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How Much Do YouTubers Make? + How to Make Money on YouTube in 2020 [$$$]

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If you walk into an average 5th or 6th-grade classroom, you could ask a question that the students are very used to answering. That question is, “What do you want to be when you grow up?”

Whereas 10 or 15 years ago, you may have heard answers like a doctor, teacher, astronaut, actor are all careers one would assume a child would set their sights on. You might even hear the rogue unicorn or ballerina. However, the career choice of many children today is YouTube vlogging, also known as a content creator.

You may laugh, but this answer isn’t as ridiculous as it sounds. While aspiring to make money online, creating videos for an eager audience may seem to be the dreams of children, many adults are living and even thriving on this method of income generation.

Some, such as Lee Steinfeld, have even abandoned their 9-5 jobs to dedicate their lives to earning money through content creation. And it is paying off because people make money starting YouTube channels.

So, how much money do YouTubers really make?

The answer isn’t as straight forward as you would assume. Several different factors come into play and some things that are the product of pure luck.

With intentional choices, the opportunity to generate at least a moderate income is available. However, without a clear direction and a plan of action, becoming a YouTube content creator may amount to little more than a fun hobby in your spare time.

Throughout this piece, we’ll provide our perception of the most effective methods of how you can make a living as a YouTuber. Or maybe just a little extra cash as a side hustle. We’ll also include information on the range of salaries of the highest-paid YouTubers.

If you like what you read, don’t forget to hit the subscribe button, located at the end of this article (we’re kidding, just a little YouTube humor to set the mood).

How YouTubers Make Money

To give you a perspective into the world of YouTube, we’re going to break down the ways that YouTubers are making money on YouTube.

YouTube Monetization

To generate an income with YouTube, content creators must qualify to apply for YouTube monetization. As of 2018, to apply for this role, Individuals must have at least 1,000 YouTube subscribers and at least 4,000 watched hours in the prior 12 month period.

This means that a YouTuber must have been creating consistent content via YouTube videos over a respectable time and have generated a supportive audience. It wouldn’t hurt their possibilities if that audience views, shares, and subscribes to their channel. Most YouTube channels earn subscribers at a negligible pace, and viewership also takes a long time.

So, achieving 18 million subscribers does not happen overnight, and this benchmark is a difficult feat.

Once a YouTuber applies and receives the approval to monetize their channel, they begin generating an income from making videos. Most of the time, the initial payment is negligible. Often during the first few months, creators will earn mere cents for their views. However, if a YouTuber’s specific content is something that rapidly gains viewership and interest, they may begin to increase their income at a quicker pace.

The way YouTube measures the amount to pay each monetized channel is by the CPM. CPM, or cost per mile (thousand), is the amount of money each content creator makes per thousand views. This number fluctuates with each channel, and one of the main factors is the content created.

Note: Put a bookmark on this concept because we’re going to circle back to it in just a minute.

YouTube Earnings F.A.Qs

  1. How much money do YouTubers make per view? Price per view varies based on the content of the video and how much advisors are willing to pay for an ad. Multi-sources report that between $0.10 to $0.30 per view is possible.
  2. How much do YouTubers make every 1000 video views? User report between 8 and 30 dollars per thousand views.
  3. How many views do you need to get paid on YouTube? You need to have 4,000 hours of watch time and 1000 subscribers to begin monetizing a channel 
  4. How much does YouTube pay per subscriber? YouTube does not pay per subscriber.
  5. How many subscribers do you need to make money from YouTube? You Need 1000 subscribers to apply to monetize your YouTube. 
  6. Do YouTubers get paid for likes? No, however, the more activity a video receives, such as likes, comments, and increased watch time, the more likely YouTube is to suggest the video increasing YouTube rankings and income. 

How to Make Money on YouTube

Google AdSense

Google AdSense is an online platform that assists websites or YouTubers with ad placement. The process for engaging AdSense is simple. Content creators provide information about their channels. If eligible, they choose where they want ads to appear in their videos (such as at the beginning or natural breaks in the content). From there, they pick what ads they’re open to allowing to appear, and then they let Google work their magic.

