These 8 Strategies Will Help You Pay Down Credit Card Debt When You Retire

Ah, retirement.

Lazy days in the hammock, bucket list trips to Europe, leisurely drives in your sports car.

Wait, you’ve spent more time jettisoning ideas than planning jet-setting excursions?

Despite your best savings efforts — and unexpected expenses — those idyllic retirement plans may have run into the stark reality that you didn’t end up with the nest egg you had planned on. In fact, you’re headed toward your golden years with credit card debt. Employee Benefit Research Institute

In 1992, 53.8% of families with the head of household ages 55 or older had debt. By 2016, that number had climbed to 68%.

Unfortunately, it’s a nationwide trend, as families just reaching retirement or those recently retired are more likely to have debt — and higher levels of it — than past generations, according to a study by the

Without your former income, you may be starting to worry about making the growing credit card payments on a fixed income, particularly when the average Social Security monthly benefit is $ 1,461.

Putting a dent — permanently — in credit card debt when you’re retired is possible, and we have seven ways to help pay off your debt so you can enjoy that hammock.

8 Ways to Help Pay Down Credit Card Debt in Retirement

Retirement offers unique opportunities and challenges when you’re paying off debt.

You may have new sources of income, like Social Security or a pension, and new expenses, like increased healthcare costs or fun stuff like travel.

So here are eight post-employment strategies that can help you pay down debt.

1. Make a Budget

Tackling credit card payment as you approach retirement starts by re-examining your budget.

Making changes to your lifestyle and using your free time to save money is a good place to start, according to Joseph Valenti, senior policy advisor with the AARP Public Policy Institute, in Washington, D.C.

“One thing we know from studies of retirement is that people have fewer set costs typically compared to when they were working,” he said. “If they have more time, maybe they will be preparing more meals at home.”

If you need help creating your budget, check out our step-by-step guide to budgeting or learn the basics in our Budgeting 101 Academy course.

Once you know where you stand financially, you can start looking for ways to cut the credit card balance.

2. Negotiate With Credit Card Companies

The best way to know where you stand is to look at the numbers — in this case, the interest rate on your cards. It’s easier to pay down a debt if you’re accumulating less interest on top of the original amount (learn more about compound interest in our Credit Cards 101 Academy course).

Asking your credit card company for a new rate is one option, particularly if you’re ready to commit to living credit card-free going forward, Valenti said.

“In some cases, even if you close that card, they will let you pay it down for little or no interest over a period of time,” Valenti said. “That’s assuming you don’t need the card again.”

Pro Tip

When you call the credit card company, the first person you talk to may not be able to help you, even if they think they can. Ask to speak with a manager who handles settlement arrangements.

Check out this post for more tips on negotiating credit card debt.

And if you’re too overwhelmed to deal with the creditors themselves, consider reaching out to a credit counselor, who can help you organize your accounts and may negotiate a lower interest rate for you.

3. Transfer Your Balance to a New Card

Loyalty isn’t necessarily rewarding. If you’ve had the same card for years, transferring your balance to a new card could give you a lower interest rate than you current provider can offer. Reap the most benefits by paying down as much debt as you can during the promotional period.

When you’re considering which card to go with, compare this information for all offers:

  1. Fees (typically at least $ 5 to $ 10 or 3% to 5% of the balance)
  2. Interest (look for 0%)
  3. Duration of the promotional APR (usually 12 to 18 months)
  4. Credit score requirements (generally good or excellent)
  5. Credit limits (make sure it’s more than your current balance)

Here’s what else to consider before transferring a balance.

4. Cut (Former) Work-Related Expenses

Still hanging on to that gym membership, even though you only signed up because it was close to your office?

By reviewing your monthly, periodic and annual budgets, you may discover work-related expenses that have become so habitual you’ve forgotten about them, according to Valenti, who gave transportation, clothing and cell phone expenses as examples.

Cancel subscriptions to professional associations and other automatic billings associated with work (an ink cartridge subscription, for instance) to avoid unwanted surprises at the end of the month. If you have trouble keeping up with recurring payments, try using a subscription tracking tool.

And if you still enjoy hitting the gym, cut costs by asking about senior discounts — AARP has many for its members.

5. Set Up Self-Imposed Limits

Before retirement, those little expenses that broke your budget one month may have been easier to cushion with your regular paycheck. And remembering them all may have been a little easier a few years ago.

To help you track the expenses and avoid unwanted surprises at the end of the month, Valenti suggested setting up alerts from your bank or credit card provider.

“It’s one thing to find out instantly through a text that you’ve reached a limit — even if it’s a self-imposed limit — as opposed to a statement that’s going to shock you at the end of a cycle,” Valenti said.

6. Ask for Professional (Financial) Help

If you’re overwhelmed by managing your day-to-day finances or fear forgetting to pay bills and sinking further in debt, consider hiring a daily money manager.

In addition to tracking bills, daily money managers can help you with balancing your checkbook, collecting tax documents, dealing with medical bills and even avoiding scams.

Pro Tip

Your bank must protect two months’ worth of Social Security benefits from a credit card collector’s garnishment. If your account has more than that, the bank can garnish or freeze the extra money.

Depending on where you live, a daily money manager may charge $ 75 to $ 150 an hour. However, the American Association of Daily Money Managers provides a list of state agencies that provide services to low-income and disabled seniors.  

7. Make Extra Money on Your Empty Nest

Now that the kids have moved out (hopefully), you’re stuck with that big, empty house.

One option for making money is to sell it and downsize to a smaller place, then use the profits to pay off credit card debt. But moving still requires an outlay of cash and can add additional stress as you’re adjusting to retired life.

If you’re seeking something a little less drastic, think about new ways to use your house — and its contents — to earn some cash today, advises Moira Somers, a wealth psychologist based in Winnipeg, Canada, and the author of “Advice That Sticks: How to Give Financial Advice That People Will Follow.”

“Look at the resources you have and say, ‘Could this turn into money somehow?’” she said. “One of the cool things about this period in our life is that there are sometimes ways we can make extra money that wouldn’t have been possible even 10 years ago — the whole AirBnb thing, for example.”

If you’re looking to make some money on your extra bedrooms, check out our post about how to become an Airbnb host.

