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Credit Repair

Repossession Credit Scores: What You Need to Know

One of the harsh truths of secured loans is that your asset can be repossessed if you fail to make the payments. In the words of the FTC, “your consumer rights may be limited” if you miss your monthly payments, and when that happens, both your financial situation and your bank balance will take a hit.

On this guide, we’ll look at what can happen when you fall behind on your car payments, and how much damage it can do to your credit score.

What is a Car Repossession?

An auto loan is a loan acquired for the sole purpose of purchasing a car. The lender covers the cost of the car, you get the vehicle you want, and in return you pay a fixed monthly sum until the loan balance is repaid.

If you fail to make to make a payment or you’re late, the lender may assume possession of your car and sell it to offset the losses. At the same time, they will report your missed and late payments to the main credit bureaus, and your credit score will take a hit. What’s more, if the sale is not enough to cover the remainder of the debt, you may be asked to pay the residual balance.

The same process applies to a title loan, whereby your car is used as collateral for a loan but isn’t actually the purpose of the loan.

To avoid repossession, you need to make your car payments on time every month. If you are late or make a partial payment, you may incur penalties and it’s possible that your credit score will suffer as well. If you continue to delay payment, the lender will seek to cover their costs as quickly and painlessly as possible.

How a Repossession Can Impact Your Credit Score

Car repossession can impact your credit history and credit score in several ways. Firstly, all missed and late car payments will be reported to the credit bureaus and will remain on your account for up to 7 years. They can also reduce your credit score. 

Secondly, if your car is repossessed on top of late payments, you could lose up to 100 points from your credit score, significantly reducing your chances of being accepted for a credit card, loan or mortgage in the future. 

And that’s not the end of it. If you have had your car for less than a couple of years, there’s a good chance the sale price will be much less than the loan balance. Car repossession doesn’t wipe the slate clean and could still leave you with a sizable issue. If you have a $10,000 balance and the car is sold for $5,000, you will owe $5,000 on the loan and the lender may also hit you with towing charges.

Don’t assume that the car is worth more than the value of the loan and that everything will be okay. The lender isn’t selling it direct; they won’t get the best price. Repossessed vehicles are sold cheaply, often for much less than their value, and in most cases, a balance remains. 

Lenders may be lenient with this balance as it’s not secured, so their options are limited. However, they can also file a judgment or sell it to a collection agency, at which point your problems increase and your credit score drops even further.

How Does a Repo Take Place?

If you have a substantial credit card debt and miss a payment, your creditor will typically take it easy on you. They can’t legally report the missed payment until at least 30-days have passed and most creditors won’t sell the account to a collection agency until it is at least 180-days overdue.

This leads many borrowers into a false sense of security, believing that an auto loan lender will be just as forgiving. But this is simply not true. Some lenders will repo your car just 90-days after your last payment, others will do it after 60 days. They don’t make as many allowances because they don’t need to—they can simply seize your asset, get most of the money back, and then chase the rest as needed.

Most repossessions happen quickly and with little warning. The lender will contact you beforehand and request that you pay what you owe, but the actual repo process doesn’t work quite like what you may have seen on TV. 

They’re not allowed to break down your door or threaten you; they’re not allowed to use force. And, most of the time, they don’t need to. If they see your car, they will load it onto their truck and disappear. They’re so used to this process that they can typically do it in less than 60-seconds.

It doesn’t matter whether you’re at home or at work—you just lost your ride.

What Can You Do Before a Repo Hits Your Credit Score?

Fortunately, there are ways to avoid the repo process and escape the damage. You just need to act quickly and don’t bury your head in the sand, as many borrowers do.

Request a Deferment

An auto loan lender won’t waste as much time as a creditor, simply because they don’t need to. However, they still understand that they won’t get top dollar for the car and are generally happy to make a few allowances if it means you have more chance of meeting your payments.

If you sense that your financial situation is on the decline, contact your lender and request a deferment. This should be done as soon as possible, preferably before you miss a payment.

A deferment buys you a little extra time, allowing you to take the next month or two off and adding these payments onto the end of the term. The FTC recommends that you get any agreement in writing, just in case they renege on their promise.

Refinance

One of the best ways to avoid car repossession, is to refinance your loan and secure more favorable terms. The balance may increase, and you’ll likely find yourself paying more interest over the long-term, but in the short-term, you’ll have smaller monthly payments to contend with and this makes the loan more manageable.

You will need a good credit score for this to work (although there are some bad credit lenders) but it will allow you to tweak the terms in your favor and potentially improve your credit situation.

Sell the Car Yourself

Desperate times call for desperate measures; if you’re on the brink of facing repossession, you should consider selling the car yourself. You’ll likely get more than your lender would and you can use this to clear the balance. 

Before you sell, calculate how much is left and make sure the sale will cover it. If not, you will need to find the additional funds yourself, preferably without acquiring additional debt. Ask friends or family members if they can help you out.

How Long a Repo Can Affect Your Credit Score

The damage caused by a repossession can remain on your credit score for 7 years, causing some financial difficulty. However, the damage will lessen over time and within three or four years it will be negligible at best.

Derogatory marks cease to have an impact on your credit score a long time before it disappears off your credit report, and it’s the same for late payments and repossessions.