Google will award the highest paying advertiser the spots that are available on a content creator’s site. The platform also manages the billing associated with the ad revenue and any associated affiliate links. At first, the fees accrued may be similar to that of monetizing a channel, in that you are not making money at a rapid pace. However, over time, creators can begin to earn money at an increased rate from this method, as their viewership and popularity increase.

Affiliate Income

Affiliate marketing is one of the fastest and easiest ways to make money on YouTube. In fact, you can make money with affiliate links before receiving the 1000 subscribers or 4000 hour watch time necessary to be approved with Adsense.

The easiest way to do this is to recommend products or services in your video and include your affiliate link. Each time your viewers purchase with, you will receive a small commission.

One of the most popular affiliate programs is Amazon, with commissions that start at 4%. Additionaly, several popular networks offer affiliate deals for almost every imaginable service such as CJ Affiliate, ShareASale, Flexoffers, and Impact Radius.

Donations

Collection donations can be an excellent way for smaller channels to make money. William “Suede” DuFresne is an excellent example of how to use a Patreon to monetize a YouTube channel.   Before accepting donations, his videos were only making $100 via AdSense ads.

In an attempted to make more money from his channel, he created a Patreon account. In 2018, he earned over $3,000/month — even though at the time, he had less than 10,000 subscribers.

Sponsorships

YouTubers can also start to generate an income through sponsorships. While this area of income generation is dependent on a variety of factors, the most direct way to earn support is a combination of a perfect “storm.”  If a YouTuber’s videos generate a high viewership and the individuals who view the content are of a target audience that interests a sponsor, there is a chance that a company may propose a sponsorship agreement. As the second largest search engine online, many organizations have a vested interested in YouTube marketing.

Remember when we asked you to put a “bookmark” in the earlier section concerning the fluctuating payment? This is where we return to that bookmark. Which leads us into our next section…

How YouTubers Can Increase Profit

YouTubers can increase their profits in several ways. Some of the methods for doing so are intentional, while others are a product of repetition, trial, and error. Here are a few techniques a content creator may use to maximize their profit earned with every video they create.

Target Audiences

Many YouTubers will try to niche down to a specific area of interest. These areas can include beauty, finance, comedy, gaming, acting, etc. Seasoned YouTube video creators encourage those aspiring to become successful YouTubers to pick a subject area that they have a passion for. The reason for doing so is to generate a following of a target audience.

The target audience will increase opportunities to form YouTube partners and create affiliate programs when the company’s desiring YouTube advertising finds your niche that may relate to their business or product. When creating videos for a YouTube channel, it’s fruitful to stick to a specific topic because it will increase views and shares.

For example, successful YouTube content creator Graham Stephens provides educational videos on personal finance matters. This enables him to target an audience of individuals who have an interest in expanding and developing their financial knowledge.

But, why does this benefit a YouTuber? Consolidating to a niche helps drive traffic to a YouTuber’s channel, in turn increasing their views and perhaps their income sources. If a creator is striving to reach the benchmarks to monetize their channel, then this is a way in which they can accomplish this goal.

The other reason for reaching a target audience is to gain sponsorship opportunities. As discussed previously, when YouTuber Graham Stephans creates content, he is targeting a financial audience. Could you imagine any other companies that may want to reach a financial audience? To name a few, banks, lenders, and credit card companies come to mind.

Finding a target audience through the creation of content is one of the savviest methods a YouTuber can increase their profit.

Creating an Abundance of Content

Another method for increasing profit is to create content consistently, with quality videos, and uploading new content regularly. A video channel that published one viral video and now only produces content on occasion will more than likely struggle to maintain loyal viewers.

If viewers never know when to expect new content, their interest in the channel and YouTuber may decline. When views drop, so do sponsorships and the ability to maintain the monetizing status. Creating consistent, scheduled content assures that viewers know when they will be able to find more videos on the subject area of their interest, and hopefully achieve the highly desired one million views.