And don’t forget about all those buried treasures in the attic. (Did you know that Urban Outfitters sells five-packs of random VHS tapes for $ 40? Yeah. That’s a thing.)

Somers notes taking a complete inventory of your assets — both physical and mental — can help you discover ways to pay down the debt you may not thought of before.

“Do that inventory not only of [your] job readiness skills and social network and what that might be able to help,” Somers said. “But also to look at your existing possessions and how might they be turned into either an income stream or a little bit of a cash infusion.”

8. Earn Extra Money by Working From Home    

When all else fails, there’s always work. But that doesn’t necessarily mean returning to the 9-to-5 grind.

Getting a work-from-home side gig in retirement provides extra money to pay off credit cards without the costs and hassle of your former commute to the office.

In addition to the income, a side job can help stave off the boredom — and resulting spending — that comes from suddenly having extra hours in the day.

Stick with trusted sites like our work-from-home jobs portal — we screen all listings using strict guidelines to help you avoid scammy employment offers.

And that should leave you plenty of time for your hammock.

Tiffany Wendeln Connors is a staff writer at The Penny Hoarder. Read her bio and other work here.

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

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Respeck On Her Name: Black Woman Lawyer Blasts Media Over Solely Giving Kim Kardashian Credit For Freeing 17 Inmates

Kim Kardashian West out and about in Paris

Source: WENN.com / WENN

The lawyer who Kim Kardashian worked alongside to spearhead the release of 17 prisoners is speaking out and asking for the media to give credit where it’s due.

For the last year, Kim Kardashian has received increasing attention for her role in criminal justice reform, but Houston based attorney Brittany K. Barnett of the Buried Alive Project, made sure to make it clear that she’s been advocating for this work for years, along with her partner MiAngel Cody.

Barnett posted a lengthy Facebook message on Tuesday after 17 men were released from life in federal prison over drug charges.

“The first and last time I will speak on it. Seriously, because the negativity from today is misdemeanor s*** and we still have lives to save. MiAngel Cody and I have BEEN doing this work for FREE,” she wrote.

“Ask any of our dozens of clients who are now free living their best lives. Both of us left six figure salary jobs and wiped out our own savings accounts to fund our work. We attempted to get grants from these large foundations shelling out MILLIONS of dollars to other organizations but would not look our way because they so-called don’t fund “direct services”. Our hands were full picking locks to human cages, we didn’t have time to participate in glorified begging from the nonprofit industrial complex only to be turned down.

But Barnett made it clear that she does not blame Kim for the media coverage, being that her name is destined to cause attention.

She also stated that Kim stepped in as a financial contributor after her and her partner were refused by different foundations.

“Kim has always been very clear in her role. It’s the media that spins it around – not Kim. We do not care how the media is portraying it – that’s what the media does. Who cares,” Barnett wrote. “We need Kim’s support and the support of anyone else who wants to join this fight. We love that she is using her platform to raise awareness. We ain’t trying to be famous, we trying to get our people free. Period.”

You can read Barnett’s full Facebook post here.

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Overwhelmed by Debt? Here’s What Happens If You Seek Credit Counseling

When you’re struggling with debt, it can be hard to determine the best method for getting rid of it. Snowball? Avalanche? Consolidation? Should you freeze your credit card in a block of ice, or cut it up and toss it in the trash?

If you’re afraid you can’t make your debt payments each month, or you feel like you’ll never get out of debt no matter how hard you try, it can be helpful to speak with a credit counselor. This trained individual can review your financial situation and make recommendations to improve it.

Credit counselors might help you organize your credit accounts, obtain a credit report or develop a budget. Depending on your situation, a credit counselor may even help you set up a plan to pay off your debt.

As an impartial third party, a qualified counselor can provide advice and tips based on your specific situation. Here’s how to decide whether you could benefit from working with one.

How Can I Find a Credit Counselor?

To find a reputable credit counselor, check out the Financial Counseling Organization of America or the National Foundation for Credit Counseling (NFCC). Each maintains a directory of member organizations — most of them nonprofits — that serve a variety of needs.   

Pro Tip

A legitimate organization will be happy to provide information about its services for free, without requiring you to disclose your financial situation.

The Consumer Financial Protection Bureau (CFPB) recommends that you ask potential debt counselors these questions:

  • What services do you offer?
  • How is credit counseling offered?
  • Do you offer free educational materials?
  • What are your fees?
  • What if I can’t afford to pay the fees?
  • Will I have a formal written agreement with you?
  • What are the counselors’ qualifications?
  • How are your employees paid?

As always, be sure to get everything in writing and read the fine print before signing up for any service. The CFPB recommends avoiding organizations that pressure you into a debt management plan before fully considering your financial situation.

Credit Counselor vs. Debt Counselor

If you’re searching for a credit counseling, you may encounter the term “debt counseling” — what’s the difference?

The short answer: Nothing. The terms are interchangeable.

Pro Tip

Credit counselors do not negotiate a reduction in the amount you owe to a creditor, but they may be able to help lower your monthly payments.

However

Don’t confuse “debt counseling” services with for-profit “debt settlement” or “debt relief” companies, which charge you a fee to arrange a settlement of your debts with creditors.

Some creditors won’t work with debt relief companies, who sometimes advise clients to stop making their regular payments so they can save up the money for a lump-sum payment.

Not keeping up with your regular payments can damage your credit, so working with debt settlement companies should be a last-resort option.

What Can I Expect When I Meet a Credit Counselor?

Your first meeting with a credit counselor, whether in person or on the phone, should last about an hour. Prepare for the meeting by gathering accurate and complete information about your finances.

After the meeting, the counselor will typically provide a written report with the details of your situation and recommendations.

This report won’t be packed with surprises. It will review what you discussed and the next steps, which you likely discussed as well.

What Does a Credit Counselor Do?

Even if a debt management plan isn’t right for you, a credit counselor may still be able to provide services to improve your finances.

A credit counselor can review your credit report and help you dispute errors. They can also guide you toward free educational resources to boost your financial know-how.

What’s a Debt Management Plan?

A woman uses a calculator, a notepad and her laptop to work on her finances.

A debt management plan rolls all your debts into one monthly payment to make it easier to manage.

