Will Paying Off My Old/Bad Debts Raise My Credit Score?

credit score

If you are worried about the effect of old or bad debts on your credit score, we are here to tell you that bad credit doesn’t last forever! It will only take some improvement in your financial life to make the mistakes from your credit report completely disappear over time.

We know how much a debt collection can make it difficult to get new credit and loans. It can be the worst type of entries on a credit report. Now the question is, are you also having problems with your credit score due to the debt collection?

Well, don’t be too worried because every debt has its time period and will soon be removed after paying off the debt. How much time? It depends; for unpaid or delinquent accounts, it’s seven years and for Chapter 7 bankruptcies, it is up to ten year!

These bad credit reports can be quite frustrating when you are trying to clean the record while making any sort of big purchases like a new home, or a car or even starting a new business. We won’t say that the reports will disappear instantly from your record but we can definitely bring you some peace of mind. By following the steps given below, your credit score will surely improve at a decent rate.

Here are some possible ways to remove bad credit reports from haunting you any further:

  • Remove by settlement

Not able to pay the full amount? Try settling your debt. We would suggest you try this first because it can help your financial life too. Negotiations with the debt collector personally to delete your debit account from your credit report in exchange for payment is a great idea.

You must try it! A “settlement” payment is some percentage less than the actual amount you owe. Send a written request and after deletion, make sure to take a written letter of the agreements before making the payment.

This can be a long process so I suggest you take your debt file out a year before any purchase.

  • Remove by paying in full amount

Most lenders will need you to pay off your debts in full and many debt collectors don’t settle for settlement payments. For this, we would suggest that you pay off your debt in full ASAP and then proceed onto requesting the collector to change your report to say paid in full.

This will increase your credit score more than the settlement payment and show the lenders that you are responsible when it comes to paying obligations.

  • One debt at one time

Don’t try to rush things because it won’t help you much. A genius way to remove the bad records and raise your credit score is to take baby steps. What we mean to say is when you are ready to pay off one of your debts, just call up the company owning the debt and repay them fully.

Are you thinking of paying small amounts to all the debt collectors? That trail of thought may be natural but it’s not appropriate. Why? Because if you do so, now and then the companies will keep bothering you. Therefore it’s better than if you repay one at a time.

  • Positivity in recent credit history

It is important to focus on the present than just fixing your past records. Most companies will look at your recent credit records than that of six years ago. So be sure to keep your recent records clean.

  • Take time to raise your credit score

Your credit records won’t just magically improve in a day or two. It will take some time, especially if you have fallen behind on your payments for a period of time.

Don’t recognize a debt? Contact the company and gather basic information right away. If it isn’t you, file a police report and talk to the company immediately. Your debt will draw out helping you raise your credit score.

  • Don’t let it happen again

Now that your credit score is rising, don’t let it fall again! Make a calculated budget and don’t waste your money unless it’s absolutely necessary. It will keep raising your credit score over time and clean all your bad credit records.

Borrowing money can help at times of dire need, so think twice when borrowing money uselessly. If you’ve been following all the advice given here, I can assure you that your credit score WILL rise.

We would also suggest you have a look at Mombo Sacco if you want to protect your financial future. They offer loans of up to 5 times your savings at amazingly low-interest rates per annum. They do care for you. So don’t be a spendthrift! Be wise when spending.

Need Funding for Business? Here’s What to Know Before Applying for a Loan in Kenya

loan in kenya

When you need a loan for your small, medium or large-sized business, it’s highly likely that you’re willing to take the first deal that comes your way, but don’t. Taking time to analyze your needs, plans and the potential lender will help you settle for the best loan in Kenya.

If you’re just getting started with loans, you might find it challenging to know the right questions to ask yourself, let alone the service providers. This article comprehensively covers everything you need to know before you apply for a loan in Kenya.

Understand why you need a loan for your business

There are unending reasons to borrow a loan in Kenya for your business. You might want to boost up your inventory, expand your physical location, do some renovations or marketing, help with recurring expenses or pay employees. You also might need money to serve as a cushion for a rainy day. Whatever your reason is for considering a loan, ask yourself:

  • Will the money help your business grow? For instance, if you borrow Sh. 100,000 for paying employees, your credit won’t generate more revenue, meaning you could still be in the same situation a few months down the line. If you put the money where it can grow, then you’ll realize more profits with time, and help minimize future borrowing needs.
  • Do you have an adequate cash flow to settle the loan? Most lenders will want to see a cash flow that’s at least triple your debt payment requirements. If they realize that you might have problems making payments if one of your clients pulls out, that’s likely to scare them away.