Another reason to create regular content is that the success of YouTubers’ videos can be unpredictable. Sometimes a video that a YouTuber creates and thinks will gain traction falls flat. Likewise, some content that seems mediocre may skyrocket in popularity. Due to the unpredictability of success, it’s best to create consistent content to increase the odds of a favorable response and to cultivate a growing YouTube channel.

This is not to say creators should throw anything up on their channel and hope for the best. We are also not trying to assert that there is no way to predict the potential success of a video. YouTube stars such as Jeffree Starr, Jake Paul, and Ryan’s Toy reviews have made it their career professional development to know the best ways to earn money on this social media platform.

Our point is that to maximize income generation, a YouTuber should create regular, intentional content with a perspective of what has worked in the past. As the old saying goes, if it’s not broken, don’t fix it. Success breeds success, and a solid plan of action with your YouTube channel will serve any aspiring YouTuber well.

Seeking Sponsorships

YouTubers can wait and hope that a sponsor will find their channel and offer them sponsorship opportunities. Or, they can pursue organizations that they believe align with their content, and pitch a sponsorship spot, and create a YouTube partner relationship.

Popular and successful YouTube content creator, David Dobrik, recently exercised this tactic and came out with a fantastic deal. He approached a sponsor he felt would have a vested interest in an endorsement from him, requesting they exchange a video “shout out” for the partial payment of a Ferrari.

The sponsor agreed, and Dobrik earned half the amount for a Ferrari. This 20-second mention of the company qualified as affiliate marketing in his video earned him the equivalent of $125,000. Fantastic deal for a YouTube ad on his channel, if you ask us.

Capitalizing on Specific Times of the Year

Going hand-in-hand with seeking sponsorships, there are specific times of the year in which a YouTuber is more apt to gain opportunities for sponsorships and paid YouTube advertising. For instance, around the holiday season, YouTube analytics show that many retailers are eager to increase their presence in hopes of driving revenue.

YouTubers may have the chance to earn more money in exchange for some video marketing during this time of year, and it would benefit them to pursue these options. For at least 30 second spots, google place ads could generate 1.5 to 2 times the normal income rate during the holiday season.  It may also make sense to increase their content during this time of the year, assisting with garnishing as many possibilities for sponsor ads as possible.

Rules of Engagement

While content creation may seem like the best online job and a career with limitless options, there are some rules that YouTubers must abide by. These rules establish parameters that content creators must maintain to keep their monetizing capabilities. YouTube requires their content creators to abstain from hate speech, spam, or copyright violations.

These are just the tip of the iceberg of regulations associated with monetization. Content creators must agree to these rules and abide by them. The platform works on three strikes, and you’re out policy. This means that if a creator violates a rule, they have two more chances before they receive the boot.

Another “deal-breaker” for revenue generation is the use of popular music. If a video includes any music, the video is immediately disqualified from generating revenue. Therefore, most content creators who strive to make money on their online video will avoid the use of music to prevent this misstep.

Unpredictable Factors

Some things are unpredictable with YouTube content creation that affects income generation. For example, YouTube can elect to demonetize a specific video for reasons that may be unexplainable to the creator. YouTube reserves the right to demonetize a video if they feel as though the content is not something they want associating with their brand.

While they won’t ban the video from their platform, they’ll send a direct message. YouTube will make it clear that they’re not a fan of the content, even if the video generated a billion total views, and they’ll do so by reducing the income generated.

How Much Money Do YouTubers Make?

Now that we’ve provided an overview of how YouTubers make money, the natural next question is, how much do YouTube content creators make? The answer is a combination of all of the factors we’ve discussed and then some.

YouTubers receive payment monthly. This means that every month, their revenue is dependent on every single factor mentioned above. Their paycheck is a combination of their YouTube views, shares, sponsorships, Google AdSense revenue, content appeal, and time of year.

Every month YouTube creators face the unpredictability of each of these facets. Like any job that is dependent on the winds “blowing in their favor,” the pay can be either feast or famine. Or, it can fall somewhere in-between.