If you choose to use one, your credit counselor’s organization will set up the plan and work with your creditors to make sure everyone gets paid on time.

Pro Tip

After you set up a debt management plan, the credit counselor will work with your creditors to stop them from pursuing collection efforts or charging late fees while you are on the plan.

Debt management plans usually don’t reduce your debt, but they may reduce your interest rates by as much as half or extend your payment timeline to make paying your debt more manageable.

How Much Does It Cost for Credit Counseling?

You can expect a setup fee of no more than $ 50 to participate in a debt management program and pay your debt through your credit counselor’s organization. Monthly fees are normal for debt management plans, but they also shouldn’t be more than $ 50.

Pro Tip

A credit counseling agency must disclose upfront whether it can provide services at a free or reduced rate, depending on your ability to pay.

Don’t plan to keep racking up debt, though — your lines of credit will be closed or suspended while you’re in a debt repayment plan.

Does Debt Counseling Hurt Your Credit Score?

Initiating a debt management plan could cause a dip in your credit score, because it indicates you’re struggling with your finances. But as you build a payment history through the plan, your score will likely improve.  

What Other Options Do I Have?

You don’t have to be seeking a debt management program or headed toward bankruptcy (debt counseling is required before filing Chapter 7 or Chapter 13 bankruptcy) to work with a credit counselor.

But before resorting to a for-profit debt settlement company, there are other alternatives to credit counseling.

Financial Adviser

If you can afford the typical hourly rate, a financial planner can design a blueprint to help you get out of debt. Financial planners won’t negotiate your balance or interest rates, but meeting with one won’t affect your credit score, either.

As a bonus, if you find a financial planner you like, you can continue to work with them after you’re out of debt and want to start strategizing for how to save for your future.

DIY

If you’re not sure whether you’re ready to talk to someone about your credit or debt concerns, you can take steps to try to improve your financial situation on your own.

You may be able to consolidate your debt or negotiate your credit interest rates. Or you may simply need a nudge to choose a debt payoff method — snowball versus avalanche, anyone? — and stick to the plan while you make steady progress.

Lisa Rowan is a former senior writer at The Penny Hoarder. Staff writer Tiffany Wendeln Connors contributed to this post.

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

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60% of People Who Try This Raise Their Credit Score Within 6 Months

Your credit score is important. The better your score, the better deal you’ll get on a mortgage, car loan or credit card. We’re talking big money here.

Even if you’re not buying a house anytime soon, a lousy credit score means you’ll get hit with a high security deposit whenever you rent a car or move into a new apartment.

To keep a closer eye on your credit, get your credit score and a “credit report card” for free from Credit Sesame. It breaks down exactly what’s on your credit report in layman’s terms, how it affects your score and how to address it.

The app makes it easy to manage your credit — so you can work on boosting your score.

In fact, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.

Can You Raise Your Credit Score by 100+ Points?

Does it sound too good to be true? We thought it might be, too — so we checked it out for ourselves.

Dana Sitar, an editor for The Penny Hoarder, found Credit Sesame in 2016, and by finally seeing what was going on with her credit, she has been able to raise her score 101 points — from 528 to 629.

We’ve talked to lots of others who have used the platform to better manage and raise their scores, too.

James Cooper knows all about having bad credit. As recently as 2017, his credit score was a lousy 524.

“I never had a credit card,” he says. “I had $ 6,000 worth of unpaid bills.”

Cooper raised his score by 277 points — from 524 to 801 — over the six months from June to November 2017.

Before coming across Credit Sesame, Jerry Morgan hadn’t bothered to check his credit score in, well, quite a while.

“Frankly, with the experiences we have gone through, I was embarrassed to even check my score,” he said.

Following recommendations from the service, he raised his score 120 points in six months.

Since signing up for Credit Sesame in January 2017, Elisabeth Nyang paid off a $ 17,500 pile of debt and raised her score from 495 to 663. That’s a 168-point jump.

By 2010, Melinda Smieja had racked up somewhere between $ 20,000 and $ 30,000 in debt on 11 credit cards after years of caring for her terminally ill daughter. Her credit score was down to 480 by the time she checked on Credit Sesame.

In 2016, for the first time, Smieja’s credit score hit 680, crossing the line of what lenders consider “good credit.” By late 2017, it was up to 764.

Secrets to Raise Your Credit Score

A woman checks her credit score on credit sesame

Once you sign up to get your free credit score and credit report card, Credit Sesame will give you personalized recommendations to better manage your credit and boost your score.

To get you started, here are a few of our favorite tips:

  1. Spot any errors.

    Did you know your credit score could be inaccurate? One out of five credit reports have an error, according to the Federal Trade Commission. On your credit report card, you should be able to spot any errors, then dispute the incorrect information and raise your credit score.

  2. Use less than 30% of your available credit.

    An important part of your credit score is how much of your available credit you’re using. Most experts suggest keeping it below 30%, but the lower, the better.

    You could call your credit card companies to ask for a high credit limit (then avoid spending more). Or, you can open a new credit card to raise your overall limit. Credit Sesame can suggest credit cards you’re most likely to qualify for, so you won’t waste your time with rejected applications.

  3. Stick old credit cards in the freezer.

    The length of your credit history accounts for 15% of your credit score, so closing old credit cards could actually hurt your score. Instead, when you’re ready to stop using an old card, freeze it, instead of cutting it up.

    Credit Sesame will show you the age of all of your credit accounts, so you can manage your credit age wisely.

The length of your credit history accounts for 15% of your credit score, so closing old credit cards could actually hurt your score. Instead, when you’re ready to stop using an old card, freeze it, instead of cutting it up.

Credit Sesame will show you the age of all of your credit accounts, so you can manage your credit age wisely.

Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

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

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Credit Unions vs. Banks: 8 Key Differences You Totally Need to Know About

Managing your finances involves a lot of big decisions: How should you invest your funds? How should you structure your budget? Where the heck should you even store your money?

Credit unions and banks are similar in that they offer the standard checking accounts, savings accounts, CDs (certificates of deposit) and money market accounts, and they typically offer mortgage, auto and small-business loans.

But while the financial products are similar, there are key differences in the way banks and credit unions are structured and the benefits they offer to members.