Still, that doesn’t mean you should take things lightly. The lender can make life very difficult for you if you don’t meet your payments every month and don’t work with them to find a solution.

What About Voluntary Repossession?

If you’re missing payments because you’ve lost your job or suffered a major change in your financial circumstances, it may be time to consider voluntary repossession, in which case there are no missed payments and you don’t need to worry about repo men knocking on your door or coming to your workplace.

With voluntary repossession, the borrower contacts the lender, informs them they can no longer afford the payments, and arranges a time and a place to return the car. However, while this is a better option, it can do similar damage to the borrower’s credit score as a voluntary repossession, like a traditional repossession, is still a defaulted loan.

Missed payments aside, the only difference concerns how the repossession shows on the borrower’s credit report. Voluntary repossession will look better to a creditor who manually scans the report, but the majority of lenders run automatic checks and won’t notice a difference.

Summary: Act Quickly

If you have student loan, credit card, and other unsecured debt, a repo could reduce your chances of a successful debt payoff and potentially prevent you from getting a mortgage. But it’s not the end of the world. You can get a deferment, refinance or reinstate the loan, and even if the worst does happen, it may only take a year or so to get back on track after you fix your financial woes.

Repossession Credit Scores: What You Need to Know is a post from Pocket Your Dollars.

Source: pocketyourdollars.com



Why You Should Not Buy a Credit Privacy Number (CPN)

What Is a CPN, or Credit Privacy Number?

If you’re looking to repair your credit, you may have come across websites that advertise a credit privacy number, credit protection number or CPN. These numbers are nine digits like a Social Security number (SSN), and sellers claim that you can use them instead of your SSN. However, these CPNs are often actual SSNs lifted from real people, reportedly children, prison inmates and the deceased – and you can never legally buy a new SSN. In other words, a CPN is no solution to your credit rating problem. Under no circumstances should you try to buy a CPN.

Why a CPN is No Credit Fix

Websites have sprung up all over the internet, offering CPNs to people with bad credit or low credit scores. They advertise that this number can serve as a “get out of jail free” card for your bad credit. In theory, you can use a CPN instead of your SSN on credit applications to hide the poor credit associated with your personal SSN. If you have bad credit but still need a credit card or loan, this can seem like the solution, assuming you can pay anywhere from hundreds to thousands of dollars.

That price might seem worth it for a chance to wipe the slate clean. However, these offers are essentially a big scam. The CPNs you can buy online are not legally assigned credit protection numbers. Instead, they are usually stolen Social Security numbers, taken from children, the deceased or inmates.

Also, using a purchased CPN puts you in some hot water, too. Credit agencies can easily spot discrepancies if you try to use a CPN on an application instead of your SSN. Not only will this fail to help your credit, but it’s also committing fraud which is punishable by jail time.

How to Avoid CPN Scams 

What Is a CPN, or Credit Privacy Number?

If you’re dealing with some bad credit, don’t turn to a CPN. Only scammers sell CPNs, and they in turn may cheat you out of your personal information as well as hundreds or thousands of dollars. Using a purchased CPN can also put you in jail, even if you didn’t know the number was fraudulent. This is why it’s important to be aware of this popular scam.

If you really need a CPN or new SSN, it will be free. The process will go through the Social Security Administration Office, since a new number would be tied to your old SSN. That said, it is very hard to qualify to receive a new number. Having bad credit is never a qualifying reason.

How to Get a Legal CPN

With so many fraudulent websites and companies trying to sell you a way to reset your credit, it’s hard to know how to get a legal CPN. Unfortunately, there’s a lot of misinformation out there. Some experts say that you can speak with an attorney to obtain a legal CPN. The attorney can then contact the Social Security Administration Office on your behalf. However, others maintain that all CPNs are illegal.

Generally, it seems that you cannot get a legal CPN unless you actually need one. These situations include celebrities, government officials and people under witness protection. You can also apply in other specific instances, like if you’re a victim of abuse, stalking or identity theft. A real CPN would be attached to your SSN, so it’s still not an escape from the credit tied to your SSN.

You may also stumble upon offers to obtain an EIN, or Employer Identification Number. The IRS does issue EINs, but only businesses can use them for business costs. This means that you cannot legally obtain an EIN as an individual looking to improve your credit. You also cannot make up a home business, apply for an EIN and use that new number for a credit reset. It is a federal crime to obtain an EIN under false pretenses. In any case, the credit profile for your EIN is still tied to your SSN.

Bottom Line

What Is a CPN, or Credit Privacy Number?

You shouldn’t ever, under any circumstances, try to purchase a CPN. These offers are fraudulent and don’t provide any credit repair or relief. At the very least, buying a CPN wastes money you should put towards repaying your loans in the first place. At worst, you could go to jail for fraud. There are better, more constructive ways to repair your credit. If you’re truly in a situation that calls for a CPN, contact your lawyer for assistance.

