Bad Credit Loan Articles and Blog Posts

Submitted by Alice Bryant  on Fri, 11/06/2015 - 12:19

Everyone knows that bad credit can be a source of tremendous stress for those unfortunate enough to have it. It can make it impossible to get a loan, an apartment, a car, a phone, and even in some cases, a job. Our credit rating is essentially the gauge society uses to determine our credibility. While, it may not always be an accurate indicator of overall financial reliability, it is the system we have in place, and to ignore it is foolish. Bad credit offers a whole host of fees and additional charges that go with it. This can make the hole one is in feel even deeper. Most Americans have experienced financial difficulties at least once in their life. Job loss, unexpected repairs, medical expenses, etc, can all work to put even the most well intentioned of us behind the proverbial eight ball. The problem seems to generate a snowball effect; the further we get behind, the harder it is to catch up. Here are a list of some of the additional expenses one may encounter as the result of letting their credit rating deteriorate.

Higher Interest Rates

Having bad credit can make it very difficult to get credit cards offers or loans of any sort. However, if you are lucky enough to still qualify despite your poor credit, you will likely confront interest rates in the double digits as a result. Lenders view those with bad credit as riskier candidates for repayment, and higher interest rates are the levy they impose to mitigate such risk. This means one with poor credit, and likely less money, will in essence be paying more in the long run than someone with a good credit score. While sometimes it is unavoidable to take out such loans, particularly if one is in need of a vehicle or some other necessity, it would be wise to avoid more debt until other existing loans are paid off, and one's credit scores improve. Waiting until you improve your credit rating to take out new loans will not only provide more cash flow as your debt to income ratio is lowered, it will always keep interest rates to an affordable minimum.

Higher Insurance Costs

Even if you have a clean driving record and have never had an accident, your insurance company could charge a higher premium if you have bad credit. The theory behind them this is, it has been established that people with lower credit scores are more likely to file a claim than those with higher scores. Again, one's credit score is used as a gauge of overall credibility even if that gauge is not always accurate in a personal context. Keep premiums down by working on improving your overall score.

Additional Security Deposits

If you are fortunate enough to find an apartment with bad credit, a landlord may require a higher security deposit to compensate for the larger potential of failing to pay rent. In addition to the added costs of obtaining the apartment, utility companies such as phone, electric, gas, cable, etc., may also require a security deposit where they otherwise would not given a higher score. They may do this even if you have never missed a utility or rent payment in your life. Like with all lenders, your bad credit score sends a risky message to those doing business with you. Additional or higher security deposits are a reflection of that risk. Improving one's credit before renting a new place requiring utilities, and the additional costs associated with them is in your best interest. Although, of course, this is not always possible as everyone needs a roof over their head.

More Expensive Phone Contracts

It becomes increasingly difficult to enter a phone contract with poor credit. Therefore, for many struggling under such circumstance, prepaid plans are the only option. In today's world, a phone has become a virtual necessity. If you have bad credit however, you may not qualify for a standard cell phone contract as most, if not all, wireless providers are reluctant to extend monthly service to those proving unreliable at paying their bills. With standard monthly contracts not an option for those with bad credit, the only available route in order to have a cell phone is to purchase an expensive prepaid plan. While this may be the only option for those in desperate need of a phone, if you have poorer credit and can live without one, you should avoid these higher costs.

Even if you are not someone with a proclivity to ignore your bills, your credit score has a tremendous impact on your life. That is why it is so important, regardless of the plethora of obstacles life may throw at us, to monitor and repair our credit as soon as it has become damaged. The sooner we educate ourselves on the vastly beneficial results associated with a higher credit score, the sooner we can start taking the steps necessary to moving us toward financial freedom. These additional charges and expenses levied against those with poor credit ratings is just a fraction of the ways in which bad credit can make life extremely difficult. If you are feeling overwhelmed with your current debt situation, you are not alone. Many good and responsible people have found themselves in similar circumstances due to unexpected hardships. Educating yourself is the first step. Finding a reputable credit repair service can also be a wise decision. These companies can provide an invaluable service if you are feeling overwhelmed. A good credit repair company is experienced with dealing with lenders and debt collectors, and can help negotiate the best repayment plans to help you get back on track. Do not let bad credit continue to ruin your life. Learn as much as you can, be proactive and find experienced help if necessary to avoid the higher costs associated with a low credit score. This is your life; bad credit does not have to be a part of it.

Submitted by Alice Bryant  on Wed, 10/28/2015 - 08:59

With the chill in the air, you no longer want to spend every moment outdoors. That makes fall the perfect time to come inside and take stock of your finances. Get in the habit of doing these things each year around the same time and you’ll see a big improvement in your financial stability.

Tax Planning

With a good eight or nine months of paychecks under your belt, it’s easy to see what your tax return might look like when you file early next year. In particular, you want to make sure that your withholdings are at the right level. Use a tax estimating calculator to estimate how much you’ll have to pay in taxes next year and compare that to your pay stub. If it looks like you might be short, you may want to talk to human resources about increasing the amount of money they’re withholding. This can help you avoid a surprise tax bill in the spring. On the other hand, if it seems you’ve been paying more than enough, you can ask them to decrease the amount of money they’ve been withholding and use the extra money in your paycheck to pay down debt or treat yourself to a little something special.

