Intellectual Property Protection and Management of Intangible Assets in Business Transactions

The importance of due diligence in both pre and post transaction

In most business transactions today, intellectual property and intangible assets comprise increasingly significant elements (value) of a deal. Therefore, due diligence must be much more than a cursory or confirmatory review of the presence, absence, and/or legal position of the targeted assets, i.e., intangibles, intellectual property, brand, goodwill, reputation, business processes, proprietary know how, etc. What’s more, due diligence must provide more than merely a snap-shot-in-time estimate of the assets’ value.

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In most business transactions today, intellectual property and intangible assets comprise increasingly significant elements (value) of a deal. Therefore, due diligence must be much more than a cursory or confirmatory review of the presence, absence, and/or legal position of the targeted assets, i.e., intangibles, intellectual property, brand, goodwill, reputation, business processes, proprietary know how, etc. What’s more, due diligence must provide more than merely a snap-shot-in-time estimate of the assets’ value.

The strategic value of about-to-be purchased/acquired intellectual property and intangible assets cannot be properly assessed by using conventional snap-shots-in-time techniques because, in today’s hyper-competitive, globally predatorial, and winner-take-all transaction environment, the value, usefulness, and materiality of a patent and/or intangible asset can fluctuate, diminish, and/or be undermined rapidly if adverse circumstances exist in which the assets’ have been compromised, misappropriated, infringed pre-post transaction.

That’s why it’s especially important for those charged with structuring-framing (negotiating) transactions in which intellectual property and intangible assets are in play to fully appreciate the reality that conventional forms of protection, i.e., patents particularly, are not synonymous with either party to the transaction being able to sustain their rightful control, use, ownership, or value of the purchased/acquired assets.

The reasons for this are two-fold, i.e., the time frame when holders, buyers, and/or sellers of intellectual property – intangible assets can expect to realize/extract value (from those assets) is continually being compressed due to, among other things:

o abbreviated product functional life-value cycles relative to consumer habits, and

o globally predatorial business intelligence and data mining operations than can, when successful, rapidly ‘get out front’ of competitors’ transactions, product rollouts, R&D, etc., to adversely affect (undermine, erode) an assets strategic value.

Again, those charged with structuring-framing (negotiating) transactions when intellectual property, know how, and intangible assets comprise a significant part of the deal would be well advised to approach the due diligence process to determine if there is evidence of:

1. consistent stewardship, oversight, and management of the targeted assets above-beyond conventional intellectual property protections?

2. consistency in the representation of those assets, i.e., meeting requisites of Sarbanes-Oxley and FASB, etc., in which risks, value, materiality, and financial performance are accounted for, reported, and measured?

3. business continuity-contingency planning that includes intellectual property and intangible assets?

4. strategic planning already in place intended to achieve fuller utilization (commercialization, monetization) of those assets?

Conducting (intellectual property, intangible asset) due diligence in this manner to determine the status, stability, and fragility of the assets in play, will provide decision makers with valuable insights relative to ‘deal – no deal’ decisions as well as assessing whether the assets’ value, control, use, and ownership can be sustained post-transaction absent time consuming and costly legal challenges.

Mr. Moberly has conducted numerous national presentations, seminars, and training for business organizations and professional associations on a range of issues related to helping companies sustain control, use, ownership, and value of their intellectual property, intangible assets, proprietary information and competitive advantages.

A professor at Southern Illinois University (1982-2002) Mike brings strong domestic and international experiences, operational insights, research regimen, and concise/objective writing skills to benefit his clients. As a researcher, analyst, strategist, educator, and practitioner, Mike offers services to various business venues and transactions in which intellectual property and intangible assets are in play. Mike has a BA and MPA degree from Indiana University. He holds leadership positions in the American Society for Industrial Security International and the Intangible Asset Finance Society among others.

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Solar Panel Systems, Renewable Energy, Energy Efficiency and Your Home

Using renewable energy to produce electricity and reduce your electric bill can be a sound long-term investment. Depending on the type of technology, you can expect a full return on your investment within 3 to 18 years. With financial or tax rebates from your utility company or state and national government, the payback period on your investment can be cut in half.

However, the very first step to considering any renewable energy system must be how to make your home or business more energy efficient. Generally, the basic rule is that for every $1 you spend on making your location more energy efficient, you save $3 to $5 on the cost of the renewable energy system. Let’s go over some basic ways you can make your home more energy efficient.