Tips on Rebuilding Your Credit 

  • Of course, the best way to legally clean up your credit is to pay back your debts and improve your credit practices. A good place to start is to pay off your credit card debt with the highest interest.
  • Sometimes you’ll just have to wait for your bad history to fall off your record. Generally, negative info stays on your credit report for seven years. If you can’t get a debt collection removed from your credit report, for example, it’ll stay there for seven years. However, as time goes on, the toll it takes on your report lessens.
  • Don’t go it alone. If you have a good income, but you’re just bad at managing your money, a financial advisor can help. With guidance, you can make smarter choices – and even start growing your wealth. To find an advisor, use our free, no-obligation matching tool. It will connect you with up to three advisors in your area.

Photo credit: Â©iStock.com/becon, Â©iStock.com/Xesai, Â©iStock.com/Kerkez

The post Why You Should Not Buy a Credit Privacy Number (CPN) appeared first on SmartAsset Blog.

Source: smartasset.com



How and When to Talk to a Credit Bureau

Two women wearing pink smile at a phone while drinking coffee in a cafe against a gray wall.

Your credit score can have a huge impact on your life—for better or worse. In many ways, the three major credit bureaus are the keepers of your credit score. They’re responsible for maintaining credit reports, which means you may need to contact them about the information included on yours. While this may seem daunting, it’s really not complicated.

Read on to learn about when to contact a credit bureau and how to do it. Contact information and tips have been provided for each of the three credit bureaus—Experian, Equifax and TransUnion—to make it as simple as possible.

When to Contact a Credit Bureau

Anytime you notice inaccuracies on your credit report, you should immediately contact the credit bureau. This can include misspelled names, incorrect address information, unreported salary changes or erroneous employment information.

Here are some other reasons why you might need to contact a credit bureau:

  • There are credit cards, collections missed payments or anything else on your report that you don’t recognize.
  • You’re in credit disputes with your credit card issuer or financial institution. You can address this with the credit bureaus, which are required to investigate.

For help talking to the credit bureaus and starting a credit repair plan, you can work with a professional credit repair agency. They offer credit monitoring, credit repair services and text alerts so you don’t miss a thing.

Get Credit Repair Help
  • You want to get a hard inquiry removed from your history, especially if it’s an unauthorized inquiry.
  • An account is missing from your report.
  • You want to remove inaccurate or unfair collection accounts from your report. Keep in mind that if you can’t dispute them successfully, these accounts can stay on your account for a number of years.
  • You want to request a free annual credit report.
  • You want to put a temporary freeze or lock on your credit file.
  • You notice any sign of fraud on your credit report.

Information to Gather before You Call

You want to have the right information on hand when you call a credit bureau. Prepare yourself by collecting the following information in advance, just in case:

  • Your name, address, Social Security number and date of birth
  • A copy of your annual credit report
  • Evidence of the inaccuracies or errors, if relevant
  • Personal financial information, such as your mortgage information, depending on the reported issue
  • Any other supporting documentation

Credit Bureau Contact Information

Because there are so many potential reasons to contact a credit bureau—general inquiries, disputes and credit freezes, for example—there are many different phone numbers and online contact forms to wade through. If you call the wrong number, you may simply be told they cannot help you and directed to call a different number, wasting precious time and energy.

To help you avoid that frustration, we’ve gathered several ways you can contact the credit bureaus for common inquiries here.

Equifax Phone Numbers

Reason to Contact

Phone Number

Availability

General inquiries

866-640-2273

 

Service cancellation

866-243-8181

8 a.m. to 3 a.m. (ET)
7 days a week

Request a copy of your credit report

866-349-5191

8 a.m. to midnight (ET)
7 days a week

Fraud alert

800-525-6285

8 a.m. to midnight (ET)
7 days a week

Credit dispute

866-349-5191

8 a.m. to midnight (ET)
7 days a week

Credit freeze

888-298-0045

8 a.m. to midnight (ET)
7 days a week

2017 data breach

888-548-7878

8 a.m. to midnight (ET)
7 days a week

Opt out of mailing lists

888-567-8688

 

 

If you don’t like talking on the phone, Equifax also offers live chat support. You can chat with a member of their customer support team between 8 a.m. and midnight (ET), Monday through Friday.


TransUnion Phone Numbers

Reason to Contact

Phone Number

Availability

General inquiries

833-395-6938

8 a.m. to 11 p.m. (ET)
Monday–Friday

Credit dispute

833-395-6941

8 a.m to 11:00 p.m. (ET)

Monday–Friday

Credit freeze

888-909-8872

8 a.m. to 11 p.m. (ET)

Fraud alert

800-680-7289

8 a.m.to 11 p.m. (ET)

Free annual report

877-322-8228

 

Haven’t received your report

800-888-4213
800-916-8800 (to speak to a representative)

 

Manage your subscription

833-806-1626

8 a.m. to 9 p.m. (ET)

Monday–Friday

 

8 a.m. to 5 p.m. (ET)
Saturday–Sunday

Technical support

833-806-1626

8 a.m. to 9 pm. (ET)

Monday–Friday

8 a.m. to 5 p.m. (ET)
Saturday–Sunday


Experian Phone Numbers

Reason to Contact

 Phone Number

Availability

Experian membership

479-343-6239

6 a.m. to 8 p.m. (PT)
Monday–Friday

8 a.m. to 5 p.m. (PT)
Saturday–Sunday

Free credit report

888-397-3742

 

Credit dispute

866-200-6020

 

Fraud alert

888-397-3742

 

Credit freeze

888-397-3742

 

Cancel membership

479-343-6239

 

ProtectMyID subscription

866-960-6943

 

Opt out of prescreened offers

888-567-8688

 


Alternatives to Calling Credit Bureaus

Not all experts think calling a credit bureau is the best approach. Don Petersen, an attorney at Howard Lewis & Peterson, PC, in Utah, recommends calling a bureau for only basic administrative questions—such as updating an address or asking if a recent data breach has affected you.