Holiday Shopping

Everyone wants to spread good cheer during the holidays, but buying presents for all of your family and friends can leave your checking account looking a little thin. This isn’t as much of a problem if you plan ahead and start shopping in the fall. Instead of doing all your shopping in December, you can spread things out a bit when you shop in the fall. If you buy two or three presents each week during the fall, you’re not as likely to feel a big financial hit. Shopping early also allows you to seek out the best prices. If you’re crafty, shopping early also gives you the time you need to make inexpensive holiday gifts that are full of love.

Holiday Travel Prep

Speaking of the holidays, if you’re planning on traveling, fall is the perfect time to start thinking about those arrangements. You’ll get better selection for flight times and airfare rates when you book early. You’ll also want to book any hotels before they fill up and you’re left paying premium rates. Get your family to commit to a place to meet for the holidays so that everyone can make their travel plans. Remember, though, that many tickets don’t allow you to make changes without hefty fees. If you’re going to buy now, be sure about the dates.

Winter Preparation

Cold winters mean extra heating costs, but by spending a bit of time and money in the fall, you may be able to drastically cut those costs. Take steps to winterize your home. If there’s not enough insulation in your attic, add more. Cover your windows with plastic film to prevent the cold air from seeping in around the sides. Purchase materials to weatherstrip your doors – it’s a pretty easy fix. If you live in an area that gets heavy snow, ice damming can be a concern. This is usually prevented by properly insulating the home, but a roofing company can give you more specific advice for your home. You may also want to get your car ready by checking the tread on your tires, and throwing a few safety items in your trunk.

Flex Spending Money

If you get a flex spending account through your employer, it’s time to use up that money. Most flex spending accounts work on a “use it or lose it” basis, so if you don’t use up the money, it goes away by December 31st. Make appointments to get a new pair of glasses, finish up any dental work or sign up for alternative therapies like acupuncture. These are all great ways to spend the money in your flex account. Before you decide to do something, though, it’s smart to check whether it’s an allowable expense. For example, some over-the-counter medicines are allowable, while others are not.

Insurance Reviews and Changes

In most cases, fall is the only time that you’re allowed to make changes to your health insurance policy without having a major life change like a marriage or the birth of a child. This makes fall a good time to take a look at the ways you’ve used your health insurance the past year and determine if it’s the best fit of all of the available choices. For instance, if you had a new diagnosis that means you’re taking more medication, you might want to look for a plan that offers better prescription coverage. If you found that you didn’t use the insurance much beyond the annual physical, you might want to switch to a more affordable plan. Since you’re already doing this for health insurance, you might consider shopping around for other types of insurance as well. A yearly review of all your insurance plans ensures that you’re getting the best deals.

Retirement Savings

Fall could also be a good time to beef up your retirement savings. Individual Retirement Accounts have a contribution limit of $5,500 per year. If you haven’t met the limit yet, add more to that fund for both you and a spouse. You might also notice that you’ve been doing well financially the past year and could stand to have a bit more money taken out of your paycheck and put directly into your company’s 401k. Increasing the amount by a percentage or two can make a big difference in your retirement account while having little effect on your day-to-day experiences.

Bonus Spending

If you’re expecting an end-of-year bonus from your company, planning the best way to spend it is a smart move. While it might be tempting to think of using the money to spend next year’s vacation, it’s probably best to use it to pay down any credit cards or loans you might have or boost your emergency savings account. If you’ve already done those things, then spend away.

It’s always a good idea to periodically review your finances and make sure that you’re making the best choices. The changing of the seasons gives you a reminder to do so, and fall offers the best opportunities to take stock of things like health care expenses and holiday spending. Take the time to warm yourself up with a cup of coffee or tea and review your spending choices during the fall.

Submitted by Alice Bryant  on Fri, 10/23/2015 - 14:56

Today, credit is far more important than ever. Lenders are known for checking credit, but a person’s overall credit history might be used for rental agreements, credit offers and several other purposes.

Even employers have started qualifying candidates based on their credit history. For quite some time, lenders have always checked whether potential borrowers pay their bills on time.

However, these days, lenders are diving even deeper into the credit rabbit hole and actually looking at how potential borrowers pay their bills.

While it’s important for consumers to pay their bills on time, the way the bills are paid is becoming increasingly important. In fact, many lenders are choosing customers based on how they pay their bills.

Paid In Full

Lenders are able to look at a credit report and determine if a potential borrower pays his or her credit cards in full each month. Consumers who pay off their credit card balances in full every month are viewed as low risk.

An individual who carries a balance every month is viewed as a revolver, which represents a higher level of risk. A number of lenders are using payment information to decide who to market credit card offers to while others are using the information to decide if they want to completely avoid granting credit.

Payment information is even being used by lenders to determine specific terms and rates. Fannie Mae, one of the biggest lenders in the world, says it is requiring mortgage lenders to use the information in loan decisions, but mortgage lenders won’t use the data until sometime towards the middle of 2016.