This makes it almost impossible to identify a standard yearly salary that YouTubers generate. Instead, we’ll give you some examples of a few different YouTube content creators and an estimated income for each.

Highest-Paid YouTubers

David Dobrik

YouTube content creator David Dobrik has a YouTube channel that has over 16 million subscribers. A fair estimate of David Dobrik’s earnings is over $35,000 per day, totaling $13 million a year from ads that run on the videos he creates. That’s a fair amount for starting a YouTube channel.

Michelle Phan

Beauty blogger and YouTube content creator, Michelle Phan is one of the most popular beauty gurus to grace the internet. With 8 million subscribers, the 28-year-old makes an estimated $3 million yearly from her sponsorships and endorsements. Her competitors, other paid YouTubers, like Jeffree Starr, make up to $18 million annually. Starr, as an example, started his YouTube Channel in 2014 after earning the title of the most successful person on MySpace.

Felix Kjellberg

Felix Kjellberg, also known as “PewdiePie,” rose to YouTube glory as a commenter on video games. Dubbed the most successful YouTuber, he tops the charts with over 92 million followers and an estimated income of $15.5 million.

Evan Fong VanossGaming

Another successful video gaming associated video host is Evan Fong. Fong’s channel, Vanossgaming, generates almost 24 million subscribers and an estimated $18.5 million in 2018 alone.

VanossGamming is known for its series of funniest moments from games such as Grand Theft Auto and Call of Duty Black Ops.

Daniel Middleton DanTDM

Daniel Middleton of DanTDM, a third popular gamer, earned an estimated $16.5 million in 2017 through sponsorships achieved from those who subscribed to his YouTube channel.

If you’re playing video games, you can also start making money online by commenting on them. Who knew?

Dude Perfect

A group of 5 college sports enthusiasts started making money on YouTube by posting videos of their stunts and tricks. Collectively their net worth amounts to an estimated $20 million. It just goes to show that AdSense account reaches are highly valuable, especially when content focuses on things as popular as sports.

Jeffree Star

Jeffree Star is an American Internet celebrity, beauty YouTuber,  and entrepreneur. He is the founder and owner of Jeffree Star Cosmetics. In November 2014, he founded his own cosmetics company, Jeffree Star Cosmetics, which he promotes on his channel. According to Forbes Star earned $18 million from YouTube,  placing him as the 5th highest-paid YouTube star in 2018.
Ryan ToysReview

Ryan’s World (previously Ryan ToysReview) is a family-friendly children’s channel featuring eight-year-old Ryan Kaji.

Ryan’s video “Huge Eggs Surprise Toys Challenge” has reached over 1.9 billion views, placing it as one of the 50 most viewed videos on YouTube. According to Wikipedia, the channel has over 20 million total subscribers, and his videos have garnered over 30 billion views.

Making YouTube videos is not without its challenges; recently, Ryan’s World was accused of misleading advertising.

In a complaint filed to the FTC dated Aug. 28, Truth in Advertising accused Ryan’s World of deceptively promoting “a multitude of products to millions of preschool-aged children.” The take away if you plan to make money blogging, vlogging, or as an online influencer, make sure you understand your audience and follow the FTC’s rules regarding disclosures, labeling sponsored content, and advertising.

Other YouTube Creators

There are other YouTube creators, such as Kelly Patreon, of the channel Kelly Does Her Thing, who has 44,000 subscribers. These views assist her in generating an estimated $18,500 in 2018 from YouTube content creation. Kelly still works a full-time job and has no intention of making YouTube her full-time job anytime soon.

Other YouTubers, such as beauty content creator Nikita Dragun, began their career using the platform to generate an income (an estimated $220,000 per year). Her YouTube career catapulted her success into the world of beauty influencers. This success enabled her to start her make-up line, a secondary source of income that was due to her YouTube success.

Canadian YouTube comedian Lily Singh makes around $8 million a year creating and posting her art. Brothers Jake Paul and Logan Paul, both with their own respective YouTube channels, generate a respectable $11.5 million and $14.5 million, heavily substantiated by the sponsorships they obtain and the merchandise sales they create.