Making Your Home Energy Efficient

One of the easiest things that you can do to reduce your electrical consumption is change out your regular incandescent light bulbs to compact fluorescent lamps (CFLs). CFLs use 65 to 75% less energy than a normal light bulb that produces the same amount of light. By replacing a normal 100 watt incandescent light bulb with a 32 watt CFL, you will save $60 to $80 in electricity costs over the lifetime of that bulb (10,000 hours). Now imagine how much you would save if you changed out all of your light bulbs to CFLs!

The technology for these bulbs has quickly evolved and improved in the last few years, while the cost has come down dramatically. You’ll find that there are CFLs that will now fit most light fixtures and lighting needs-there are even dimmable CFLs!. Head out to your local department or hardware store and buy CFLs for as many of your light fixtures as possible. The investment is well worth it.

Another alternative to traditional lights are tubular skylights . Tubular skylights look a little like shiny stove pipes that start with a transparent dome on top of the roof and come down into some room for day lighting. We frequently see customers using tubular skylights to bring daylight into hallways and closets. The light is, of course, entirely natural and in some installations can provide as much illumination as a 100-Watt incandescent light bulb.

Energy Star and EnergyGuide

One of the biggest consumers of electricity in most households is the refrigerator. In most households, refrigeration is the number one electricity consumer after any electricity-based heating or cooling systems. If your refrigerator is over 10 years old, chances are it’s electrically very inefficient. Consider replacing your current refrigerator with one that has a high Energy Star rating. Remember that just because a refrigerator may have earned the Energy Star label doesn’t mean it’s the most efficient model available-it only means that its efficiency exceeds the federally mandated efficiency standard by at least 15%. You can even do much of your investigation online at the Energy Star website. There you can search for the brand, type and size of refrigerator you want and sort by energy efficiency. When you shop in stores, consult the yellow EnergyGuide tags that are attached to all new refrigerators (and many other appliances). EnergyGuide is a different government program from Energy Star that offers information about annual energy consumption and shows you where each model lands in a comparison with similar models. For maximum energy savings, select the model that’s a leader in efficiency in its class.

Ghost Loads

Also known as “phantom loads”, ghost loads are the sneaky devices that constantly consume small amounts of electricity 24 hours a day-even when they’re not actually doing anything useful. While each device by itself may not consume much electricity, the combination of all of them within your household may easily consume the equivalent of two or three 60-Watt incandescent light bulbs left on all day and all night. Over the course of a single year this adds up to over 1 Megawatt-hour-in other words, enough electricity to power an entire energy-efficient house for 2 to 3 months!

What are these mysterious ghost loads? The most common examples are the “power brick” adapters, or power supplies, that charge or operate cell phones, laptop computers, cordless drills, answering machines, radios, inkjet printers, and many other household devices. They’re actually small transformers, turning AC electricity from the wall outlet into DC electricity for use by the device. While any one of these devices may only consume a small amount of power (e.g., 3-20 watts), a dozen or so of them, running simultaneously and continuously, consume a significant amount of electricity. What’s worse is that even when you’re not charging your cell phone or the battery for your cordless drill, that AC adapter may continue to consume power just because it’s plugged into the wall. Other well-disguised ghost loads are those devices which have the “instant on” feature, such as most modern television sets, VCRs, DVD players, many radios and even many computers. While all of these devices are supposedly turned off, they are actually consuming anywhere from 3 to 20 watts continuously-just to stay ready for you to use them.

How can you decrease the consumption of energy by these parasitic loads? One of the simplest solutions is to simply plug these devices into a power strip which has an off/on switch. When you are done using the devices and shut them off normally, then just hit the off switch on the power strip. Many people make it part of their nightly routine to shut off these power strips just before they go to bed. For AC power adapters that you use at night, like for charging a cell phone, put those on a separate power strip that you turn off during the day when you take your phone with you. Simple solutions like these could reduce your ghost electric loads by as much as 80%. In real-dollars terms, this means saving upwards of $120 per year in electricity costs, depending on your local electric utility rates and how dedicated you are to reducing your ghost loads.