For most other issues, Petersen advises his clients to write to credit bureaus or submit disputes online. This provides you with an official record of your request.

If you do prefer to call a credit bureau, take notes during the call and follow up in writing after the telephone conversation. In your follow-up letter, you should include the name of the representative you spoke with as well as details of what transpired in your conversation.

Send important requests—especially disputes—through certified mail. This allows you to track the letter and ensure that the credit bureau responds in a timely manner. Never send original copies of documents, as the bureaus may not return anything you send.

Equifax Mailing Addresses

Reason for Contact

Address

Credit dispute

Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374-0256

Request a copy of your credit report

Equifax Disclosure Department
P.O. Box 740241
Atlanta, GA 30374-0241

Fraud alert

Equifax Information Services LLC
P.O. Box 105069
Atlanta, GA 30348-5069

Credit freeze

Equifax Information Services LLC
P.O. Box 105788
Atlanta, GA 30348-5788


TransUnion Mailing Addresses

Reason to Contact

Address

Credit freeze

TransUnion
P.O. Box 160
Woodlyn, PA 19094

Credit dispute

TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA 19016-2000

Fraud alert

TransUnion Fraud Victim Assistance
P.O. Box 2000
Chester, PA 19016

Request credit report

TransUnion LLC
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19016


Experian Mailing Addresses

Reason to Contact

Address

Credit dispute

Experian Dispute Department
P.O. Box 4500
Allen, TX 75013

Credit freeze

Experian Security Freeze
P.O. Box 9554
Allen, TX 75013

Privacy

Chief Privacy Officer
Compliance Department
Experian
475 Anton Blvd.
Costa Mesa, CA 92626

Report a relative’s death

Experian
P.O. Box 9701
Allen, TX 75013


Track Your Credit

Under the Fair Credit Reporting Act, you have the right to obtain a free copy of all three reports once each year. These free reports can be accessed on the government-mandated site operated by the big three credit bureaus, AnnualCreditReport.com.

You can also sign up for the free credit report card offered by Credit.com, which provides a snapshot of your credit as well as the ability to dig deeper into the elements that affect your credit score. When you sign up, you’ll also get regular emails with tips and tricks for keeping your credit healthy.

Sign Up Now

The post How and When to Talk to a Credit Bureau appeared first on Credit.com.

Source: credit.com



Tips For Getting The Most Out Of Your Credit Cards

Credit cards can be a useful tool if you do your research a make a plan for your spending. Here’s how to get the most out of your credit cards.

The post Tips For Getting The Most Out Of Your Credit Cards appeared first on Bible Money Matters and was written by Peter Anderson. Copyright © Bible Money Matters – please visit biblemoneymatters.com for more great content.

Source: biblemoneymatters.com



How to Get Approved for Credit in a Financial Downturn

In a recession it’s common for many people to rely on credit cards and loans to balance their finances. It’s the ultimate catch-22 since, during a recession, these financial products can be even harder to qualify for.

This holds true, according to historical data from the Federal Reserve Bank of St. Louis. It found that during the 2007 recession, loan growth at traditional banks decreased and remained deflated over the next four years. 

Credit can be a powerful tool to help you make ends meet and keep moving forward financially. Here’s what you can do if you’re struggling to access credit during a weak economy.

Lending becomes riskier in a weak economy. Does this mean you’re completely out of luck if you have bad credit? Not necessarily, but you might need to take the time to understand all of your alternatives.

How Does a Financial Downturn Affect Lending?

Giving someone a loan or approving them for a credit card carries a certain amount of risk for a lender. After all, there’s a chance you could stop making payments and the lender could lose all the funds you borrowed, especially with unsecured loans. 

For lenders, this concept is called, “delinquency”. They’re constantly trying to get their delinquency rate lower; in a booming economy, the delinquency rate at commercial banks is usually under 2%. 

Lending becomes riskier in a weak economy. There are all sorts of reasons a person might stop paying their loan or credit card bills. You might lose your job, or unexpected medical bills might demand more of your budget. Because lenders know the chances of anyone becoming delinquent are much higher in a weak economy, they tend to restrict their lending criteria so they’re only serving the lowest-risk borrowers. That can leave people with poor credit in a tough financial position.

Before approving you for a loan, lenders typically look at criteria such as:

  • Income stability 
  • Debt-to-income ratio
  • Credit score
  • Co-signers, if applicable
  • Down payment size (for loans, like a mortgage)

Does this mean you’re completely out of luck if you have bad credit? Not necessarily, but you might need to take the time to understand all of your alternatives.

5 Ways to Help Get Your Credit Application Approved 

Although every lender has different approval criteria, these strategies speak to typical commonalities across most lenders.