Credit Union vs. Bank: What’s the Difference?

Banks are for-profit organizations, which means they invest the money you entrust them with and the interest they charge on loans. They use that money to grow the company and pass along dividends to the owners.

Credit unions have a different ownership structure: They are nonprofit and member-owned, meaning dividends, though small, are passed along to every single member instead. Credit union members have voting power and can elect members to the board of directors to ensure they are represented in the credit union’s decisions.

Both credit unions and banks are typically insured through the U.S. government for up to $ 250,000 per deposit account — banks through the FDIC (Federal Deposit Insurance Corp.) and credit unions through the NCUSIF (National Credit Union Share Insurance Fund), which is a part of the NCUA (National Credit Union Administration).

Each type of financial institution has its benefits and drawbacks. Here’s how credit unions and banks stack up across eight essential categories:

1. Interest Rates

The biggest draw of credit unions is the higher interest rates they pay. Because credit unions are member-focused, they prioritize higher interest rates on checking accounts, savings accounts, CDs and money market accounts.

Banks, on the other hand — especially national banks — have high overhead and are profit-driven, so they pay lower interest rates on their bank accounts.

Winner: Credit unions

2. Fees

For the same reasons they can pay higher interest rates, credit unions can offer lower fees on their accounts than banks. In fact, many credit unions offer free checking accounts and free savings accounts, while many banks charge monthly maintenance fees to account holders.

Both banks and credit unions may also require minimum account balances, but banks are more likely to have higher overdraft fees. The higher fees at banks in combination with the lower interest rates can be a real prohibitor to financial growth.

Winner: Credit unions

3. Loans

Erica Chambers, right, and her daughter, Paisley Kinglade, 3, talk with banker Valentina Kurilchenko at Mount McKinley Bank in Fairbanks, Alaska.

Credit union members can also typically get lower loan rates on car loans, mortgage loans, personal loans and small-business loans than members of national banks.

Even better for those with low credit scores? Credit union officers are willing to sit down with you and work out a loan option that fits your unique credit picture. Banks, on the other hand, calculate risk based on credit scores alone and are more likely to reject applicants with low scores.

However, banks are more likely to offer credit cards, though these typically come with higher interest rates.

Winner: Credit unions

4. Rewards

So far, it may sound like credit unions are a no-brainer. But they do have their shortcomings, a major one of which is rewards. While credit unions can offer better interest rates on accounts, lower or no fees, and better loans, banks typically offer better rewards programs — an easy way to make money just by opening an account or buying groceries.

Bank credit cards, for example, are more likely to offer rewards points and cash back, while bank accounts often come with sign-up bonuses. In general, credit unions lack such options.

Winner: Banks

5. Physical Locations

Large banks have brick-and-mortar locations all across the U.S., while credit unions tend to be regional. If your family moves regularly, investing with a national bank can prevent you from having to open and close accounts at every move.

Because big banks have more locations, it is also more convenient to access your funds in person and via fee-free ATMs.

Pro Tip

Ask whether your credit union participates in a shared networks of ATMs. These allow members to deposit and withdraw money at other credit unions’ ATMs.

Winner: Banks

6. Customer Satisfaction

As nonprofit, community-based institutions, credit unions are generally more focused on providing a personalized, friendly customer experience.

Last year, credit union members reported higher satisfaction than bank members in the 2018 FIS Performance Against Customer Expectations (PACE) study. The most important aspect leading to satisfaction across all age groups was trust, a good indicator that the more personalized approach of credit unions may lead to superior customer trust and, as a result, satisfaction.

Small banks, it’s worth noting, generally receive the same customer satisfaction ratings as credit unions because of their more personal vibe and one-on-one interactions.

Winner: Credit unions

7. Technology

Generally speaking, larger banks have had the resources to lead the industry in digital transformation over the last decade. That means better websites and mobile apps, as well as advances in card technology (e.g., chips), mobile check deposit and mobile wallets. However, as time has progressed, credit unions have been inching toward a more level playing field with site redesigns and app updates.

Pro Tip

If you’re concerned about the security of mobile banking, find a bank or credit union that can offer two-factor authentication on all online financial services and products.

Winner: Banks

8. Ease of Joining

Banks are eager to have you open an account with them because you represent a source of revenue. Credit unions can be a little more challenging to join, because membership is limited to those within the “field of membership.”

Typically, your ways into a credit union’s field of membership are through your employer, your place of worship, your physical location or your membership in a specific organization. Many credit unions will also let you join if a family member meets the criteria or if you make a small charitable donation.

Winner: Banks

Summary: Credit Unions vs. Banks

Criteria Credit Unions Banks
Interest rates Higher interest rates Lower interest rates
Fees Lower fees Higher fees
Loans Better loan rates More expensive loan rates
Rewards Typically do not offer rewards Frequently offer rewards
Physical locations Typically regional, meaning fewer locations and fewer ATMs, though more may be available through shared networks Big banks offer locations all across the country with larger ATM networks
Customer satisfaction Superior customer service with a desire to help Can feel colder at big banks, but small banks create a welcoming environment
Technology Behind, but catching up Advanced
Ease of joining Involved; must meet specific criteria Simple

Credit Union or Bank: How to Choose?

Grow Financial Federal Credit Union is pictured in Tampa , Fla.

If you’re keeping score, credit unions and banks are tied 4-4 across the eight factors we considered above.

So how do you know if you should go with a bank or a credit union?

1. Determine what’s most important to you. Do you want to earn a little more from annual dividends and higher interest rates, or do you prefer advanced technology and convenience from your financial institution?

2. Look for the very best of both options. The pros and cons in this article are very general. Individual banks and credit unions may diverge from the norm. You might find a bank with no fees and great loan options, or a credit union that makes it incredibly easy to join and offers a rewards-based credit card. Thoroughly research several banks and credit unions before making a decision.

3. Don’t forget online banking. Managing your finances has gone completely digital. Online banks often offer much higher interest rates than banks or credit unions. Include these in your search.

4. Open multiple accounts. Nothing is stopping you from opening checking and savings accounts with a credit union and applying for a credit card from a big bank. Diversifying your finances can make things more challenging, but it can also get you the very best rates, rewards and features.