A Special Note for People Who are Planning to Live Off-grid

If you’re planning to use an off-grid solar panel, wind turbine or hydro electric system and plan to have a 12 or 24 volt battery bank, you will often be able to find devices and appliances that work directly with these DC voltages. The benefit to using the devices is that they will not need an AC power adapter which needlessly consumes electricity whether or not the device in use. After all, what an AC adapter plug does is convert normal AC household electricity to DC type of electricity to power the device, and it rarely does that conversion efficiently.

Energy Efficient Cooling

During the summer (and in warmer climates) air conditioning is frequently the largest consumer of electricity. An inexpensive way to reduce the demand on your air conditioner is to keep your attic cooler with a solar attic fan. Powered by a built-in solar panel, solar attic fans turn on when your attic warms up during the day. By venting the hot air out of your attic all day long, the floors below stay cooler and as a result your air conditioner runs significantly less.

Solar attic fans can be installed by good do-it-yourselfers or carpenters. They require no wiring. A hole needs to be cut in the roof, the attic fan is slipped in and the edges are sealed up well with roof caulking. The solar panel built into the fan unit is designed to last at least 25 years. A solar attic fan is another wise investment that pays for itself very quickly.

For people who live in zones that are relatively dry but hot, evaporative coolers (also known as swamp coolers) are a cost effective and energy efficient alternative to traditional air conditioners. Evaporative coolers use about 25% the energy an air conditioner would need. Unfortunately, most people live in climates that when it’s hot it is also relatively humid. In these conditions evaporative coolers won’t work effectively.

Another simple and green method for reducing your home’s air conditioning costs is to plant deciduous trees whose leaves will shade your home in the summer time and shed its leaves for more sunlight in the winter time. By shading your home it heats up less, and therefore requires less cooling by an air conditioner. Planting a tree in this scenario has double the environmental impact, you’re reducing greenhouse gases by both using less electricity and because the tree itself absorbs carbon dioxide.

Energy Efficiency and Household Appliances

Many other appliances throughout your household will have a newer and significantly more energy efficient version available. Here is a short list of other appliances you should consider replacing with higher efficiency versions: water heating tanks, air conditioners, dehumidifiers, dishwashers, telephones, VCRs and DVDs, ceiling fans, fax machines, computers and copiers. To see which brands and models have Energy Star certification and to figure which ones of those are the most efficient, visit Energy Star’s website: www.EnergyStar.gov. To find out how much power your appliances are really consuming, invest in an inexpensive power meter like the Kill-A-Watt meter.

For many households the biggest bill is the heating bill. Probably the quickest, least expensive and easiest way to reduce your heating bill is to buy a programmable thermostat. You can set these thermostats to turn off the heat automatically when you’re not home and turn it on just before you arrive. You will easily recoup your small investment in the new thermostat within one winter by running your heating system less. See your local hardware store or HVAC company for pricing and availability of different models.

Another basic step to reducing your home heating bill is sealing air leaks and adding insulation. According to Energy Star sealing air leaks and adding insulation can reduce your heating bill by as much as 10%. For homes with attics, one of the easiest and most effective places to put down insulation is in the attic. Visit your local home improvement store to find out how much insulation in different areas of the home is recommended for your region.

In the last few years, the use of solar air heating systems has become more popular. Mounted on an exterior, southern-facing wall or on the roof, solar air heating collectors can reduce a home’s or business’ annual heating costs by as much as 30%. Costing far less than a new conventional heating system, solar air heating systems usually pay for themselves in 3-6 years. They’ll typically last for 18 to 35 years and require minimal maintenance. Working in conjunction with your existing heating system, the solar air heating system simply reduces your heating demand whenever you have even partial sunlight.

There are two basic flavors of solar air heating systems. There are ones that heat up fresh outdoor air and blow it into your home or business. The there are ones that take the air from inside your building boosts up the temperature by another 50 to 90 degrees fahrenheit and blows it back in (known as recirculating air solar heating systems). Newer homes and buildings which tend to be tightly sealed and have stale winter air will benefit doubly from the fresh air solar heaters. Older homes tend to be inherently draftier and experience full air exchanges with the outdoors a few times a day. These homes will benefit more from the solar air heating systems that recirculate the indoor air and boost it up in temperature. Typically, one 4×8 foot solar air collector is recommended per 750 to 1000 square feet of home space.