As you can see from our examples, YouTubers can make everything from $0.00 a year to $18 million a year. The income they generate is reliant on several factors, not exclusive of the work and dedication they put into their content and its creation.

The Bottom Line

For some, YouTube offers a platform to express their creative side. Others use it as a means to educate their audience. Still, some use it as a means to advance their careers and provide them with the opportunity they need to achieve said advancement. Paid or unpaid, YouTube creators offer content to those living around the world. Their videos extend the reach of the message each creator wants to convey, enabling them to create a lasting legacy (good or bad).

With the potential for financial gain that YouTube content creators have, comes the unpredictability of both changing trends and technological advancements. What is fashionable and desirable today, may become a thing of the past tomorrow. Similarly, while YouTube is one of our world’s current sources for video content, every day, we are on the cusp of new technology, app, or online platform that threatens to topple YouTube’s kingdom.

It would be an incredible risk for anyone to jump headfirst into a career as a YouTube content creator and hope to make money video blogging. The requirements to monetize a YouTube channel alone require months of dedication. However, if approached, much like those who have found their success after years of deliberate, YouTube has proven a fruitful career choice, especially when in comparison to a career launched in podcasting.

If we were to walk into an elementary classroom and ask students about their desired future career, we’d receive a guaranteed number of students who would state that they aspire to become YouTubers. While insightful concerning current day success stories, we’d offer students some sound advice concerning their future aspirations. That advice would be, “Don’t quit your day job.”

The post How Much Do YouTubers Make? + How to Make Money on YouTube in 2020 [$$$] appeared first on Your Money Geek.



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The Cheapest Renters Insurance Companies in Florida 2019

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Hurricane Irma held the world transfixed as Florida’s beautiful beaches were battered by relentless rain, whipping winds and tons of flooding. The category-4 hurricane created over $50 billion worth of destruction that is still in repair today, and it is an event that remains fresh in the minds of renters and homeowners alike.

Hail, hurricanes, flooding and high winds are all widespread in Florida. That creates a need for a different kind of renters insurance with specialized features that cover things like sinkholes, lightning and hurricanes. Florida has a weather system all its own, so renters must be diligent in ensuring maximum coverage for all types of events.

The Florida Housing Finance Corporate reports in a new study that the number of renter households in 2017 exceeded 2.5 million. With so many renters and so many potential natural disasters, renters insurance is a necessity to protect your home and all of your belongings inside.
Best renters insurance companies in Florida

As tourism continues to rise, visitors are more common. It is essential to ensure your belongings are covered, as well as theirs. Renters insurance will protect your home, your belongings and any guests on the property.

The cheapest renters insurance companies in Florida

There are many excellent insurance options for Florida residents, and here we have the best renters insurance companies in the state for 2019:

  • Castle Key
  • Citizens
  • Peoples Trust
  • Security First
  • State Farm

To assess each company, we examined their ratings. Both J.D. Power and the Better Business Bureau judge customer satisfaction on price, claims processing and overall customer service. AM Best uses a grading system to judge a company’s financial strength.

J.D. Power and AM Best ratings are not available for all Florida insurance companies, but we include Demotech financial ratings where possible.

These companies are not only the cheapest renters insurance companies but also come highly recommended by their customers.

Rankings for cheapest renters insurance companies: Florida

Company J.D. Power AM Best BBB Demotech
State Farm 3 out of 5 A++ (Superior) A+ A (Exceptional)
Security First N/A N/A A+ A (Exceptional)
Citizens N/A A (Excellent) A+ A (Unsurpassed)
Peoples Trust N/A N/A N/A A (Exceptional)
Castle Key 2 out of 5 B (Fair) C A (Unsurpassed)

Best Florida renters insurance for best claims service: Castle Key

Castle Key is a specialized division of Allstate that provides renters insurance to Floridians. Allstate is already a well-respected renters insurance company, with excellent claims service and extra protections that will come in handy with Florida’s unpredictable weather. Allstate has 5 out of 5 rating from J.D. Power for how it handles claims.