1. Pay Off Debt 

Paying off some of your debt might feel bold, but it can be helpful when it comes to an application for credit. Repaying your debt reduces your debt-to-income ratio, typically an important metric lenders look at for loans such as a mortgage. Also, paying off debt could help improve your credit utilization ratio, which is a measure of how much available credit you’re currently using right now. If you’re using most of the credit that’s available to you, that could indicate you don’t have enough cash on hand. 

Not sure what debt-to-income ratio to aim for? The Consumer Financial Protection Bureau suggests keeping yours no higher than 43%. 

2. Find a Cosigner

For those with poor credit, a trusted cosigner can make the difference between getting approved for credit or starting back at square one. 

When someone cosigns for your loan they’ll need to provide information on their income, employment and credit score — as if they were applying for the loan on their own. Ideally, their credit score and income should be higher than yours. This gives your lender enough confidence to write the loan knowing that, if you can’t make your payments, your cosigner is liable for the bill. 

Since your cosigner is legally responsible for your debt, their credit is negatively impacted if you stop making payments. For this reason, many people are wary of cosigning.

In a recession, it might be difficult to find someone with enough financial stability to cosign for you. If you go this route, have a candid conversation with your prospective cosigner in advance about expectations in the worst-case scenario. 

3. Raise Your Credit Score 

If your credit score just isn’t high enough to qualify for conventional credit you could take some time to focus on improving it. Raising your credit score might sound daunting, but it’s definitely possible. 

Here are some strategies you can pursue:

  • Report your rent payments. Rent payments aren’t typically included as part of the equation when calculating your credit score, but they can be. Some companies, like Rental Kharma, will report your timely rent payments to credit reporting agencies. Showing a history of positive payment can help improve your credit score. 
  • Make sure your credit report is updated. It’s not uncommon for your credit report to have mistakes in it that can artificially deflate your credit score. Request a free copy of your credit report every year, which you can do online through Experian Free Credit Report. If you find inaccuracies, disputing them could help improve your credit score. 
  • Bring all of your payments current. If you’ve fallen behind on any payments, bringing everything current is an important part of improving your credit score. If your lender or credit card company is reporting late payments a long history of this can damage your credit score. When possible speak to your creditor to work out a solution, before you anticipate being late on a payment.
  • Use a credit repair agency. If tackling your credit score is overwhelming you could opt to work with a reputable credit repair agency to help you get back on track. Be sure to compare credit repair agencies before moving forward with one. Companies that offer a free consultation and have a strong track record are ideal to work with.

Raising your credit isn’t an immediate solution — it’s not going to help you get a loan or qualify for a credit card tomorrow. However, making these changes now can start to add up over time. 

4. Find an Online Lender or Credit Union

Although traditional banks can be strict with their lending policies, some smaller lenders or credit unions offer some flexibility. For example, credit unions are authorized to provide Payday Loan Alternatives (PALs). These are small-dollar, short-term loans available to borrowers who’ve been a member of qualifying credit unions for at least a month.

Some online lenders might also have more relaxed criteria for writing loans in a weak economy. However, you should remember that if you have bad credit you’re likely considered a riskier applicant, which means a higher interest rate. Before signing for a line of credit, compare several lenders on the basis of your quoted APR — which includes any fees like an origination fee, your loan’s term, and any additional fees, such as late fees. 

5. Increase Your Down Payment

If you’re trying to apply for a mortgage or auto loan, increasing your down payment could help if you’re having a tough time getting approved. 

When you increase your down payment, you essentially decrease the size of your loan, and lower the lender’s risk. If you don’t have enough cash on hand to increase your down payment, this might mean opting for a less expensive car or home so that the lump sum down payment that you have covers a greater proportion of the purchase cost. 

Loans vs. Credit Cards: Differences in Credit Approval

Not all types of credit are created equal. Personal loans are considered installment credit and are repaid in fixed payments over a set period of time. Credit cards are considered revolving credit, you can keep borrowing to your approved limit as long as you make your minimum payments. 

When it comes to credit approvals, one benefit loans have over credit cards is that you might be able to get a secured loan. A secured loan means the lender has some piece of collateral they can recover from you should you stop making payments. 

The collateral could be your home, car or other valuable asset, like jewelry or equipment. Having that security might give the lender more flexibility in some situations because they know that, in the worst case scenario, they could sell the collateral item to recover their loss. 

The Bottom Line

Borrowing during a financial downturn can be difficult and it might not always be the answer to your situation. Adding to your debt load in a weak economy is a risk. For example, you could unexpectedly lose your job and not be able to pay your bills. Having an added monthly debt payment in your budget can add another challenge to your financial situation.

However, if you can afford to borrow funds during an economic recession, reduced interest rates in these situations can lessen the overall cost of borrowing.

These tips can help tidy your finances so you’re a more attractive borrower to lenders. There’s no guarantee your application will be accepted, but improving your finances now gives you a greater borrowing advantage in the future.

The post How to Get Approved for Credit in a Financial Downturn appeared first on Good Financial Cents®.

Source: goodfinancialcents.com



Spouse Has Bad Credit? How It Affects You.

Spouse Has Bad Credit? How It Affects You

It wasn’t until a few months after my husband and I got married that I decided to check both our credit scores. While my husband’s credit score wasn’t horrible, it certainly didn’t qualify as “excellent.” This got me thinking about how newlyweds’ financial histories can affect both spouses’ finances moving forward, and how critical it is to acknowledge this reality—ideally before getting hitched.