Timothy Moore is a market research editor and freelance writer covering topics on personal finance, careers, education, pet care, travel and automobiles. He has worked in the field since 2012 and has been featured on sites like The Penny Hoarder, Debt.com, Ladders, Glassdoor and The News Wheel.

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

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Dear Penny: Should I Pay Off My Credit Card if That Means Saving Less?

Dear J.,

A new depressing stat seems to surface every day about how we’re all one check-engine light or root canal away from financial implosion. And with the scary numbers, the message is always the same: Just. Keep. Saving.

So I get why you might feel pressure to prioritize saving above any other financial goal.

But here’s what we often neglect to talk about when it comes to saving money: It’s entirely possible to save too much of it. If you’re charging basic needs like groceries to a credit card in order to save, it’s costing you money in the long term.

To understand why, let’s start with your last question: Is there a benefit to carrying a balance? In short, no. When you carry a balance beyond an introductory no-interest period, your credit card company is the only one that benefits.

There is a claim in credit card land that carrying a small balance from month to month boosts your FICO scores. But this is pure myth. One of the best things you can do for your credit score is to pay off your balance in full each month.

So while there’s no benefit to carrying a balance, there’s a high cost. Average credit card interest rates are more than 17%. By comparison, the average annual return for the S&P 500 when adjusted for inflation is just 7%. And savings accounts? They earn a pitiful 0.09% in interest on average nationwide.

That means every dollar you put on a credit card is costing you more than you’d earn if you invested it or saved it.

But the good news is that your commitment to saving shows that overall, you’ve got your financial act together. The fact that you’re saving so much suggests that you have room in your budget to cover your expenses and have money left over to save.

You don’t need to pay off your balance overnight, but your top priority should be to keep it from creeping any higher.

Start by figuring out exactly how much you’re earning, spending and saving each month. Since your combined spending and saving will probably be higher than your earnings, you’ll have to cut back until they’re equal.

Assuming you’re not spending money on a twice-daily UberEats habit, Tinder Gold, a Dog Lady subscription box or any similarly frivolous vice, you might need to cut back on saving, at least temporarily. And that’s OK.

Keep contributing to your 401(k) to get your company’s match. That’s a no-brainer, because it’s free money. But you might want to limit your contribution to that amount for now.

If you have a healthy emergency fund — three to six months of living expenses — consider using the amount you typically put in savings to pay off your balance. Or you could scale back on your Roth IRA contribution for now.

Remember: This is only temporary. But getting your credit card use in check now is one of the best investments you can make in your financial future.

Have a tricky money question? Write to Dear Penny and you might see your question answered in an upcoming column.

Robin Hartill is a senior editor at The Penny Hoarder and the voice behind Dear Penny.

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

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This Father of 5 Needs More Space. Here’s How He’s Fixing His Bad Credit

This California couple is running out of room for their growing family.

Matsimela McMorris and his wife, Stacey Reid, just welcomed their fifth child into the world — a baby daughter. That’s making their two-bedroom apartment even more crowded. And their Mazda5 minivan is a six-seater, which is a problem for a family of seven.

McMorris, 33, works as a school bus driver in Anaheim. Reid works at Dollar Tree. They’re on a tight budget, but they’ve got financial goals.

They want to buy a home and a used Dodge Durango, a seven-seater. To make that happen, McMorris knows he’ll have to work on his credit.

A Solution for Poor Credit

Until recently, his credit score was pretty low. On a scale of 300 to 850, it was 461. Unless he raised it, he’d end up paying sky-high interest rates on an auto loan or a mortgage.

That’s why he’s using Credit Sesame, a free credit-monitoring app that helps people to fix their own credit. 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.

Right off the bat, the app sent McMorris a free “credit report card,” along with personalized recommendations for better managing his credit.

One suggestion made a big difference right away. McMorris hadn’t been able to get a credit card because his credit was so poor.

“Discover had turned me down,” he recalled.

This was a big problem for him because, to improve your credit, you must be able to show that you can wisely handle the credit you already have.

Credit Sesame recommended an option he hadn’t thought of before. He applied for a secured credit card — a card backed by his own cash.

He put a small deposit down as collateral, and Capital One sent him a credit card with a limit that was the same amount as his deposit. The bank essentially used his deposit as a line of credit.

This is a good way to rebuild if you have damaged credit. The secured credit card started reporting his payments and balances to credit bureaus.

After only a month or two, he noticed that his credit score had gone up by 52 points.

“Then it became an addiction,” McMorris recalled. “I was like, ‘What else can I do to raise my credit?’ It was kind of like a video game.”

Targeting Those Problem Areas

The challenge was on. Next on his target list were some old, unpaid bills that were hanging around on his credit report, darkening up the place like unpleasant memories.

He took care of an old Sprint cell phone bill. There was also an ambulance bill for thousands of dollars, dating from the time he broke his leg while chasing a thief through a commuter train station.

“Some kid just snatched my phone out of my hand,” he says. “I was chasing him, and he jumped down some stairs. I thought, ‘I’m athletic; I can do the same thing.’”

He couldn’t really pay the ambulance bill, so he reached out to the credit bureau.

“It was so old, they just deleted it,” he says.

Boosting His Credit Score 163 Points

By doing all these things, McMorris was able to raise his credit score by 163 points — all the way to 624. He did it in just a few months, he says. He’s still got a ways to go before he gets to where he wants to be financially, but he’s on his way.

His favorite thing about using Credit Sesame is its personalization. Based on his situation, it suggests concrete steps he can take to manage his credit better.

These are suggestions that apply directly to his life.

He and his wife are still eyeing that Dodge Durango, and they’re still hoping to buy a home at some point — even if they have to leave high-priced California to do it. He’s got to get his family of seven out of their two-bedroom apartment.

“It’s a little cramped,” says McMorris, with a rueful chuckle. “We’ve definitely got to get something bigger.”

That’s why he’s still checking Credit Sesame regularly. It updates his credit report once a month.

“It’s definitely a helpful tool to have,” he said.

If your credit isn’t as good as you’d like, check out Credit Sesame for yourself to see what you could do differently.

Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. His credit could be better, and he’s working on it.

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

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Here’s How to Manage Your Credit Like a Millionaire (Even If You Live on Ramen)

You dream big. In fact, you imagine dining on caviar while relaxing on a yacht.