Water Heating Efficiency

More efficient models of domestic hot water heaters have also become available in the last several years. If you have an old hot water heater, chances are that it was not designed with efficiency in mind. Again, check out Energy Star’s website to find out which boilers are the most efficient.

Another good alternative to the traditional hot water heating tanks are instantaneous hot water heaters. These systems heat the water only when its being used. Normal water heating systems used in much of North America maintain a large tank of hot water to be used only a few times a day. To keep the water hot and ready at a moment’s notice these traditional hot water heating tanks consume energy throughout the entire day, whether you need it or not. Instantaneous water heaters only consume energy the moment you need the hot water, saving the typical household 30 to 50% of the cost of hot water heating. You can find instantaneous water heaters that use natural gas, propane and electricity from a variety of manufacturers.

Solar Water Heating Provides You the Best Return on Your Investment

The energy (natural gas, propane, electricity, etc) needed for hot water heating can be reduced by 60 to 90% by using a solar water heating system to pre-heat water before it enters your existing traditional water heater. Remarkably effective and efficient, even in northern climates, solar water heating technologies have matured significantly in the past 30 years. Designed to easily last 30 years or more with minimum maintenance, typically solar water heating system will pay for itself in its first 3-7 years of use. Solar water heating systems heat your home’s water with collectors that are usually placed on the roof of the home. The hot water produced is stored in an insulated tank until your home is ready to use it. Your traditional hot water will only kick on to heat up the water when the water temperature is not quite high enough. Solar water heating systems can be installed by advanced do-it-yourselfers, but it is recommended that a licensed plumber or installer review or do the more complicated plumbing.

Energy Efficiency – Your First Step Towards Clean Energy and Energy Independence

The first step before purchasing a solar electric or wind power system to meet your electricity needs is to intelligently reduce those needs. Most homes can inexpensively reduce their electricity demands by 20 to 30% without ever having to make any adjustments in the lifestyles of the occupants. We provided you with many energy saving tips in this article, such as:

Replacing incandescent light bulbs with compact fluorescent ones.
Upgrading your older appliances with EnergyStar star ones that have a very low annual energy consumption rating.
Minimize the many hidden phantom (ghost) loads in your house.
Insulate your home well for colder seasons.
Creatively use vegetation to keep your home cool in the summer and maximize sunshine entering the house in the winter.
Use solar heating technologies (not to be confused with solar electric technologies) to cost effectively reduce how much your traditional air or water heating systems have to work.

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Benefits of Travel Planning and How to Get Started

If you travel frequently or travel a lot then you must have realized the importance of travel planning. A well planned trip really gets you your money’s worth. You are aware of your schedule, plus you are not wasting your time in figuring out (at the last minute) what to see, what to do, where to eat, etc. But still a lot of people travel with vague plans and without a complete picture. A lot of people say to me that travel planning is hard and time consuming and that if they were to wait for a travel plan then they would not be able to travel at all.

I disagree with all of them. Yes, it takes time to plan a trip but whats the point of traveling to another country or city if you are not going to see the best sites, taste the local food, or experience the top activities. Following are some of the tips that you can use to plan a near perfect trip for yourself.

First of all, zero out on a location where you would like to travel, it may be another city, state or another country.

Second, Why you would like to go there? Maybe some friend or family member went there and were full of praise or may be you read about it on internet or magazine or saw it on TV. Realizing WHY you want to travel to a particular location will help you plan the trip properly. For example, you may want to travel to the New York city to see the skyscrapers, or/and see Statue of liberty or/and may be visits the Museums.

Third, How long i.e. How many days you want to spend in the new place.

Once you have decided WHERE you want to go, understand WHY you want to travel there and decided HOW long you want to visit for, you can then begin preparing your itinerary.

You should start by asking your friends, family & co-workers about the destination that you have selected. If they have not been there, you should ask if anybody they know have traveled to that place. If yes, then don’t be shy of talking to that other person about their experience. Realize that people love to talk about their trips. This way you would learn a lot and maybe make a new friend in the process.

You can watch YouTube videos or watch Travel Channel to get ideas about the place you would like to visit.

Further, Google is your friend, you can search for the location to get tons of information about any place. There are thousands if not millions of Travelogues written virtually about all places on this earth.

