Knowing how to handle your finances, for many of us, is something we learn as we go along. From when you open your first bank account, to the first loan or credit card you take out, each time is a learning curve. However, there are many aspects of finance that can either be confusing or we have a knowledge gap in, meaning you can easily sign up to credit agreements without fully understanding the terms. If this sounds familiar, here are some tips on how to increase your financial literacy and be more money confident.
Choose Better Lenders
With so many options available when you’re thinking of borrowing money, it can be difficult to know which to pick and which to avoid. Being financially literate helps to make better decisions on a lender and choose the right type of loan product for you, so taking the time to understand loan offers is important before jumping into an agreement. If you are someone with a low credit rating, there are lenders online who can help where traditional lenders may not. If you suddenly find yourself in a situation that needs to be resolved quickly and you don’t have the funds, payday loans bad credit lenders can provide the instant cash you need and provide flexible repayments based on your affordability. Some lenders can also show you multiple offers you are eligible for to help you make an informed decision. Rather than choose the first lender you find, take the time to inform yourself about the options available and compare loan offers.
Understand Different Loan Products
Being able to tell the difference between unsecured and secured borrowing, and why a guarantor loan is different to a personal loan, are just a couple of examples of loan products worth learning more about. As there are so many different types of loan, understanding the pros and cons of each and what they are ideal for will help you increase your financial literacy. There are many loan products you may never need to use, but understanding why they are valid options for some people, and which are best to avoid, will also help you understand other parts of finance. From fixed to variable APR rates to fees and charges, the details of each will become more clear the more you read about them.
Utilising Your Credit Report
An important part of your finances is your credit report and how lenders and institutions interact with it. Understanding what your credit report shows and what your credit score means will go a long way to helping improve your financial literacy as it will detail the positives and negatives of your credit history. If you have ever wondered why you may have been declined by a lender, your credit report will provide insight into this. Credit Reference Agencies like Experian and Equifax have plenty of online help to guide you and can even help you with finding the best deals on loans, credit cards and mortgages if you need them.
Gaining a good understanding of your finances won’t happen overnight and everyone has gaps in their knowledge. Start with the basics and understand finance products you already have, then you can start to learn more about other potential finance products you may want to use in future.