Payment Data and How It Affects Credit

The payment information is called trended credit data, and in the near future, it will be used in loan decisions. For some consumers, the use of the data could cause some problems, but for others, it could offer several benefits.

For example, the data could help consumers who have lower credit scores get a mortgage, but the payment data would need to show that they have a positive history of paying off their cards every month. The separation of those who pay their cards off in full every month from those who don’t is one of the hottest credit report attributes for researchers and lenders.

The bottom line is that lenders are always searching for improved ways to assess the risk of consumers they grant credit to. The major reason why they seem to be latching onto this new data is because it provides unique insights that the traditional credit scoring models do not offer.

Whenever new information like this becomes available, lenders tend to latch onto it and find the best way to incorporate it into their risks analysis models.

A few experts said they would be surprised to find any number of large banks that are not actively analyzing payment trend data and deciding how the information can be used effectively.

Since the data allows lenders to see trends over time, it provides them with a much bigger picture when analyzing borrowers for risk.

The Problem with Current Credit Scores

The credit scores that are used most frequently in lending decisions don’t have the power to make the distinction between consumers who carry credit card balances, and consumers who do not.

The two major credit scoring models, FICO and VantageScore, don’t offer payment trend data, so there is no payment trend data accessible by major lenders. Roughly three years ago, TransUnion, Experian and Equifax started adding payment patterns to consumer credit reports.

Although it took quite a lot of time, researchers finally found a correlation between payment patterns and risk. In other words, researchers found that payment patterns happen to be very effective for predicting whether or not consumers will default on their loan obligations.

Many experts say the data makes a massive difference because it can make it much easier for lenders to predict what consumers pose a greater risk. The payment data groups consumers into two categories.

There is one category for consumers who pay their credit cards off in full every month, and the other category is for consumers who carry a balance.

According to experts, consumers who carry a balance are nearly three times more likely not to pay on new auto loans or credit cards than consumers who pay their balances off every month.

The payment data also shows that consumers who carry a balance are also five times more likely to stop paying on their current credit cards, which was found by a study performed by TransUnion.

There are also what the industry refers to as partial payers and minimum payers. Partial payers are consumers who actively pay down card balances, and minimum payers only pay the minimum balance amount that is required each month. Studies show that partial payers tend to be less risky than those who only pay the bare minimum balance every month.

What The Major Credit Bureaus Are Doing

Experian is one of the three major credit bureaus, and it offers something called Trended Solutions, which is one of its products. The company has started incorporating payment trend data into its line of products.

The purpose of the data is to help lenders determine risk much more easily, and it makes it easier for lenders to target credit card offers to borrowers based on long-term payment trends. Equifax is also doing something similar. They’re offering a product that is called Dimensions.

There is even a similar product offered by TransUnion, which is called CreditVision. Lenders have started using these different products when making credit decisions.

Many lenders create custom scores and purchase payment trend data from the credit bureaus. Recently, TransUnion has introduced a newer version of their original payment trend product, and it’s called CreditVision Link, which factors in magazine subscriptions, address changes and checking account data.

The data is used to find consumers who represent lower risk but have been downgraded by the standard credit scoring formulas. Through the use of alternative data and payment patterns, TransUnion’s formula has been able to identify roughly 23 million individuals as solid risks.

Data shows that traditional scoring methods categorized all of these individuals as bad risks. These new products that are offered by the major credit bureaus check over 30 months of balance and payment data. Other formulas provide a snapshot of a single month.

The new products also check payment data for an 82-month period and add points for responsible payment patterns. It’s important to understand that the use of these payment patterns isn’t normal yet, but it shouldn’t be long before it’s considered best practice. To benefit from this change, consumers need to start paying their credit card balances off in full every month.

Submitted by Alice Bryant  on Fri, 10/16/2015 - 14:11

The rising cost of medical coverage is something that many people in the United States are having trouble dealing with. Even though health insurance is available, many times people are still left with a large bill after a hospital stay. There are a lot of ways in which medical debt can hurt a person's financial future. Not only is it expensive, but it also can hurt the credit of a person that cannot make the payments on time. If you have are having trouble making payments on your medical debt or have had trouble in the past, it is important that you work to get medical debt off of your credit report. Here are several guidelines for anyone that is dealing with old medical debt hurting their credit.

What is A Credit Score?

The credit score is one of the most important financial measures that a person has. A credit score essentially tells lending institutions how creditworthy you are. There are various ways in which you can build credit, but it generally comes down to borrowing money and then paying it back. Any time you borrow money and do not make payments on time, this can hurt your credit as well. If you are younger, you will generally not have a lot of credit history built up. This can make it difficult to recover from a medical debt that you are having trouble repaying. The longer your credit history, the less one incident will hurt you. However, at the end of the day it is important to get bad debt off of your credit report quickly.