Why It’s Important to Have a Good Credit Score

Manisha Thakor cuts right to the chase in her book On My Own Two Feet: “Your credit score is essentially your financial reputation in numeric form.”

Aiming for an excellent credit score—generally defined as 750 or more—is a worthy goal, owing to the range of ways in which it can save you money. Credit scores are critical when applying for loans—for instance, car loans and mortgages. In addition, many employers consider prospective employees’ credit scores during the hiring process.

A high credit score means you can access lower interest rates when borrowing, because creditors will view you as reliable. The perceived risk that you’ll default on your loan is lower compared to those with poor credit scores. Lower interest rates, especially on large amounts borrowed over significant timeframes, can save you thousands and thousands of dollars!

A poor credit score can indirectly hurt your financial efforts as well; consider the fact that when you’re paying over the odds in debt repayments, you’re committing fewer dollars to saving and retirement planning.

photo credit: LendingMemo via photopin cc

Till Debt Do Us Part

Marriage makes you one combined financial unit.

However, that doesn’t mean your credit scores are merged; your credit history continues to be maintained on an individual basis. One spouse’s poor credit cannot directly damage the individual score of the other spouse.

That being said, if you apply for a loan as a married couple, creditors look at both your credit scores to determine your eligibility and terms. So, if one of you has the credit of an angel whereas the other’s credit history is limited or even littered with missed payments and liens, you may find your application is denied.

But, this is not just about loan applications—poor credit can belie more than just a few bad credit card habits. Other financial follies, like paying taxes late, not focusing on saving, and day-to-day overspending, could be lurking in the closet.

What Do You Do After You’ve Said I Do?

While bad credit isn’t good news, it’s not necessarily a reason not to get married. And, it’s not necessarily the precursor to divorce! It is, however, an alarm signaling that it is time to get clear on your joint financial situation and start communicating. Make sure you do this respectfully and compassionately to minimize blame and financial stress. (If you’re the type of person who’d like to know this information from prospective partners before things get serious, there are now dating sites catering just to you.)

Once you’ve identified that one of you has less-than-optimal credit, it’s time to take action. Here are four top tips for taking immediate action:

1. Check your credit report for mistakes: Errors are, unfortunately, pretty common and can be really detrimental. Check your report at least once per year.

2. Make payments on time: Yes, this is stating the obvious, but it needs to be said! Mary Beth Storjohann of Workable Wealth says, “35% of your credit score is based on how you pay your bills (making this the biggest determining factor for your score)! Are you often late of missing payments? The impact of just one 90-day late payment goes way beyond the three months you took to pay, so set up automatic bill payments.”

3. Lower your debt-to-credit ratio: This is how much debt you have as a proportion of your overall credit limits. 30% of your credit score is based on the amount of money you owe versus the amount of credit available to you. The higher the amount of credit you’re utilizing, the more negative the impact on your score. Keep the debt level as low as possible (30% of your limits, or less).

4. Pay down your debt faster: Make more than the minimum payments wherever possible by utilizing the snowball method or targeting the balance with the highest interest rate to pay down first.

photo credit: natloans via photopin cc

Alongside these tips, it’s super important to remember that improving your credit score won’t happen overnight. The length of time it takes for your score to improve is directly related to reasons for the drop. It can take anywhere from a few months to several years for your credit report to reflect the positive changes you’re making. As Mary Beth notes, “The most important thing is to be proactive in clearing up any issues.” In addition, two of the criteria factored into your score are the length of your overall credit history and the average age of your accounts.

So, don’t be discouraged—be patient and give it time.

And, Finally, Some Tips on What Not to Do!

There are always two sides to every coin so, while you’re following the tips above, make sure that you’re not unwittingly hurting your score and negating your good work.

Be mindful of the following ways that you could be hurting your credit score:

1. Opening too many new accounts: This comes back to the point that the average age of your accounts is a key factor. Opening lots of new accounts reduces that average.

2. Closing too many old accounts: Older accounts indicate that you have managed payments for a long time and increase the average age of your accounts. When you close credit card accounts, this also decreases the amount of credit available to you, which can reflect negatively if you have other accounts that are still carrying high balances (it essentially increases your debt to credit ratio).

3. Signing up for lots of retail incentive programs: Every time you apply for credit, the company issuing the credit will request information about you from the credit bureaus. Too many of these requests can reduce your score.

4. Over-utilizing your credit. Mary Beth advises, “If you’re depending on your credit cards to fund your daily expenses and lifestyle needs, but aren’t able to pay them off in full at the end of each month, something needs to change. Start tracking your spending and get a handle on your expenses.”

In summary, start taking positive steps, be aware of actions that can hurt your credit, and focus on building solid financial foundations for the future.

This post was written by Erika Torres of GoGirl Finance. GoGirl Finance is a fast-growing community of women seeking and providing financial wisdom across money management, lifestyle, family and career. For more finance tips, follow GoGirl Finance on Twitter @GoGirlFinance

The post Spouse Has Bad Credit? How It Affects You. appeared first on MintLife Blog.

