelines for the know your customer (KYC) and property-related documents, where it is imperative that all accurate documentation is shared to avoid unnecessary rejections and thereby delaying the availability of funds. 

For any home loan, typically an applicant needs to provide the following: –

  • KYC documents which include:
    • Identity Proof
    • Address Proof 
  • Income proof documents including but not limited to:
    • Salary slips, Form 16 issued by your employer or
    • Income tax returns (especially for self-employed) of the last three years
  • Property related documents such as: 
    • Agreement to sell, a sale deed or a registry 
    • Previous sale deed for the property (typically all transactions done on that property in the last 13 years) 
    • Few property or location-specific documents like a no-objection certificate (NOC) from relevant authorities or from your bank if the project is funded by any financer in case you are buying new property from a builder.

All applicants need to provide their KYC documents regardless of whether they earn an income or not or whether they even co-own the property. 

If you are applying for a joint home loan mainly for higher eligibility wherein the income of other applicants also needs to be considered, then income documents of all the applicants will be required to be shared with the lender in addition to KYC documents.  

If your purpose is to save on stamp duty charges by adding a female member of the house as a co-owner of the property, then you must make sure that the draft agreements and final sale deed or the registry documents have relevant members stated clearly as co-owners. 

If you are a nonresident Indian (NRI), you can issue a registered power of attorney (POA) in favour of a trusted family member for them to execute the necessary documentation on your behalf. However, you must ensure that the exact purpose of the required transactions are mentioned in the POA, thereby easing the process for compliance and reducing chances of rejection.

Factors to Consider Before Applying for a Loan

Before even applying for a joint loan, it is important to fully understand the lenders’ conditions, which differ depending on the provider you’re considering to approach. 

Lending Conditions

  • If the property has co-owners, in such a case, the lender, in all likelihood, insists all co-owners to become co-applicants as well. 
  • The lender may also insist any or one of your family members become co-applicants in the case of an NRI loan. 
  • If you have given the power of attorney to any of your family members, the lender is likely to insist one of the family members is available in the country as co-applicant for follow-ups and communication purposes to minimize repayment risks.

Credit Score Reports

It is always better to check your and the other co-applicant’s credit score and bureau report prior to applying. This will help to ensure that you are aware of all your past and current loans along with their performance over time. 

In some cases, if it is observed that you may have an old credit card with some minor payment overdue or incorrect reporting by any financial institution, it may lead to the possibility of hampering your overall credit score, reducing the chances of approval.

In India, there are primarily four credit bureaus via which you can check your credit report. Any bureau after paying relevant fees, which is about INR 500, will process your credit report. These credit bureaus include CIBIL, Equifax, CRIF Highmark and Experian.  

When to Avoid Taking a Joint Home Loan?

When a co-applicant already has significant loan obligations and is not left with sufficient income to be eligible for a higher home loan amount, it is generally advisable to reconsider taking a joint home loan and instead consider an individual home loan.

Healthy credit history is very important for lenders while considering applications and a co-applicant who has a bad credit history or poor track of repaying past loans is a major factor while assessing the eligibility of a new loan. 

If your income is sufficient to cover costs with no additional benefits available in terms of tax write-offs, it is suitable for you to avoid a joint home loan and keep the responsibility of your liability limited.

Joint home loans are also best avoided if there is a plan for taking on a larger liability or loan in the near future as the joint loan may impact the eligibility criteria of future loans due to existing liabilities.

Bottom Line

A joint home loan is a beneficial financial tool with the potential of helping the borrower secure higher loan amounts. 

It can aid individuals significantly improve their spending power and investing threshold while buying a larger and more comfortable home and at the same time keeping the primary applicant’s liabilities manageable by sharing the repayment burden with other co-applicants. 

If utilized correctly, it can help you enjoy higher tax benefits, while simultaneously reducing overall tax outgo on a yearly-basis. 

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Fixed-rate student loan refinancing rates inch up, but still hover near record low

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Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

The latest trends in interest rates for student loan refinancing from the Credible marketplace, updated weekly.  (iStock)

Rates for well-qualified borrowers using the Credible marketplace to refinance student loans into 10-year fixed-rate loans hit another low during the week of April 12, 2021.

For borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender, during the week of April 12:

  • Rates on 10-year fixed-rate loans averaged 3.78%, up from 3.73% the week before and down from 4.81% a year ago. The record low for 10-year fixed rate loans was 3.71%, during the week of Feb. 15, 2021.
  • Rates on 5-year variable-rate loans averaged 3.26%, up slightly from 3.13% the week before and down from 3.28% a year ago. Variable-rate loans recorded a record low of 2.63% during the week of June 29, 2020.

Student loan refinancing weekly rate trends

If you’re curious about what kind of student loan refinance rates you may qualify for, you can use an online tool like Credible to compare options from different private lenders. Checking your rates won’t affect your credit score.

Current student loan refinancing rates by FICO score

To provide relief from the economic impacts of the COVID-19 pandemic, interest and payments on federal student loans have been suspended through at least Sept. 30, 2021. As long as that relief is in place, there’s little incentive to refinance federal student loans. But many borrowers with private student loans are taking advantage of the low interest rate environment to refinance their education debt at lower rates.

If you qualify to refinance your student loans, the interest rate you may be offered can depend on factors like your FICO score, the type of loan you’re seeking (fixed or variable rate), and the loan repayment term. 

The chart above shows that good credit can help you get a lower rate, and that rates tend to be higher on loans with fixed interest rates and longer repayment terms. Because each lender has its own method of evaluating borrowers, it’s a good idea to request rates from multiple lenders so you can compare your options. A student loan refinancing calculator can help you estimate how much you might save. 

If you want to refinance with bad credit, you may need to apply with a cosigner. Or, you can work on improving your credit before applying. Many lenders will allow children to refinance parent PLUS loans in their own name after graduation.

You can use Credible to compare rates from multiple private lenders at once without affecting your credit score.

How rates for student loan refinancing are determined

The rates private lenders charge to refinance student loans depend in part on the economy and interest rate environment, but also the loan term, the type of loan (fixed- or variable-rate), the borrower’s credit worthiness, and the lender’s operating costs and profit margin. 

About Credible

Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 4,300 positive Trustpilot reviews and a TrustScore of 4.7/5.

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