Finding the Bad Debt

Everyone in the United States is entitled to a free credit check every year. It is important that you take advantage of this if you are struggling or have struggled to pay off a debt. A credit check will show all of your current and past debt history. If you are struggling to pay something off, it will be noted in this report. The first step in cleaning up your credit report is to find the debts that are hurting you. Many people have outstanding debts that they do not know about, and these can cause a lot of long term damage for no reason. Always be sure to do an annual check on your credit just so you are clear about what debts are hurting your credit score. If the debt is current, work to get your payments up to date. However, if this is a bad debt from the past you have several other options.

Settle Debt

One of the options that you have is to settle the debt in question. Once a bill has gone past collections, a company will generally treat the money as almost gone. However, if you go to the company and offer twenty cents on the dollar, that may seem like a good deal to them and they may accept. Although this is not ideal, it is much better than letting an old debt hang out on your credit report while damaging your credit. Although settling a debt will hurt your credit in the short term, over the long term you will be much better off for doing this. With anything credit related, time tends to heal a lot of credit scores. Even if you have made financial mistakes in the past, work today to start building your credit back up. Most people can completely clean up their credit within a couple of years of having a major incident. One bad medical bill is not a huge issue to recover from.

Medical Debt

One of the biggest debts that many people struggle to deal with is medical debt. This comes up anytime a person goes to the doctor and they do not have the money to pay for the services. With the rising cost of medical coverage in the United States, it is no wonder that many people struggle to pay their bills in this area. Medical debt is tricky because a lot of the billing and collections goes through an insurance company rather than the hospital. If you have a medical debt from your past, it is important to get in touch with the people that are actually billing you. If the debt is still active, you can still settle on the debt to get it off of your radar. However, if the collections company has essentially closed on the account this transaction may be hurting your credit severely. The good news is that there are still options available for people that have bad medical debt on their record.

Credit Repair Companies

There are many companies in the credit repair space that work to help people clean up past debts. There are millions of people in the United States that have struggled to pay off a medical bill at some point in their life. It is important to not get frustrated or upset during the process of trying to clean up an old debt. A credit repair company will help you in contacting the various different agencies to get the debt cleaned up. A good credit repair company has many years of experiences in the field, and they can say the right things to collections companies to get the debts cleaned up. Always be sure that you do some research on the front end so that you choose a reputable company to work with.


Medical debt is something that many people struggle to pay off. If someone has an old medical debt this can hurt their credit over the long term. If you are struggling to pay a medical debt or have done so in the past, take the first step today to clean up your credit by getting in touch with a credit repair agency. They can work with you and the billing company to clean up the transaction and get your credit report cleaned up for the future.

Submitted by Alice Bryant  on Thu, 10/01/2015 - 13:29

Student loans are one of the fastest growing forms of debt in the United States today. With the rising cost of college, many people are having to take on tens of thousands of dollars in debt to pay for school. Although some students land jobs after graduation, there are also some that have issues finding employment where they make enough money to pay for their student loans. Many students are left with loan payments that are too big for them to bear the burden of over the long term. This results in many students missing loan payments or going into default on their loans. Many people do not realize just how detrimental it is to miss loan payments on their debt. There are several things that happen financially when a person misses a loan payment. Not only does the interest continue to grow on the loan, but a person's credit score is also impacted. A lower credit score will result in higher borrowing costs down the road. People with a lot of student loans or other debt should work to make payments on time every month. If they start to get behind, it can be very difficult in getting caught up again. Here are several things that happen when missing a payment on any loan.


Interest is the penalty that people pay for taking on debt. The higher the interest rate, the more that the interest will be as a percentage of the total payment. We are currently in an environment when interest rates on many forms of debt are at all time lows. However, when using a credit card or other forms of unsecured debt, there is a much higher interest rate to be paid. The financing company that provides the loan must be compensated for the risk that they take on. This risk can be measured in the interest rate that must be paid. When you miss a payment, the interest on the debt starts to build and is eventually added to the principal on the loan. This is why some people are simply never able to pull out of their financial hole from all of the debt that they take on. Whenever a person just pays the minimum payments, they are never paying down the principal on the debt. Interest building up over time is one of the biggest reasons that missing payments should be avoided at all costs.

Credit Score

The credit score is one of the most important metrics that anyone can have with their finances. There are many people with a high credit score, and this makes it much easier to borrow money at a lower rate. Low credit scores mean that it will be more expensive to borrow money in the future. The best way to increase a credit score is to borrow money and pay it off over time. Missing a payment on a loan is one of the worst things that can happen to a credit score. Many people make financial mistakes when they are young that ends up affecting their financial future. For example, many people end up renting longer than they would like because they cannot get qualified to purchase a home. Being responsible and paying off debt is the best way to help your financial future. The credit score should be treated with the importance that it has. Always be sure to pay loan payments on time in order to not hurt the credit score over time.

Credit Repair

There are many credit repair companies in the industry today that can help people that are struggling to make all of their payments. Many people have five or six credit cards that carry a balance. It can be difficult to manage all of the payments on these cards at one time. These credit repair companies can work with people in a way that will help them in both the short term and long term. In the short term, it is important to get all of their payments caught up. However, in the long term it is important to change the behaviors that led to the increase in debt in the first place. Many people make purchases on credit because they want something that day. A good practice is to save up money to buy something if the monthly payments cannot be made. Credit cards are not a bad thing and are a great way to build up credit. Likewise, student loans are the only way that many people can attend college to make a better life for their future. However, if the borrowing costs are not measured, many people end up owing money that they can never pay back.