Tripadvisor.com is an excellent site to research about any destination. You can ask questions, read about other’s experience etc. But the research on internet is time consuming and you should be diligent.

Lastly, you can even read the travel books, city guides by Frommer’s, Lonely Planet and Fodor’s. These are very well written and cater to all level’s i.e. Newbies, repeat, expert etc.

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Improve Your Poor Credit Score and Secure Yourself a Loan

So you are thinking of getting some extra money to make some urgent home repairs, the porch door needs replacing, along with a new hot water system. Unfortunately you do not have the money in the bank, but neither do you have a secure porch door or any constant hot water.

Have you considered personal loans? A lot of people take out personal loans for this type of repair. Car repairs and even holidays are used by people with their newly acquired finances. Most people have heard that a poor credit score is not a good thing (However even those that have a poor financial history can still get loans). But how do you make a good rating?

One of thing major pieces of advice from experts, before you apply for finance it is best to get a credit report completed from a reputable source. This will give you an idea of the chance of getting your application approved. In the United States of America there are three levels of credit rating, basically the higher it is the better it is.

An excellent rating is above 760, a good rating would be between 700 and 759 and a poor rating would be between 640 to 699. if you are at the top end, 760 and above then there is no point in making your rating any better. However with other ratings it is worth trying to improve as it will help your chances of succeeding in the application.

There does seem to be a bit of a chicken and egg situation sometimes, you need finance but have a poor score,but to improve you need a lender to give you a chance. Well, luckily there are things that you and your family if you have one, can do to improve your rating.

Having a poor rating does not mean you have to be stuck with it, starting to pay the bills on time instead of late or not at all will start to get you on the right path. Some lenders will still give applicants loans even with a low score, but the total given will be lower than usually and the percentage rate will be considerably higher. So you will pay more over the period of the finance.

Families can help too. If a member of your family has a good rating then some credit card companies can add you to that family members credit card as an authorized user, this will help with any poor credit score. Also having a family member with a good rating co-sign the loan could help you get what you need.

Finding the correct lender for your score is a good way to make sure that you are getting what you deserve, if you have a high score you deserve some of the best deals on the market. Instead of going to your bank or card company you can go online and search for a matching company. Companies like this are a good place go to make sure you achieve the best deal.

What are a matching company and what do they do? You enter your details on their online program and your information will be fed to several of their approved lenders, in turn the lenders will then return to the matching company with a list of loans that they are able to offer.

Once the offers come back it is then up to the applicant to choose one and complete all the necessary paperwork. A check will then be received within a matter of days and your new boiler and door fitted soon after.

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Payment Options for Shopping All the Way

Everyone is busy. Busy in shopping online and in the malls. Popular online portals are breaking and making new sale records! All thanks to the convenience and the availability of easy payment options and funds!

Here are few of the factors that are making online businesses a success

Credit Cards: A credit card is plastic money. It is one of the easiest form in which a person gets a personal loan.

All online portals as well as retailers in malls accept credit cards issued by various banks.
Online payment becomes very simple and safe, thanks to the one time passwords generated for such transactions.
A PIN is sufficient for shopping using a credit card at any retail store.

Personal loans for shopping: When we apply for a personal loan, we don’t have to provide the financier with the details of what we want the loan for.

Thus these days’ personal loans are being used to finance shopping.
They can also be used as wedding loans, vacation loans and educational loans.

Payment Processing: As far as payment processing is concerned, the following factors matter to both the consumer and the online retailer.

Uncomplicated manoeuvring on website: It is important for the payment process to be step-by-step and easy to understand. Most websites work on this section very carefully and thus the online shopping experience is satisfactory.

Processing Costs: Processing costs matter to the retailers. More the processing fees they have to pay to providers of payment gateways like Visa, the lesser are their margins. So to have an effective business the processing costs need to be low.
Number of payment options: Multiple payment options should be available for the customer to make payment. This makes the shopping a convenient proposition.
Time taken to process transactions: Processing time not only tests your patience but sometimes also the strength of your internet connection!

Cash on Delivery: This is also known as “collection on delivery.” This is a very popular mode of making payments for shopping in the developing world.

It enhances impulse purchases.
A credit card is not an essential possession for the buyer.
The buyer can check the quality of the product and then pay

So this festive season, do not hesitate to shop and to gift! The availability of funds for shopping is not difficult anymore. Also the convenience of online shopping has brought various retailers to our doorstep. So let us shop all the way!