Nevermind that you are actually chowing down on some ramen on your futon. It’s all a state of mind, right?

Yes and no. Take that state of mind just a bit further and start practicing what you dream. You know that if you want to make it big, you need to manage your credit score, so why not start do it like a millionaire?

Thinking like a millionaire when it comes to your credit score could help you get closer to living your caviar dreams. Here are a few tips:

1. Pay Your Credit Cards On Time and Get Paid Back

Paying your credit card bills in full each month is an absolute must if you want to boost your credit score. In a perfect world, you’ll pay off your balance every one or two weeks to keep your utilization low (more on that below).

So why even use them?

If you get the right credit card, it will pay you back. Look for credit cards that have no annual fee but offer rewards like cash back, travel points or some other perk.

If you’re not sure which credit card is right for you, Credit Sesame can help. Credit Sesame, a personal credit-score management service, can pair you up with the best credit cards to keep your credit score healthy.

Using credit cards helps you build a credit history. Paying them off boosts your payment history. By choosing the right card, you could also be flying first class or treating yourself to a bottle of bubbly with your rewards.

Now that’s living rich.

2. Have More Credit Than You Use

Can you imagine the credit limit on a millionaire’s card?

Now, do you think they use all of that? To keep your credit score in great shape, keep your credit utilization below 30%. That means, however much credit you have available through credit cards or lines of credit, only use 30% or less.

To find out what your credit utilization is, log into Credit Sesame. It breaks your credit score down into separate categories and grades them so you can see exactly what needs attention. If your credit utilization gets an “A,” great! If not, Credit Sesame will offer suggestions to better manage your credit.

Even if you’ve let your credit card debt accumulate, take a deep breath. Using Credit Sesame helped this mom pay off nine credit cards and climb out of debt.

If you’ve been good and have been paying your credit cards on time, consider asking the credit card company to increase your spending limit. Here’s the millionaire trick: When you get more credit, don’t use it.

True, you won’t be able to buy a new boat with your card and keep your credit utilization under the desired threshold, but you could probably buy a pretty nifty boat hat. You know, dress for success.

3. Let Your Credit Age Like a Fine Wine

Did you know credit age is a factor in your credit score? Credit Sesame says creditors and lenders like to see an average account age of more than five years.

So, if you are closing out those store cards you haven’t used in a while, you’re not doing yourself any favors. Let them be. In fact, it can be a good idea to charge something on them at least once or twice a year, just to keep the account active and in good standing.

So what happens if you need to get a new loan or credit card? It could bring your score down temporarily because it’s brand new, but don’t fret. Just keep a few older accounts open to keep that average age where you want it. Just one credit card that’s 15 years old can help offset the effect of new credit.

Credit age, while important, only accounts for 15% of your score, so be mindful of it, but don’t lose sleep over it.

4. Diversify Your Credit Like It’s a Millionaire’s Portfolio

You always hear how important it is for an investor to diversify their portfolio. Why? Because if you have millions of dollars in investments, you don’t want all of your eggs in one basket.

Another sneaky part of your credit score is your credit mix. This is based on the types of credit and debt you carry, like car loans, mortgage, credit cards and student loans. Having a diverse credit history shows lenders you have the ability to handle different types of accounts, and that helps boost your score.

Should you go buy a house on a whim like a movie star just to get a mortgage into the mix? Of course not.

But if you’re looking at a home remodel of some type or other expense, consider getting a loan rather than putting it on a credit card. For example, Jerry Morgan told us Credit Sesame helped him realize a car loan could improve his score.

Boom. You’re diversified and rocking your credit score like a big-wig.

5. Be Smart When Shopping Around

Do you think millionaires just buy whatever they want without looking at the cost? A few, maybe, but most of them didn’t get to be millionaires by being frivolous with their money.

And neither should you. If you’re thinking about buying a car or a home, shop around to see who will give you the best interest rate. A few percentage points can mean a lot of money over the course of a loan. Most online marketplaces can give you quotes without impacting your credit score.

To avoid applications and inquiries that could hurt your score, use Credit Sesame to check out your personalized buying power. This shows you what credit cards, loans or mortgage amounts you will likely qualify for before you apply.

Give Your Credit Score the Millionaire Treatment

You don’t have to rake in millions of dollars to have a credit score that shines like the hood ornament on a Mercedes. Just give it a little love and attention and it could actually help you get a little bit closer to that millionaire life.

By managing your credit and boosting your score from good to excellent, you can open opportunities you wouldn’t otherwise have. You can get that great mortgage rate. You can get an auto loan rather than buying a beater off Craigslist.

To see where you credit score is right now and to learn how to manage it, sign up for Credit Sesame. It’s free, it’s easy, and it’s the coach you need to manage your credit like than a millionaire.

Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.

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

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These 5 Factors Are What Actually Matters When It Comes to Your Credit

It’s impossible to overstate the impact your credit score has on your life.

It determines everything from whether you can buy a home or rent an apartment to your credit card interest rates and how much you’ll pay for insurance.

Your credit score is basically just a three-digit number that measures how likely you are to repay your debt. Credit scores range from 300 to 850 and are based on information the three major credit bureaus — Equifax, Experian and TransUnion — have on file for you.

For simplicity’s sake, we’re going to talk about your credit score in the singular, but you actually have three credit scores — one from each of the credit bureaus.

A high score tells lenders that you’ve managed your debt well in the past, while a low credit score indicates that you have a poor history (or not much history) of managing credit.

If you want to build good credit, you need to understand the five credit factors that are used to calculate your score.

The 5 Credit Factors That Matter (and 5 Things That Don’t)

FICO, the data analytics company that calculates most credit scores, has always been hush-hush about the exact formula it uses. But it does tell us that the following five credit factors determine your score:

  • Payment history for loans and lines of credit: 35%
  • Credit utilization (i.e., how much of your total available credit you’re using): 30%
  • Length of credit history: 15%
  • Credit mix: 10%
  • New credit and hard inquiries: 10%

VantageScore, a newer credit scoring system, considers similar factors in calculating your score but weights them differently.