Best Florida renters insurance company for discounts: State Farm

State Farm offers good insurance coverage in a variety of areas, which means you can save on your renters insurance by bundling it with your auto insurance and get more discounts for both kinds of insurance. State Farm helps you save if you have safety features like smoke alarms or a security system.

Best Florida renters insurance company for private coverage: Citizens

Citizens is available exclusively to Florida residents as a not-for-profit government organization. It is a popular solution for those who cannot find private coverage, and Citizens offers exclusive savings like discounts for homes with storm windows and shutters and homes in compliance with Florida Building Codes.

Cheapest Florida renters insurance company: Security First

Security First is also a Florida-based renters insurance company with unique coverage and affordable pricing. While most companies feature discounts for adults 65 and older, Security First offers discounts for those 55 and older. It also offers discounts for wind-resistant homes, similar to Citizens renter insurance. While your rates will be unique to you, Security First often offers the lowest insurance rate.

Florida is on par with the national average cost of renters insurance, costing about $185 per year, while the national average is $181 annually.

These are the average rates for the best Florida renters insurance companies:

  • Security First: $142
  • Citizens: $160
  • Peoples Trust: $170
  • Castle Key: $175
  • State Farm: $181

Given the specific needs of Florida renters, companies have worked to adapt their policies for better coverage. With several services exclusive to Florida only, it helps to ensure better customer service, fast claims processing and, most importantly, greater affordability for better coverage.

Frequently asked questions

How much renters insurance do I need in Florida?

Renters insurance is especially prevalent in Florida, given its propensity for damaging storms. Consider extra protections based upon where you live. Areas closer to shore will need flood insurance more than someone living near Disney. Florida also experiences strong winds from frequent storms, and areas closer to shore could require more coverage than other areas. Some companies provide wind coverage, but not all. Determine how much risk you have and how much coverage you’d need to replace your belongings to find out how much insurance you need.

What is the best renters insurance company in Florida?

Unlike other states, there are many Florida renters insurance companies that specifically cater to the changing Florida landscape. Where you live will significantly determine the kind of coverage that you need, and that, in turn, will help determine which company is right for you.

Why do I need Florida renters insurance?

Florida has more lawsuits than other states, so renters insurance will provide the extra protection you need. Renters insurance can also protect your belongings from the storms Florida tends to get. Also, many landlords require renters insurance, so check your lease. While your landlord’s policy covers the building, your belongings inside are not covered unless you pay for an insurance policy.

Will renters insurance cover roommates?

Renters insurance only covers the individuals listed on the policy. If your roommate is not on your policy, he or she is not included. If they have coverage and you are not listed on their policy, you are not covered. Roommates should provide their own coverage.

The post The Cheapest Renters Insurance Companies in Florida 2019 appeared first on The Simple Dollar.



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Spend One Minute Doing This to Earn 5 Cents/Gallon in Points to Save on Gas

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Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners.

There are a lot of ways to save money on gas. You can drive across town to find the cheapest gas station. You can obsess over finding the quickest route. Or you can spend one minute downloading an app that automatically earns you points to save money when you fill up your tank.

Sound easier? We think so, too. With the Exxon Mobil Rewards+ app, you automatically earn points to save money every time you fill up at Exxon or Mobil stations. Until February 2020, you can earn 5 cents per gallon, compared to the app’s usual offer of 3 cents.

It also lets you pay easily and securely through the app — without swiping a card. 

Watch Your Savings Pile Up With the Exxon Mobil Rewards+ App

If you’re consistent about it, that nickel discount really adds up. 

Consider this: The average American driver goes through roughly 650 gallons of gas per year.

At a current average price of about $2.30 per gallon, that means your typical American spends about $1,500 a year on gas.

At that rate, this app could save you $32.50 per year — free money that you could pocket or that you could spend on whatever you want.

Oh, you’re a two-car family? That’s $65 in the bank.

If you drive a lot, you’ll save even more.

You’re a VIP at 11,500 Stations

It’s easy to be consistent about using the app whenever you get gas, too.