Final Thoughts

Overall, there are many consequences to missing payments on loans that are taken out. Two of the most common types of debt in the United States today are credit cards and student loans. Credit cards have high interest rates which can build up quickly if they are not paid off. Many people think they can get away with missing just one or two payments on their loans. However, this will impact the credit score of the borrower and will lead to higher costs down the line. Whenever a loan is not paid, the interest on the loan continues to build up. This will make it more difficult to pay off over the long term. There are many credit repair companies that can help borrowers that are in a bad position with their debt. In order to avoid this situation, it is best to just pay off the debt as it is owed on the loan.

Submitted by Alice Bryant  on Fri, 09/18/2015 - 14:21

In the wake of the dual 2008 housing and banking crisis, the majority of United States citizens made a concerted effort to save more and spend less. This attitude was reflected in the financial statistics of the time period between 2008 and 2013. Economists marveled at the percentage of total income that most Americans were able to save throughout that time period, even as many of them decried the practice as somehow stopping the economy.

However, this trend of saving more and spending less seems to have reversed itself completely in a relatively short period of time. Today, many of the major news outlets and reputable financial agencies report that Americans are now earning worse credit scores than ever before and going back to bad habits that predated the coming of the 2008 crisis.

The Stats for American Saving and Spending

As it stands today, the average American family owes US $7,813 on credit cards. This adds up to a total amount on credit of over US $900 billion for the country. To put these numbers in perspective, this household figure is the highest since the crash of 2008 - families held an average of US $8,428 in credit card debt during that year.

These stats are made worse when one considers that the trend that started them actually began a full 10 quarters ago. According to a new analysis by Card Hub, a top credit card comparison site, year over year regression of consumer performance is especially bad in the last 10 quarters, with seven of those quarters showing that the American consumer is moving back towards the behavior that got him into trouble in 2008 in the first place. These people seem to be taking a very short term approach when it came to cashing in on the savings that they had put up following the Great Recession. These habits coincide with a rising debt level overall, as mentioned above, and more access to their credit cards and credit reports.

The Average FICO Score and What That Means

As it stands today, the average FICO score as reported by the Fair Isaac Corporation is now 695. The score ranges from 301 to 850, with a higher score being better. A similar analysis from Experian, one of the top three credit rating agencies in the United States, puts the score at around 667.

In general, 750 is considered a good credit score that will get a borrower the best rates on large asset loans and other financial proceedings. Anything below that is beginning to dip into highly questionable territory for a nation that does not yet seem to have its financial bona fides in place for what could possibly be another financial downturn.

The Federal Reserve seems to mirror this uncertainty with their unwillingness to test the marketplace by raising the base interest rate of the country to a level that is actually tenable over time. Ever since the 2008 crisis and downturn in the economy, the Federal Reserve has basically held the basic interest rate of the country, or the rate that banks borrow from other banks, at near to zero. This is a level that cannot be sustained over time, and even the Federal Reserve admits this. However, they cannot raise the rate to a market level until the economy has been shown to be stable. The more bad credit there is on the books of Americans, the less stable that the economy becomes.

Keeping the interest rate low with high credit all over the country lowers the value of the United States dollar, making that dollar much less able to conduct trade with other countries. This puts the United States at a huge disadvantage in trade with all countries, and virtually ensures a trade deficit that will continue to add to the deficit of the country itself, a number that continues to rise and that the citizens of that country will eventually be beholden to pay back.

Myths about Credit

Even with all of the bad reports about credit on the market today, there are still ways for you to keep yourself out of the mud pit when it comes to credit. However, the first thing that you must do is to destroy all of the myths that have been put into the air about credit., a highly reputable online banking site, found that around 77 percent of United States citizens had absolutely no idea that accounts that they held with high outstanding balances were hurting their overall credit scores. This is true even if the bills are being paid on time. 55 percent of these people actually thought that carrying a balance over from month to month helped their credit score. This is far from the truth.

Many people also believe that they can fix their credit in the last minute if they are getting ready to make a large asset purchase. This is also patently false. Aside from the mistakes that the credit rating agencies themselves often make, dealing with each problem on a credit report is a time consuming effort that has the potential to far outpace the timing on the purchase of a house or a car. If you are trying to clear your credit report up for the purchase of a house, do not wait until the last minute to do it!

Lastly, people often thought that simply holding many credit cards helped their credit score. They did not consider the percentage of money that they were borrowing as opposed to their total borrowing power - just the amount of money that they had as a credit card maximum. This is a mistake that may cost these people tens to hundreds of thousands of dollars on a loan in the future.

The Way to Avoid a Personal Financial Ruin and Collapse

There are also many myths about how to go about getting out of debt and creating a financial safety net. Most financial advisors will actually advise against throwing all funds and income streams into debt repayment. There is also the notion of building an emergency fund and paying for insurance packages that will keep an individual from going back into debt because he or she faced one unexpected emergency.