Here are some things that do not factor into your credit score:

  • Payments for expenses like rent, utilities or phone bills. However, missing payments could kill your credit if you wind up with an account in collections or a civil judgement against you.
  • How much money you have. But you are more likely to get approved for a loan if you have more cash on hand, because you will be able to make a bigger down payment.
  • Your age, although because the length of your credit history affects your score, you may find that your score increases as you get older.
  • Your income isn’t used to determine your credit score, though being able to prove steady income can help you obtain credit.
  • Checking your own credit. When you check your credit report, it counts as a “soft” inquiry, which doesn’t affect your credit score.

But let’s delve into the five credit factors that actually do matter.

1. Your Payment History: 35%

If you’re looking to improve your credit score, the single most important thing you can do is make on-time payments toward your credit cards and loans. That’s because your payment history accounts for 35% of your FICO score, making it the most important of the five credit factors.

When you make your debt payments, creditors report those payments to the credit bureaus, and you gradually build a good payment history. Eventually, those payments will help to boost your score.

The quickest way to negatively impact your credit score is to miss a payment.

If you’re more than 30 days late on a payment, your creditor will probably notify the bureaus, which will cause your credit score to drop. If your account goes into collections — which typically happens when your payment is 90 days or more past due — the negative impact to your score is even worse.

Late payments and collections stay on your credit reports for up to seven years, though the impact on your score lessens with time.

How to improve: If you have trouble remembering to pay bills on time, set up automatic bill pay for at least the minimum amount due for all of your debt payments.

Also, get copies of your credit reports (we’ll explain how later) to look for errors. If your reports contain an account in collections that doesn’t belong to you or that’s past the statute of limitations, having the negative information about your payment history removed could improve your credit score.

And if you know you’re not going to be able to make a payment, you need to talk to your creditors — ideally before you miss a payment, but at the very least before the account is sent to collections. They may be able to put you on a payment plan you can afford or change the due date for your bills.

2. Your Credit Utilization Ratio: 30%

Money falls on children's building blocks.

When it comes to credit factors that actually affect your score, what matters isn’t the total amount of debt you have — it’s the percentage of your available credit that you’re using, also known as your credit utilization ratio. It’s the second most important credit factor, determining 30% of your score.

Here’s an example: Suppose your credit card limits add up to $ 10,000. Your total balances amount to $ 3,500. Your credit utilization ratio is 35%.

The lower your credit utilization ratio, the better. A utilization ratio that’s too high tells lenders that you’re overly dependent on credit. While most experts recommend keeping utilization below 30%, the actual number you should be shooting for is zero. (No, don’t believe the credit myth that carrying a balance from month to month helps your score.)

How to improve: If you need to lower your credit utilization, keep paying down your debt without adding to your balance. Aim to get to the point where you can pay off your balance in full each month.

You can also improve your credit utilization by getting more credit. If your limit increases but your balance stays the same, your credit utilization ratio goes down.

Try asking for limit increases on your existing accounts. As you’re about to learn, the average age of credit and new credit are both factors that affect your score.

3. The Length of Your Credit History: 15%

Creditors like to see that you have experience managing credit, which is why the age of your credit matters. But if you’re new to credit, don’t get too hung up on age; it only makes up 15% of your overall score.

Both the average age of your overall credit and the age of your oldest account will affect your credit score. That means closing an older account or getting a new credit card could have a negative impact.

Your score could also drop if you pay off debt. For example, if you pay off the car loan that was one of your older accounts, that account will be closed. Even though you’ve done something good for your finances, your score could drop in the short term.

How to improve: There are no shortcuts here. Building your length of credit history takes time.

Think carefully before you close out a card you’ve had for a long time. But if you’re paying high fees or a card is causing you to overspend, don’t worry too much about the impact to your length of credit history.

The negative impact of closing an account is more likely to come from your increased credit utilization ratio, and even then, your score will probably bounce back in a few months, as long as your debt situation doesn’t change significantly.

4. New Credit and Hard Inquiries: 10%

Opening multiple accounts within a short period of time is bad for your credit, because it indicates a high risk of default.

FICO considers the number of new accounts that have been opened within the past six to 12 months, but that only accounts for 10% of your score.

Also included in this category is the number of hard inquiries, which occur when you apply for credit. What’s important to know is that if you apply for the same type of credit within 30 days — for instance, when you’re shopping around with multiple lenders for a mortgage — FICO treats it as a single hard inquiry, so the effect on your credit score will be minimal.

How to improve: Avoid applying for lots of new accounts within a few months, but don’t be afraid of shopping around for a specific type of loan or credit.

And, as we mentioned earlier, if you’re looking to lower your credit utilization ratio, consider asking for increases on your current lines of credit instead of applying for new lines of credit.

5. Credit Mix: 10%

Having a diverse mix of open accounts — credit cards, a line of credit and a mortgage, for example — is good for your credit. But note that the impact is small: It determines just 10% of your score.

How to improve: Don’t put too much emphasis on this credit factor. It’s not worth taking out a loan or going deeper into debt just to have a diverse credit mix.

3 Ways to Check Your Credit

Now that you know about the five credit factors and how much each one matters, it’s time to check your credit. Here are three places you can do so.

AnnualCreditReport.com

You’re entitled to check your credit report for free with each of the three credit bureaus once every 12 months. To do so, visit AnnualCreditReport.com.

While your actual credit scores aren’t included on the reports, you do see all the information that’s used to calculate your credit score. If you find errors, you can dispute them with the credit bureaus.

Your Bank, Credit Union or Credit Card Company

Many let you access at least one of your FICO scores for free, and some even offer free monitoring services.

Apps

Some apps like Credit Sesame will let you check your credit score for free, though they often use the VantageScore rather than your FICO scores.

Still, these apps are helpful in estimating your FICO score and monitoring changes to your reports.

Robin Hartill is a senior editor at The Penny Hoarder.

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

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Payment History is the Biggest Part of Your Credit Score: Here’s How to Fix It

It happens to the best of us.

Even though you’ve always paid your bills on time, the date slipped past you a few months ago and you just forgot. Or maybe money was tight and you had to choose which bills to take care of and which to put off until your next paycheck.

Now you’ve received a notification that your credit score has dropped.