That’s because Exxon and Mobil have about 11,500 gas stations scattered across the North American landscape. Seriously, they’re everywhere. You can earn points to automatically get discounts at all of those stations.

Even if you’re not the kind of driver who actively hunts for a particular kind of gas station, the odds are good that, wherever you are, you’ll find an Exxon or Mobil station nearby. Just Google it. There’s probably a station, like, one minute from you.

The Easiest Way to Save on Gas

It takes just a minute to download the app on Apple or Android and connect your payment information (credit, debit or Apple Pay). Once you’re parked next to a gas pump, you just press a button in the app, and the app turns the pump on. Plus, doing everything through the app means you won’t risk subjecting your credit card to illegal skimmers attempting to steal your credit card information. 

Here are some nitty-gritty details about the app:

  • When you buy gas with the app, you earn rewards points.
  • Once you have 100 rewards points, you can start redeeming your points on gas purchases.
  • Until February 2020, you can earn points to save 5 cents per gallon on gas this way. That’s a temporary increase from the typical 3 cents per gallon with this app. So if you’re thinking about signing up, the sooner the better.
  • If you’re filling your tank with premium gas, you can earn points to save 10 cents per gallon through February 2020.  

We can’t think of an easier way to save on gas. If you’re ready to start earning and saving at the pump, download the app and get started. 

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He drives a lot and would love to save on gas.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.



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What is a Credit Score and How Can You Improve Yours In 2020?

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Whether you’ve seen it on discussed on TV or heard your friends discuss it over dinner, you may have just realized that you have something called a credit score, and the bigger your credit score is, the better. 

Still, with advancements in digital technology soon, it became more widely available quickly, becoming another critical metric for people to work. Now, credit scores can be accessed in just a few minutes online. With this transparency, individuals themselves can see how small changes to their lifestyles can have a positive or negative effect on their scores.

Credit score websites, such as Credit Karma, and credit checker Apps have gamified credit checking in an attempt to drive traffic to their sites, and what used to be a straightforward measure of a lender’s trust is now displayed with bright, eye-catching colors and dynamic wheels to capture and retain a persons attention.

Regardless of the change in the way in which your credit score is now displayed, the end goal is still the same – to increase your credit score. So here’s how you can improve yours in 2020. 

What is a Credit Score?

Before we get into the nitty-gritty, let’s take a quick step back to ensure that we all understand what a credit score is, because amongst all the bright colors and dynamic graphs hides some critical information. A credit score sometimes referred to as a credit rating, is a measure of the likelihood of you paying a loan or credit back>

Lenders use credit scores to assess whether they feel they can trust you to make the necessary repayments. Aside from the obvious, getting a credit card, your credit score can affect you getting a mortgage, being able to finance a car, your insurance policies, and even your mobile phone contract.

To make things even more complicated, your credit rating is calculated differently by different credit bureaus.

How You Can You Find Your Credit Score?

It’s now easier than ever to find out an estimation of your credit score through credit checker websites in which you fill out a short form detailing information about you. Remember, although these websites are a good indication of your credit rating, they often aren’t exact, and their results can vary quite significantly over time and from site to site.

Most websites use a scoring model that starts at 300 and ends at 850 though some others such as Experion score out of 999, so it’s best to check how you rank on each scoring system separately. Typically a credit score of 700 or higher is considered good however they are generally classified as follows:

  • 750 – 850 is deemed to be excellent 
  • 700 – 749 is considered to be good
  • 650 – 699 is considered to be fair* 
  • 600 – 649 is considered to be poor 
  • 300 – 599 is considered to be bad 

*If your score is in the 650-699 range, read what you can do to boost your credit here

What Can Affect Your Credit Rating? 

Believe it or not, a good salary and a steady borrowing history don’t always amount to a good credit rating, and there are many factors at play which affect the final number. Here are a few things that can affect your credit rating. 

Your History with Credit
Let’s get the most obvious one out of the way first, good history with confidence, and demonstrating your ability to make timely repayments reflect well on your credit rating, whereas having no history of credit or missing repayments can reflect very poorly.