The best way to keep yourself out of financial ruin and disaster is to pay off debt at the same time that you build an emergency fund for future debt. Stay off of the credit cards for commercial purposes, and make sure that you always monitor your credit score using one of the free sites.

Submitted by Alice Bryant  on Fri, 09/11/2015 - 13:55

The decision to get married is a major one and can affect many areas in a person's life, including the financial areas. While getting married can and does affect credit, there are many myths and misconceptions regarding how. Below are some of the ways that marriage can have an impact on someone’s credit. This information can be used to protect a good credit score and for learning how a married couple can build credit.

The Impact of Marriage on Credit History

Let us start by getting one common myth out of the way. For the most part, getting married will have no effect on a couple's individual credit reports. Their credit reports will continue to be separate and will not merge as is widely believed. Credit reports are based on an individual's social security number, and this does not change after marriage. One marriage partner's credit report will not appear on that of their spouse or vice versa. If one spouse's credit history is negative, it will be impossible to tell simply by looking at the other's credit history. In other words, their credit history will neither worsen or improve based on that of their partner. This disproves the myth that one spouse’s bad credit score will make their partner’s score worse.

Another misconception has to do with a wife changing her name. The myth is that the new name comes with a new credit history and erases the old one. If a wife opts to take her husband's last name, this means that she will have a new name on her credit report. Her credit history from her maiden name will carry over to the new one.

Circumstances Where Marriage Can Affect Credit

Should a married couple make a joint application for a credit card or a loan, then both of their credit histories will play a role. The lender will look at both of their credit histories when evaluating them. If one has bad credit, then they may be turned down. Alternatively, their application may be approved; however, they may have to pay higher interest rates. If the one with the better credit score were to apply separately, their interest rates would be lower as a result. In such cases, it may be best for the spouse with good credit to apply for the loan or credit card individually. It is important to note that this is only a viable option if the spouse’s individual income and assets allow them to meet the loan qualifications.

Married couples often open joint accounts and those do affect both credit histories. If more than one person is added to an account, it will appear on each person's credit history. This means that the positive or negative history of one account holder on that account will be credited to the credit history of the other. The same thing happens when parents add children as authorized users on their credit cards or when people co-sign on loans for friends or relatives. The relationship is irrelevant, the important factors are the names listed on the account. Both people are committing to managing the account and therefore the account will show up on both their credit reports. One benefit is that if one spouse does not have a credit history at the time that they get married, adding them as a joint account holder may help them to establish one. Since the account appears on both credit reports, it will help with the independent qualification for credit; however, creditors and lenders will try to collect from both spouses should the account become delinquent.

It is important to note that adding a spouse as an authorized user on an account will not cause it to be factored into their credit score. Someone who is an authorized user and not an account holder is not responsible for paying back a debt.

Benefits of Individual Accounts

In the event that the couple gets a divorce, the joint account could be closed. Having individual accounts would allow each account holder to have open accounts in their own names. It is important that both spouses be in full agreement with regard to the opening of a joint account. Finances are the most common cause of strain on marriages and any appearance of secrecy with regard to opening accounts could start trouble.

Spouses Should Get Full Disclosure from Each Other

Couples should share their credit reports with each other before getting married. If a married couple has not yet reviewed their spouse’s credit report, they should do so as soon as possible. They can get free credit reports from the three major credit reporting bureaus. When looking at their spouse's report, they should pay special attention to things like:

  • High balances
  • Bankruptcies
  • Late payments
  • Unpaid student loans
  • Foreclosures

Protecting a Good Credit Score is Important

While bad credit can certainly be the result of extenuating circumstances like high medical bills, it is often a measure of an individual’s ability to manage debt. It is possible that a spouse with bad credit is showing that they have a history of making poor financial decisions. It is important that their partner think carefully about whether they are willing to entrust them with responsibility for the household's finances. They should consider the risk to their own good credit rating. One way to handle this situation is for the spouse with better credit to take over the finances until their partner shows that they have improved their debt-handling skills. Until the improvement is seen, they should not open any accounts jointly.

Submitted by Alice Bryant  on Thu, 09/03/2015 - 13:09

For many people with bad or no credit, finding an apartment or other place for rent can become difficult. Even if a potential tenant shows up with cash, the property owner will still most likely run a credit check.

That credit check can ruin what was otherwise a good proposition. But there's hope for those with bad credit. It's still possible to rent a nice apartment; it just may require a little extra effort.

1. Check the Credit Report

Before doing anything else, it is important that people know what their credit report looks like. In some cases, having a copy of the credit report can even save potential renters some time and money. Providing the property owner a copy of a credit report can keep them from running them and charging for the service.

If finding an apartment isn't an immediate concern, potential renters can take some time out to try to repair their credit somewhat before they start searching for apartments. Otherwise, it helps for them to know what's listed on the credit report in general. A potential landlord may ask about some of those items.

2. Shop Around

A mistake that many people make is to narrow their choices down to just one apartment. In reality, it's usually better to narrow choices down to several picks. It's impossible to know how any one situation will play out. Placing hope on a single place can turn into disappointment.