Related: four steps to make the most of your credit

Consider how much money your business needs

This might seem obvious, but you’ll be surprised by how many business people end up borrowing way more, or even less than they initially thought they needed. So, the second thing you should do is to take a pen and paper and write down all your needs, against the cost. This will help you come with an ideal figure, which is essential for two reasons:

  • Knowing how much you require will assist you in finding a provider who’s capable of financing your needs. Some will only give you a fraction of what you need, which will be too little, and won’t be worth taking. On the same breath, taking more than you require will mean bigger payments, which might strain you at the end of the day.
  • Having the ideal figure in mind will guide you in borrowing what you need; it removes the guesswork from the picture. This way, you won’t take less or more than what your business requires. Besides, with everything written down, you are aware of how you’re going to use the money, and it will serve as a guide for careful spending.

Analyze the cost of the loan

Once you’ve figured out how much money you need for your loan in Kenya, the third thing is to know how much it will cost you – or the interest. The market presents hundreds of options when it comes to money lending, but only a few will give you value for money. The hard part is finding the “few”.

Borrowing smart is the way to go; don’t go into it with your eyes wide shut, blinded by the excitement of what you’re getting. Debt isn’t bad, ignorance is. Here’s how you understand the real cost:

  • In addition to your potential interest rate, ask your lender about the Annual Percentage Rate (APR) for the loan. The APR includes all the extra charges – like the accounts, loan processing, and origination – and will give you a more accurate quote of what you’ll pay.
  • Ask if there are any prepayment penalties or extra costs. With this information, you’ll know whether or not your business can comfortably pay back the loan that you’re planning to take.

Find out about the payment terms

The good thing about loans is you can repay over a period. Before you commit to one, you should always be aware of its terms (how long the loan will last and its features). Top providers of quick loans in Kenya are flexible and allow repayments from 2 days up to 48 months. It’s best to know what you prefer before settling into a deal. You can:

  • Find out if the interest rate is floating or fixed. Floating interests fluctuate with the financial market, whereas the fixed one doesn’t change regardless of the market.
  • Consider if the term you’re interested in uses compound interest (CI). With CI, the interest amount is added to the principal borrowed amount periodically. Find out if you’ll incur any penalty for early repayment. If there isn’t, and the loan is using CI, then you can pay up the full amount sooner to save up.

Establish how soon you need the loan

If you want a quick business loan to boost your stock in a high sales period, or to cater for an emergency need, you’ll pay more for the convenience you’re getting. Fast cash is a bit more expensive than those that take longer to materialize. Prior to settling for a deal:

  • Analyze your business needs. Can the investment wait, and for how long? Is it an emergency? With the answer in mind, you’ll know what to settle for.
  • It’s also important to know who you’re working with. Some lenders will want to squeeze you dry because they know you need the money. You can opt for SACCOS which are highly regarded for helping in such situations.

Related: how to open a savings account that enables you to borrow against savings

Always ensure that you are well-versed with all that goes into the process before you resolve to take a loan in Kenya for your business. Big funds with minimum interest sound incredible, but if you can’t qualify, then it isn’t the right loan for you. A business loan is just about matching your needs with your options. Best of luck.

Easter: 5 Tips to Save When Everybody’s Spending + 1 Tip on Savings Account in Kenya

savings account in kenya

Easter is almost here! Not all of us have already recovered from Christmas overspending, and now another one is around the corner! Weekend trips, entertainment, gifts, chocolates, pricey food and drinks… Is it possible to have a great Easter fun with family and friends without breaking the bank? We will tell you how to save while everybody’s spending during this Easter. And even more, how to build up a fund for things that really matter – with a savings account in Kenya.

Tips for saving during Easter

1. Set your budget. Many of us anticipate Easter to officially indulge our cravings for chocolate and fun. But beware, this time is tricky. Small things like coffee, taxi, expensive treats, Easter-style décor and accessories stack up into a significant sum of money.

Marketers agitate the spending culture during religious holidays making a huge dent in our wallets. Can you resist this mania? Yes, if you stick to your budget. Before Easter rolls in, define your budget limits and stay within them.

We don’t recommend relying too much on credit cards and putting yourself in the red. Credit cards are bad for long-term loans.

2. Shop wisely – before and after. While grocery shopping before Easter, always have a shopping list with you and stick to it. You know, deals here, deals there… It is always a big temptation to spend lots of money on things you don’t actually need (at least now).

 The best time to look for deals is after the holiday – on Easter clearance. On post-Easter sales, you can buy gifts or Easter-related things you’ll need the next year.

 

3. Home-made treats and entertainment. Treats, food and drinks stretch the budget if you buy them. Consider looking for recipes online and preparing dishes on your own. You’ll save a TON. Inviting friends and relatives to your place instead of dining out will also save you lots of cash. Especially, if you guests will bring a plate.

 

4. Get creative on entertainment, and the fun won’t cost you big money. Color real eggs (boil them hard first) and make Easter-themed crafts with kids instead of pricey chocolate egg mania.

 

5. Staycation instead of expensive travels. Maybe you want some new sensations, but prefer to keep your money for a BIGGER trip in the future. Here are some Easter getaway options for you. Consider exploring your city’s surroundings, renting a cottage, going on a camping trip or just taking your family for a walk in the park. You’ll be able to spend some great time with your beloved people without flushing your savings down the drain.