Source: mint.intuit.com



How to Build Credit with Fingerhut

If you’ve been wanting to make a big purchase, but your credit is less than spectacular, you might have looked into Fingerhut as an option. 

Fingerhut is an online catalog and retailer that showcases a multitude of products. On this website, customers can shop for anything from electronics to home décor to auto parts. Fingerhut offers financing through their own line of credit, making it appealing to shoppers with poor credit or a nonexistent credit history. Many consumers have a better chance of getting approved by Fingerhut, than they might have of getting approved through most other credit card companies. It’s an option worth looking into if you want to improve your credit score through credit utilization.  

The major difference between Fingerhut and credit cards that cater to low credit scores is that Fingerhut credit is exclusively available for use with its own company’s products and authorized partners. You’ll also find that the company’s products are pricier than they would be through most other retailers, while also bearing the weight of higher interest rates. While it might seem like a good idea if you don’t have good credit, it’s best to familiarize yourself with the ins and outs of the company beforehand so that you know what you’re signing up for. 

How Fingerhut credit works

When you apply for a Fingerhut credit account, you can get approved by one of two accounts:

  • WebBank/Fingerhut Advantage Credit Account.
  • Fingerhut FreshStart Installment Loan issued by WebBank.

As it happens, by submitting your application, you are applying for both credit accounts. Applicants will be considered for the Fingerhut FreshStart Installment Loan issued by WebBank as a direct result of being denied for the WebBank/Fingerhut Advantage Credit Account. In other words, you won’t have a way of knowing which one you will be approved for prior to applying. Both credit accounts are issued by WebBank and are set up so that customers can purchase merchandise by paying for them on an installment plan with a 29.99% Annual Percentage Rate (APR). These are the only things that the different Fingerhut credit accounts have in common.

The WebBank/Fingerhut Advantage Credit Account

The WebBank/Fingerhut Advantage Credit Account works very much like an unsecured credit card, except that it’s an account that you can only use it to shop on Fingerhut or through its authorized partners. 

This credit account features:

  •  No annual fee.
  • A 29.99% interest rate.
  • A $38 fee on late or returned payments.
  • A possible down payment; it may or may not be required. You won’t know prior to applying. 

If you get denied for this line of credit, your application will automatically be reviewed for the Fingerhut FreshStart Credit Account issued by WebBank, which is both structured and conditioned differently.

Fingerhut FreshStart Installment Loan issued by WebBank

If you get approved for the Fingerhut FreshStart Installment Loan, you must follow these three steps to activate it:

  • Make a one-time purchase of no less than $50.
  • Put a minimum payment of $30 down on your purchase, and your order will be shipped to you upon receipt of your payment. You may not use a credit card to make down payments, but you can use a debit card, check, or a money order. 
  • Make monthly payments on your balance within a span of six to eight months.

You can become eligible to upgrade to the Fingerhut Advantage Credit Account so long as you are able to pay off your balance during that time frame or sooner without having made any late payments. Keep in mind that paying for the entire balance in full at the time you make your down payment will result in you not qualifying for the loan as well as being ineligible for upgrade. 

How a Fingerhut credit account helps raise your credit score

The fact that it can help you improve your credit is one of the biggest advantages of using a Fingerhut credit account. 

When you make your payments to Fingerhut in full and on-time, the company will report that activity to the three major credit bureaus. This means that your good credit utilization won’t go unnoticed nor unrewarded. If you use Fingerhut to improve your credit score, you will eventually be able to apply for a credit card through a traditional credit card company—one where you can make purchases anywhere, not just at Fingerhut. 

Additional benefits of a Fingerhut credit account

Besides using it as a tool to repair your bad credit, there are a few other benefits to using a WebBank Fingerhut Advantage Credit Account such as:

  • No annual fee.
  • Fingerhut has partnerships with a handful of other retailers, which means you can use your Fingerhut credit line to make purchases through a variety of companies. Fingerhut is partnered with companies that specialize in everything from floral arrangements to insurance plans.
  • There are no penalties on the WebBank Fingerhut Advantage Credit Account when you pay off your balance early.

How to build credit with Fingerhut

Fingerhut credit works the same way as the loans from credit card companies work: in the form of a revolving loan. 

A revolving loan is when you are designated a maximum credit limit by your lender, in which you are allowed to spend. Whatever you spend, you are expected to pay back in full and on-time through a series of monthly payments. This act of borrowing money and paying off bills using your Fingerhut account causes your balances to revolve and fluctuate, hence, its name. 

Your credit activity, good or bad, gets reported to the three major credit bureaus and in turn, will have an effect on your credit report. Revolving loans play a large role in your credit score, affecting approximately 30% of your score through your credit utilization ratio. If your credit utilization ratio, the amount of available revolving credit divided by your amount owed, is too high then your credit score will plummet. 

When using a Fingerhut account, the goal is to try to keep your amounts owed as low as you possibly can so that you can maintain a low utilization ratio, and as a result, have a higher credit score.