An easy way of shopping is using a credit card. It forms an integral part of most people’s financial planning. When used in the right manner, it helps reduce financial liability and optimizes financial resources.

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Are Online Personal Loans Good For People With Bad Credit?

While the rise of online lending in itself makes it more convenient for people to apply for finance, is this development a good thing for those who are already struggling? There are companies out there who charge expensive annual percentage rates (APRs), leaving many people in more trouble than when they first started.

But it doesn’t have to be this way. Over the last few years, online lending has earned itself a bad reputation. The internet leaves many people vulnerable to fraud, so you should always exercise caution when inputting your financial details. The best way to make sure your information remains safe is to find a secure, reliable lending platform.

There is an unfair irony attached to lending today. Those with bad credit are often led to believe they have no financial options if they have made mistakes in the past, often making their situations seem more desperate than they actually are. This can result in people making bad decisions and can lead to borrowing through unstable sources.

Meanwhile, any lenders that do accept you with bad credit will charge extortionate interest rates because of your history, making it more difficult for you to meet your monthly repayment obligations – thus worsening your situation. This is a trap that many people fall into, and it gives online installment lenders a bad name.

However, this doesn’t need to be the case. If you can find yourself a reliable lending platform, you will be connected to a secure network of trustworthy lenders who can offer sensible solutions to your borrowing needs. Many of these lenders will assess your application, even if your credit file isn’t perfect or your income is lower than average.

Instead of (or in some cases, as well as) running credit checks, these lenders will take other factors into consideration, including your income and employment circumstances, and how long you have lived at your current address. They may even ask for references they can contact who will vouch for your character personally.

Even those who receive benefits as a form of income will be able to apply, giving everyone a fair and carefully considered chance of borrowing money. In these cases, applicants won’t be accepted for higher loans than they can afford to pay back, and interest rates will be low, meaning there is a better chance of managing repayments.

If you have poor credit and need to borrow money, consider a personal installment loan, but make sure the APR is advertised between 5.99% and 35.99%. There should also be a number of options in terms of flexible repayment, offering you the chance to pay the money back anywhere between six months and six years, depending on what you can afford to pay per month.

Small, carefully considered personal loans could actually help you build a financial profile making you eligible for better future borrowing. As long as the lender is responsible, and offers reasonable interest rates, online lending platforms can actually give people with more opportunities than many other lenders in terms of improving their situation.

With this in mind, personal loans can be beneficial to those hoping to improve their credit score, but only if some caution is exercised by both parties, and you only apply to borrow an amount you can afford to pay back.

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Five Reasons for Refusal of a Personal Loan

Don’t you wish personal finance were a mandatory course in college? Unfortunately, too many of us learn by mistake. When you need a personal loan and are rejected, you might be baffled as to what went wrong- and how to fix it. Here are some clues.

NO CREDIT

No credit is a situation where you have never used credit and therefore have no credit history for the bank to review. They have no way of making an educated decision on whether or not you will pay back a personal loan based on your credit history. No credit is worse than bad credit. Qualifying for and making regular payments on these types of introductory forms of credit can overcome a “no credit” score:

· Student Loans

· Secured credit card (includes a down payment amount)

· Being added to a parent’s or spouses good credit: card, car loan, etc.

LOW CREDIT

Low credit takes on several forms. If you’re using more than 30% of your allowable debt, it can negatively impact your score. Too many inquiries from shopping around for loans will also hit you hard. Lapses in payment, defaults, or bankruptcies are giant red flags and can take a long time to rebuild from.

Other things that lenders may look at are whether or not you have sizeable assets should you default on the loan. They also check to see if your debts are diversified or if you are only carrying one type of debt.

INCOME

Proof of income is generally required when applying for a personal loan. If you are unemployed or underemployed, it can work against you in the loan approval process. Lenders may also require a work history to see how long you have been with your current employer, and to determine if you typically have job stability. Frequent job loss or change will tell a creditor that your payments may not be reliable.

PURPOSE OF THE LOAN

Believe it or not, your application can be rejected due to your proposed purpose for the loan. Financial institutions have the right to set up the parameters surrounding their disbursements and can accept or reject your application based on what you want to use the money for.