A savings account in Kenya: how to save when everybody’s spending?

When Easter rolls into your city, it is easy to get carried away with expensive frills and forget about your saving goals. If you want to have more than chocolate eggs in your pockets as Easter rolls by, you need to start saving now and do it wisely.

Opening a savings account in Kenya will help you devote a bearable amount of money from your every paycheck to your dream. And what is more, do it automatically. This ensures that your savings grow regardless of the time of a year and holidays that come and go.

Opening a savings account with MOMBO: benefits and terms

Savings accounts differ a lot in terms of benefits and requirements. Registered SACCOs in Kenya are the best option for savings accounts. As a member, you get access to the credit facility. Most of the registered SACCOs in Kenya offer loans equal to 2 or 3 times your savings.

MOMBO not only increases this credit limit to 5-fold your savings but also offers 6% interest on savings. The last feature is unparalleled among registered SACCOS in Kenya. As a member, you also earn dividends on your shares.

To start saving with MOMBO Sacco, download the app and enroll. After paying the nominal entrance fee, you can start growing your account with monthly instalments.

Devoting as little as KES 3,000 monthly, you’ll be able to survive any holiday without losing the saving perspective.

SACCOs in Kenya: The Benefits of Borrowing

Saccos in Kenya

Besides the best saving plans they offer, registered SACCOs in Kenya offer plenty of borrowing opportunities too. In this article, we’re going to cover all the benefits of borrowing from SACCOs in Kenya and how to get the most from your money with Mombo!

What are SACCOs?

In case you didn’t already know, SACCO stands for savings and credit cooperative organization. So, you can already tell that they’re all about best savings plans, savings accounts and finance. But in this article, we’re going to focus on the credit side of SACCOs in Kenya.

SACCO societies are organizations of savers, investors and finance professionals, so you often have a lot of opportunities to make the most of your money. From higher interest rates on your savings, to lower fees compared to what the traditional banks charge.

The Benefits of FOSA and BOSA

There are 2 types of SACCOs in Kenya, both with unique benefits.

FOSA stands for Front Office Services Activity. It basically means that they offer similar products to the traditional banks in Kenya, and you can access your savings over the counter. You can withdraw from your SACCO account when you like, but there may be small fees and reduced interest rates as a result. These aren’t the best saving plan if you want to get the most interest from your savings. FOSAs are regulated by SASRA (SACCO Societies Regulatory Authority) while BOSAs are not.

Benefits of a FOSA SACCO:

  • You can withdraw money when you like, as you would a bank savings account.
  • As a member of the SACCO you may have access to their loans too.
  • Clearinghouse process also allows you to process your salary and cheques through the FOSA.

BOSA stands for Back Office Services Activity. That sounds shady, and although they aren’t regulated by SASRA, there are very reputable, trusted and regulated SACCOs in Kenya that are BOSAs. The money you put into the BOSA can’t be touched until you leave the SACCO altogether – this usually allows for higher interest rates on your savings and comes with other benefits, as you’re locking your money in. Take Mombo SACCO for example and read more about why we’re so great below.

Benefits of a BOSA SACCO:

  • Higher interest rates compared to banks and FOSA SACCOs on your savings.
  • Money tied into the BOSA can be used to get you a higher loan – 5x your savings in the case of Mombo!

Solely focused on your savings and loans – a BOSA SACCO is dedicated to managing these finances alone.

The Benefits of Borrowing from a SACCO

Here are the key benefits of borrowing from a registered SACCO in Kenya. Can your bank offer you these features?

  • Better credit facilities and more flexibility than the banks.
  • A much smaller chance you’ll be declined a loan from a SACCO you’re part of, compared to traditional lenders!
  • You may be entitled to dividends as a key member, depending on the SACCO.
  • It’s much easier to save large amounts of money without the temptation to spend it – especially with a BOSA.

Extra benefits from Mombo:

  • A completely digital process – from signing up to applying for loans to repaying them.
  • Access and monitor your SACCO activities from anywhere via smartphone.
  • Access to Mombo iCapital for larger loans and investments.
  • Dedicated 24/7 customer support via our innovative Mombo app.
  • Life insurance guarantee – if you pass away while holding savings with Mombo, your loved ones will receive twice the amount you saved.

    Discover Mombo SACCO

Mombo SACCO is a BOSA, meaning we are registered, licensed and regulated by the commissioner of cooperatives under the ministry of industry, trade and cooperatives. As far as we know, we are the leading SACCO in Kenya in terms of FinTech and forward thinking! Not only is our entire application process digital but we’ve gone to lengths to make sure it’s user-friendly and easy to understand.

When it comes to borrowing from Mombo SACCO, you can access up to 5 times your savings, at an affordable repayment rate. And if you need more for a shorter period of time, you can also access Mombo iCapital from the app.

Discover more about Mombo SACCO, one of the leading SACCOs in Kenya here.