Whether You Have Registered to Vote (UK)
Although registering to vote is essential for many other reasons, it can also impact your credit rating as lenders use it to verify your name and address as a precaution against fraud. Failing to register or registering at an old address can reduce your score by as much as 50 points, which may not seem like a lot but can be the difference between your application being accepted or rejected.

Missing Your Repayments
A late or missing payment can stay on your credit record for up to 3 years, impacting your score, so remember to make payments on time. Believe it or not, this also includes your mobile phone payments and your utility bill payments, with half of the big six energy providers now sharing data about the customers with credit agencies.

Applying for Too Much Credit 
Submitting credit applications in quick succession can be seen as a sign of financial stress and may appear on your credit report. Lenders may see this and decide not to lend on you in case you are in financial difficulties, notably if any of your other applications were declined. 

Your Partner’s Rating
If you apply for a financial product with your partner, then your financial histories become linked, which means that their score can influence yours. You may even have business ties with ex-partners who you no longer are in a relationship with.

The Amount You Spend on Your Credit Cards
The amount you spend on your credit card can be used by lenders to determine whether you rely on them. 

So, How Can You Improve Your Credit Score for 2020?

Now that you know what impacts your credit rating, you can work on improving it. Improving your credit rating will increase your chance of being accepted for loans, credit cards, and mortgages and will stand you in good stead for future financial decisions. So here’s what to do. 

1. Find Your Score

If you haven’t already, create an account with one of the credit check companies and find out your current score as this will give you a good benchmark to work off. Remember that your score can vary between credit agency and that their scales can vary too.

2. Register to Vote (UK)

This piece of advice may seem odd to readers in the U.S. However, if you live in the UK, registering to vote may improve your credit score.

If you aren’t currently on the electoral register, then register to vote. Be sure to use your exact name and address and to keep this up to date should you move even if you don’t plan on voting, being registered to vote matters and can affect your rating.

3. Make Sure to Meet Your Current Repayments

If you are currently using credit them be sure to set yourself reminders for your repayments and make at least the minimum payment amount each month. Prioritize the repayment of your current loans over everything else and be consistent. Just one missed payment can stay on your record for three years.

4. Don’t Pay Off Your Loans All at Once!

If you have a credit card or loan, then you may think that by racing to make early repayments, you are increasing your credit score, but this isn’t always the best strategy. The speed at which you pay off your loan doesn’t matter to the credit agencies so long as you make the minimum repayments, and in fact, lenders can make more money off you in interest if you don’t pay off your loans early.

So weigh up whether you need to pay it off early or whether you can continue to plug along with the regular repayments as this could reflect better on you as a consistent and reliable user of credit in the long run.

5. Dissolve Ties Between Ex-Partners

Your ex-partners will continue to haunt you if you don’t cut ties with their credit ratings. You can ask to have your credit ties cut by contacting the main credit agencies and merely explaining the change in your circumstances.

6. Don’t Take Out Joint Credit with Someone Who Has a Poor Rating

If you have a higher credit rating than your partner, then purchasing credit with them will bring your credit rating down. Carefully consider whether it would be better to take out credit on your own to protect your rating or work with your partner to improve their before you take out the loan. 

7. Take Out One Credit Product at a Time

Although you may need more than one credit product, try to take them out one at a time over several months to not cause alarm with credit agencies who may think you are in financial distress.

8. Use Under 25% of Your Credit Limit

Maxing out your credit cards can make it look like you rely on them. To build your credit rating, try to keep your credit spending to below 25% of your overall credit maximum and remember to make the repayments on time. The lower the percentage of credit you spend on your cards, the better.

Be Patient

We live in a world of instant gratification, but building your credit score will likely take time. Remember that missed repayments can sit on your score for several months, and proving your reliability with money will require regular payment over the year.

So sit back and play the long game, check your score periodically throughout the year and be patient; it will grow with time.

The post What is a Credit Score and How Can You Improve Yours In 2020? appeared first on Your Money Geek.



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