BLACKLISTING

If you’ve defaulted on debt before, your name may be put on a list of whom not to loan to,’ also known as a “Blacklist.” This will follow you around for a long time and is difficult to erase. If you do resolve the debt issues, get documents to prove the resolution.

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How Can A Personal Loan Improve Your Credit Score?

When it comes to a personal loan, you have to first learn to use it responsibly. Because if you miss a repayment, your credit score will be impacted adversely. And remember, that a credit score is an indicator of how well you manage your personal finances. Also, it plays a defining role when you apply for any kind of loan – secured and unsecured. It is suggested to apply for a loan slightly larger than what is needed so that you will be assured to have enough money to pay all bills necessary and still have some money left over to ensure that your bank account stays current.

A credit score can be defined as a number which reflects the financial situation of a person. If the person is well-off when it comes to financial matters, then he or she is said to have a high credit score. On the other hand, if a person is the exact opposite of this, then they possess a low credit score. There are a lot of factors that are considered by financial institutions for the purpose of evaluating a person’s credit score – usually, the credit scores of people vary from 300 to about 850.

A personal loan is a type of loan that is given by digital lenders, banks and credit unions to aid you in your plans, be it starting a small business, or making a big purchase. Personal loans tend to have an interest rate(s) lower than the credit cards; however, they can also be put to use for combining several credit card debts together into one monthly lower-cost payment.

Now, your credit score is built by keeping in mind various parameters from your credit reports. These reports serve the purpose of trailing your history of utilization of the credit across the duration of seven years. These credit reports are comprised of information, including how much credit you have utilized to date, the type of credit in your possession, the age of one’s credit accounts, whether one has put in for bankruptcy or liens filed against them, actions of debt collections taken against them, one’s total open lines of credit as well as recent inquiries for hard credit.

Like any other type of credit, personal loans are very capable of affecting your credit score. This can be done through the process of applying and withdrawing a personal loan. If you are curious as to how personal loans can end up affecting your credit, then read on to find out more about the context. There are many ways in which your credit can be affected by personal loans and some of them are listed below:

The ratio of your debt-to-income and loan

Debt-to-income ratio is considered to be the measure of your amount of income that you spend on the debt repayments. In the case of lenders, the amount of income that you receive is said to be one of the major factors proving that you are able to repay your loan.

Some of the lenders have come up with their own debt-to-income ratio so that their proprietary credit scores may make use of it in the form of a credit consideration. Do not fall into the kind of mindset that possessing a high amount of a loan would hurt your credit. The most damage it can do is raise the ratio of your debt-to-income so that you won’t be able to apply for loans anymore without it getting rejected or denied.

Paying loans on time will make credit scores soar

The moment your loan is approved, you have to make sure that you settle the payments of each month on time and in full. Delay in repayment may significantly impact the state of your credit score. However, on the other hand, if you make the payments on time every month, then your credit score will soar high, leading to an overall good score. This will not only make your name to the preferred borrower’s list, but it will prove to be beneficial for you in the long run.

Since your payment history is comprised of almost 35% of your credit score, paying loans on time is essential in cases like these so that your credit score can maintain a positive status.

Variety is built into your credit type

There are about five factors that are responsible for determining your credit score. These are composed of the payment history, the length of the credit history, the utilization ratio of the credit, the credit mix and new inquiries of the credit in accordance with FICO®.

The credit mix only accounts for about 35% of your total credit score, whereas when it comes to a personal loan you can have a varying mix of the credit types. This mix of all types of credit is viewed at a high level of approval by the creditors and lenders.

Origination fee charged by loans

Most of the lenders end up charging you an origination fee. This fee cannot be avoided at any cost and is instantly taken off from the amount of the loan payment. The amount of origination fees depends upon the amount of the loan you are about to borrow. Late payments can lead to an overdraft of fees and late expenses. Therefore, make sure that you pay complete repayment for each month before the deadline.

Avoiding penalties when it comes to payments

Some of the credit lenders tend to charge an additional fee if you end up paying your part of the loan earlier than the agreed date. This is because they are looking for moderate amounts of interest on your loan. Now, seeing that you have paid off your part of the loan before time, they will miss out on that interest that they could have possibly made if you had not cleared the debt soon enough before the deadline.

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