Having multiple choices also allows people looking to deal with multiple personalities. Bad credit can cause a property owner to turn someone away, but there are other property owners that won't mind at all. Shopping around can give a nice mix of personalities to try to work with.

Independent vs managed

A good example of this idea comes with the type of location someone wants to rent. An independent landlord is more willing to work with someone. He or she is more amendable to working out deals or setting up unique payment plans.

By contrast, a property manager may have set guidelines that he or she cannot veer from in any way. So sometimes it's a good idea for renters to look beyond one type of dwelling. When the apartment complex won't deal, maybe the owner of a townhouse will.

3. Use a Cosigner

Using a cosigner is a tricky proposition.

  • The property owner has to allow for someone to cosign.
  • The cosigner has to have okay credit.
  • The cosigner has to understand the responsibility involved.

However, a cosigner offers property managers a guarantee that they will receive their payments no matter what is going on.

4. Offer a Larger Deposit

As people say, money talks. Many property owners can look past bad credit if someone offers a larger initial deposit. Alternatively, offering to pay several months of the rent at one time can also sway a property owner that's indecisive. Not all property owners will accept such offers, but some will.

In some cases, the property owner may ask for more upfront to offset someone's bad credit. It's a proposition worth considering for those that have the means to pay that extra security deposit or fee.

5. Ask Past Landlords for Help

Letters of reference aren't always helpful, but sometimes they can come in handy. They do help to prove that despite bad credit, a person has still come up with their monthly payments and remained in good standing with the property owner.

This can also work with a letter of reference from some other professional. An employer or past employer can also write up such letters.

6. Check for Places that Don't Check Credit

Some property owners do not check credit. When searching for a place, apartment hunters may come across many listings that explicitly say they don't check credit.

Even for those that don't say anything about credit checks, potential renters can save a lot of time by simply contacting any that sound interesting, and blatantly asking if they run credit checks or not.

7. Stay Within Affordability

One mistake that many apartment hunters make is to look for apartments that are obviously outside of their means. It's understandable that someone would want a nice apartment in a nice area. They may even think that if push comes to shove, they can make up that monthly payment.

However, there is a better chance of getting the keys to an apartment for those that look at places they can easily afford. A good rent-to-income ratio will give a potential landlord a better look at what someone can and cannot afford.

Show and prove

Having a solid history of paychecks and rent payments proves that someone can handle future rent payments. Having a strong income shows that someone does have the means to make the payments. Those seeking a new apartment would do well to keep a full year of this kind of proof on hand.

8. Negotiate

Bad credit does not mean an apartment hunter cannot negotiate. This is especially true when dealing with independent landlords. People forget that a lease is a contract, and a contract isn't set in stone until it is signed.

There are several things someone could negotiate with a property owner that can improve their chances of moving in to the apartment they want, bad credit or not.

Move in date – For those willing to move in immediately, a property owner may not give as much thought to the credit check.

Trial or short lease – It is possible to suggest a month-to-month or short-term lease. The property owner may allow someone to stay in the apartment if they can pay for several months at one time. Landlords often want longer-term tenants, but they also want to keep their monthly payments coming in, so they may make an exception.

There are several points anybody can negotiate. If there isn't anything, it costs nothing to simply ask the property owner what's required to move in. The property owner may make some suggestions the renter can live with.

9. Be Honest

The most important tip for any apartment hunter is that they should always practice honesty. Signing on with a property owner represents a new relationship. A relationship that starts with falsehoods will end badly.

Bad credit can make finding a suitable apartment harder, but it doesn't make the process impossible. Start with credit, figure out budget, then start looking.

Submitted by Alice Bryant  on Thu, 08/20/2015 - 14:55

Starting or going back to school can be expensive — the average shopping expenditure associated with commencing studies at or returning to an educational institution averages $630 per student per school year. From school supplies to home/dorm work station expenses to computer- and software-related costs, students face expenditures that are often hard to avoid when it's time to start or return to school.

Therefore, it's important to squeeze the greatest financial savings out of your purchases that are possible. A lot of people don't associate saving money with purchasing, but if done the right way — particularly with credit cards — larger-than-expected savings are often possible.

Reward Programs

Many people may be aware of credit card reward programs, but did you know certain cards have bonus rewards for school supply purchases? For instance, some reward for office supply purchases, Amazon, Target, and more.

Sign-up Bonuses

If you were already planning on applying for a credit card that gives you cash back, why not choose one that will reward you for school purchases, as well? For instance, many cards offers hundreds of dollars cash back if you spend a certain amount within the introductory period of card ownership.

Other cards offer even greater bonuses, so before you rush to get a card, check to see who's got the best offer out there.

Price Matching

How frustrating is it to buy something and then see the price of that item fall in the weeks following your purchase or to find that it's being sold at a cheaper price in another store? It's true that many stores now allow you to bring the receipt back and be credited with the difference in price, but this can be a time-consuming chore involving a second trip back to the shop and research at other outlets. Sometimes the store needs proof in the form of a coupon, store advertisement or printout of an online offer, an additional hoop to jump through.

Fortunately, many credit cards now essentially perform some of these actions for you automatically and give you back the difference electronically.