Alternatives to Fingerhut

If you’ve done all your research and decided that Fingerhut isn’t the right choice for you, there are other options that might serve you better, even if you have bad credit. There are a variety of secured credit cards that you can apply for such as:

  • The OpenSky Secured Visa Credit Card: You will need a $200 security deposit to qualify for this secured credit card, but you can most likely get approved without a credit check or even a bank account. It can also be used to improve your credit, as this card does report to the three major credit bureaus. While this card does come with an annual $35 fee, you can use it to shop anywhere that will accept a Visa. 
  • Discover it Secured:  For all those opposed to paying an annual fee of any sort, this card might just be the one for you. With a $0 annual fee and the ability to earn rewards through purchases, there’s not much to frown about with this secured credit card. One of the best perks, is that it allows you the chance to upgrade to an unsecured card after only eight months. 
  • Deserve Pro Mastercard: This card is a desirable option for those with a short credit history. There is no annual fee and no security deposit required and, if your credit history isn’t very long-winded, that’s okay. The issuers for this card may use their own process to decide whether or not you qualify for credit, by evaluating other factors such as income and employment. This card is especially nifty because you can get cash-back rewards such as 3% back on every dollar that you spend on travel and entertainment, 2% back on every dollar spent at restaurants, and 1% cash back on every dollar spent on anything else. 

Final Thoughts 

Fingerhut is an option worth looking into for those with bad credit or a short credit history. If you want to use a Fingerhunt credit account to improve your credit score, be sure to use it wisely and make all of your payments on time, just as you would with any other credit card.

Even though it might be easy to get approved, the prices and interest rates on items sold through Fingerhut are set higher than they would be at most other retailers, so it’s important to consider this before applying. 

There are a ton of options available, regardless of what your credit report looks like, if you are trying to improve your credit. If the prices of Fingerhut’s merchandise are enough to scare you away, you might want to consider applying for a secured credit card. 

How to Build Credit with Fingerhut is a post from Pocket Your Dollars.

Source: pocketyourdollars.com



Things Break. How to Make Sure Your Emergency Fund Can Cover Them

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Your washing machine. Your car. Your front tooth.

If any of those broke right now, would you be able to get it fixed immediately? Or would you have to walk around with a gap in your smile for months until you could get the money together?

If you can’t afford to pay to fix it today, you’re not alone. Most people don’t have $400 saved in case of an emergency either. So before your car breaks down on the side of the road on your way to an interview, make sure you have a solid emergency fund of at least $500.

Don’t know how to get there? Having a budget (that you actually stick to) can help you get there. Here’s one budgeting strategy we recommend, and four other tips that can help you keep your expenses in line.

1. The 50/30/20 Budgeting Rule

The 50/30/20 rule is one of the simplest budgeting methods out there, which is why you’ve probably heard us talk about it before if you’re a regular TPH reader. There are no fancy spreadsheets or pricy apps to download (unless you want to), and it’s very straightforward.

Here’s how it shakes out: 50% of your monthly take home income goes to your essentials — your rent, your groceries, your minimum debt payments, and other necessities. 30% of your cash goes to the fun stuff, and 20% is dedicated to your financial goals. That could be paying more than the minimum on your debts or adding to your investments. And it definitely includes building up your emergency fund!

If you take a look at your budget and realized you don’t have enough leftover to contribute to your emergency fund, here are a few ways to help balance your budget:

2. Cut More Than $500 From One Of Your Must-Have Bills

You’re probably overpaying the bills you have to pay each month. But you can cut those expenses down, without sacrificing anything. Maybe even enough to cover that window your kid just smashed with a ball. Definitely enough to grow your emergency fund a meaningful amount.

So, when’s the last time you checked car insurance prices?

You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $540 a year.

Yup. That could be $500 back in your pocket just for taking a few minutes to look at your options.

3. Earn Up to $225 in Easy, Extra Cash

If we told you you could get free money just for watching videos on your computer, you’d probably laugh. It’s too good to be true, right? But we’re serious. You can really add up to a few hundred bucks to your emergency savings with some mindless entertainment.

A website called InboxDollars will pay you to watch short video clips online. One minute you might watch someone bake brownies and the next you might get the latest updates on Kardashian drama.

All you have to do is choose which videos you want to watch and answer a few quick questions about them afterward. Brands pay InboxDollars to get these videos in front of viewers, and it passes a cut onto you.

InboxDollars won’t make you rich, but it’s possible to get up to $225 per month watching these videos. It’s already paid its users more than $56 million.

It takes about one minute to sign up, and you’ll immediately earn a $5 bonus to get you started.

4. Ask This Website to Pay Your Credit Card Bill This Month

Just by paying the minimum amount on your credit cards, you are extending the life of your debt exponentially — not to mention the hundreds (or thousands) of dollars you’re wasting on interest payments. You could be using that money to beef up your emergency savings, instead.

The truth is, your credit card company is happy to let you pay just the minimum every month. It’s getting rich by ripping you off with high interest rates — some up to nearly 30%. But a website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

It takes two minutes to see if you qualify for up to $50,000 online. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.

5. Get a Side Gig And Make More Money

Let’s face it — if your monthly income is less than what your monthly expenses are (and you’ve run out of things to cut), you need more money.

Well, we all could use more money. And by earning a little bit extra each month, we could make sure we’re never taken by surprise when an ER visit tries to drain our savings.

Luckily, earning money has never been easier with the rise of the “Gig Economy”. Here are 31 simple ways to make money online. Which one could you do to pad your emergency savings?

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.

Source: thepennyhoarder.com




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