Online Shopping

Many credit cards offer their own shopping portals that provide ways to save money from specific retailers and increase rewards and cash back when you use their cards to make purchases.

If you're going to be shopping online anyway, this can be a very cost-effective way to do it. In particular, check out the portals of Barclay's Upromise card, the Discover It card and the Chase Freedom card; research them thoroughly before you get one of their cards, so you know which brands and merchandise are associated with which portal.

By calculating the reward or cash back for purchases on these portals and comparing the resulting effective price on them to prices for the same items on other sites, you can see if you're getting a true bargain or if you're not really getting the best value for your money.

Balance Transfers

If you already have a balance on your credit card, spending more with it will only increase the amount you owe. You can cut this amount by doing a balance transfer to a card with a lower APR or to one that offers a zero-percent promotional rate.

A number of cards currently offer zero-percent APR on balance transfers, including the Chase Slate card, which offers not only zero percent on purchases, but also gives zero percent on balance transfers for the first 15 months you have it. The Slate card waives the balance transfer fee (normally three percent) for the first 60 days, which means you save money on the balance transfer fee, as well.

0% APR

If you don't have much money to purchase school supplies at the moment, but can't wait because school is starting soon, there are credit cards that offer a zero-percent APR on purchases for a limited time, which can give you time to pay for the items you bought without incurring interest charges. Be sure to pay off the balance before the promotional period ends! Both the Discover It and Discover It Miles cards fall into this category, offering a zero-percent APR for 12 months.

Submitted by Alice Bryant  on Mon, 08/10/2015 - 15:20

You can’t go to court over a bad credit score. You won’t go to jail over a bad credit score. But having a bad credit score limits you in many ways, so being in credit trouble might feel as bad as if you were in legal trouble.

Unfortunately, bad credit affects more than just your ability to get loans. Some businesses use credit scores to determine who they will hire and who they won’t hire. Interest rates and insurance rates are sometimes based on your credit score because these rates are based on the likelihood of your paying on time. In some states, insurance rates are higher for people with bad credit than they are for people with DUIs. Whether determining your insurance rate according to your credit rating is right or wrong, your credit rating has more impact on your life than you’d think.

Poor Credit Lenders

Many businesses will still loan you money even though you have bad credit. Some credit cards and car dealerships and rent-to-own stores will allow you to make purchases and owe them money. Interest rates are higher using these forms of credit, and payment times are shorter than usual credit payments. Also, beware of those who offer to help you rebuild your credit using their cards. If you are in financial trouble because you can’t afford to pay your credit card bills, having another credit card will just make the situation, and your credit score, worse.

Short-term, high-interest lenders who attract folks with bad credit scores can give your credit score a boost if you can afford to pay the payments. Unfortunately, the high-interest rates and a short period of the loan routinely make it necessary for the person receiving the loan to take out another loan to cover the loan they already have. The vicious cycle continues. More bad credit can be the result.

Living Up to and Beyond Your Means

Life happens. Unfortunately, many people live from month to month even if they have a good income coming in. Because a couple has enough credit, they use it to buy immediately all of the things they want instead of taking the time to pay for the niceties of life over a period. If life and jobs were secure, this rationale would work. But life and jobs are not secure. If someone becomes ill, loses their job or dies, they are not able to make their monthly payments on all their credit cards with only one income. Because credit is stretched to the limit, the couple may be making credit card payments rather than developing a savings account. So when disaster strikes, they are swallowed up in debt with no savings.

Credit Scams

Carefully read any mail or emails that appear to come from a reputable lender. Occasionally a scammer will get your contact information and try to get you to sign up with them.Read the fine print to determine whether or not the email is legitimate or not. Also, never change your account information from an email request. Always go to the company’s site to check your login and password information.

If a company asks for a fee up front to process your credit or asks you for a processing fee, they are trying to scam you. Asking for money to process an account before it is finalized is illegal. Also, check the company’s contact information out before you sign up with them. If anything looks unusual or shady, don’t sign up with them.

Don’t give any personal information out over the phone, online or through the mail. All information such as name, birth date, Social Security number and any financial account information is private and should not be given out.

Going Straight by Improving Your Credit Score

You don’t have to be poor to have bad credit. Many people who have a good income get into debt by living a lifestyle beyond their means. Some of the people with the fancy houses can’t afford to have furniture, or are in debt up to their necks. Their credit rating has become a serious issue because they are keeping up appearances rather than slowly getting what they want by making good financial decisions.

The best way to keep your credit score from going down is to live within a budget. Sit down and honestly look at your income. Balance your income and the amount of money you spend each month. Make any adjustments in your lifestyle necessary to make your budget work. Once you understand your budget, contact a reputable company for a credit score. Take a good look at the sources of your score to ensure that there are no errors on the credit report.

Check with your creditors. If you are already behind in payments, call them and see what can be done to help you get caught up. Many creditors are happy to work with you to get your payments caught up and improve you credit score.

If you are in debt, you didn’t get their overnight. You won’t get back out of debt overnight. Make a budget and stick to it. You can work and plan your way out of debt and into a high credit score.

Last updated on Nov 30th 12:07 am