That’s because missed payments show up on your credit report payment history: A long-term  account of your behavior when it comes to making payments on time for credit items like credit cards, auto loans and mortgages.

Your payment history makes up 35% of your entire credit score.

It’s hard to know what to do in that situation, and when you’re stuck between guilt and anxiety, it’s even harder to figure out how it’ll affect your future.

Can you fix your credit? How long does the missed payment stay on your file?

If you’re struggling with questions like these, or if you just want to know more about what determines your credit, read on.

How Does Payment History Affect Your Credit Score?

Your credit score will be important if you ever want to buy a home, take out a loan for unexpected expenses, or even if you just want to buy a new car.

Your credit score is a way to measure your ability to manage credit, which in general means any long- or short-term loans.

When you look into getting a new loan (like a new credit card, a mortgage or an automobile loan), the lender you approach will use your score to assess things like how much to give you and how much interest to charge.

Your credit score is a three-digit number that usually ranges from 300 to 850. A score between 300 and 550 is considered bad, while a score above 700 is considered good.

But how does payment history factor into your score compared to other influences? Let’s take a look at how your credit score is calculated:

Your Credit Mix (10%)

Are the credit products you manage from a broad range of different kinds of credit? If not, it’s hard to determine whether or not you’ll be able to manage a new credit product. This could lower your score.

Any New Credit You’ve Opened (10%)

Have you recently gotten a new credit product? If so, you could be less suitable for an additional new credit product. This could lower your score.

The Length of Your Credit History (15%)

Are you a new credit customer? Without a long history, it’s hard to determine if you’re creditworthy. This could lower your score.

Your Amounts Owed (30%)

Do you carry high balances on your credit products? If so, a new loan might make you more at risk for missing payments on all of them. This could lower your score.

Your Payment History (35%)

Have you typically made your payments on time? If not, this could lower your score.

As you can see, the average credit score calculation weighs your payment history at around a whopping 35% of your score, even more than how much money you already owe. That’s because your credit score is meant to demonstrate that you can make payments regularly, not necessarily that you have too much debt.

The bottom line is that the single most important thing you can do to keep your credit score in good condition is to pay your bills. Put simply, if you miss payments, your score could decline.

But that’s only part of the story.

What Makes Up Your Payment History?

A closeup of invoices and bills sit next to the corner of a calculator.

First, it’s important to remember that your payment history is just that — a history. Due to the way it’s reported to the credit bureaus, it’s impossible for the information to be immediately up to date. Instead, it can take between 30 and 60 days for any changes to take effect.

That’s why people can often be frustrated when their credit score continues to decrease even though they’re caught up on their payments.

At the same time, it’s a history that reaches far back into the past. There’s an urban legend that if you swallow your gum, it can stay in your system for seven years.

Think of late payments as swallowed gum: Your credit history will have records of late payments up to seven years after they first appear on your file.

(That rumor about gum is false, incidentally. Swallow away!)

Second, to understand what goes into your payment history, you need to know the different kinds of credit available to you. Any of these has the potential to impact your score.

(FYI: The reason it’s not guaranteed that each source of credit will impact your score is that every lender has different policies about reporting to the credit bureaus. It’s always a good idea to assume that any product you have from the list below will affect your payment history.)

Credit Cards

Every credit card you own will affect your payment history, which is why it’s so important to stay on top of your billing cycle and make sure you’re making your payments on time.

Retail Accounts

Whether or not you sign up for a store credit card, if you have a payment plan with a retailer, it will likely affect your payment history.

Unfortunately, this is also the kind of account where just having one can be a negative impact on your credit score, even if you’ve already paid your balance in full.

Note that this doesn’t apply to layaway plans where, chances are, you don’t have access to what you’re looking to buy yet, and you’re paying installments in cash.

Automobile Loans

It doesn’t matter if you opt for purchase financing or for a lease, in this case. Both operate in the same way when it comes to your credit, acting as an installment loan. Any late payments will affect your history.

Mortgage or Home Loan

Since a home loan will probably be the largest balance you will ever carry, it’s important that you make payments regularly, not just so your payment history reflects your hard work, but also so you keep up with your financial goals.

Finally, a few other major flags can show up on your payment history that go above and beyond late payments. These are serious issues that you’ve experienced in the past and are known as derogatory records.

Bankruptcy

Filing for bankruptcy is an awful experience in itself. It can bring up a host of emotional issues and have financial effects that last for years to come — including your credit payment history.

If you’ve filed for bankruptcy, it can take between seven and 10 years before it is removed from your records, depending on what kind of bankruptcy you’ve declared (Chapter 13 bankruptcy, in which you repay a portion of your debt vs. Chapter 7 bankruptcy, in which you don’t repay anything).

Not only does a bankruptcy stay on your file, but it has a substantial impact on your score. In fact, after filing bankruptcy, most people will have a credit score below 550. That might not seem so devastating in light of the fact that the lowest scores is 300, but it’s well within the “bad” category of credit.

Collections

If you’ve missed several payments in a row, your lender can submit your account to a collection agency. This can actually open up a new listing on your payment history, which will already be in arrears and negatively affect your credit. Worse yet, a derogatory collections flag can stay on your file for seven years.

How Late is Too Late?

A parking meter shows that time has expired.

Now that you know what kinds of accounts can show up on your payment history, you’re probably wondering what it takes for them to start negatively impacting your credit.

The short answer is that any late payment at all is bad news for you, but only a payment later than 30 days is bad news for your credit score.

That’s because the credit bureaus aren’t looking to punish people for the milder scenarios outlined at the beginning of this article.

Missing a payment deadline by a day or two shouldn’t affect your score, but the longer you let it go, the more that effect will build up.

To help understand how that works, you can look at the way lenders report to credit bureaus in the first place. Think of it as a system of “levelling up” where the higher your level is, the worse off you are.

You start in good standing at level 1.

If you miss a payment deadline (1-30 days late), you technically “level up” from 1 to 2, even though your lender won’t report your payment as late.

If you miss a second payment deadline (31-60 days late), you “level up from 2 to 3,” and so on.

Since your payment history is reported monthly, that means if you end up 90 days late on a payment, you don’t just have a 4 on your history: You can have a 1 from the first month, a 2 from the second month, a 3 from the third month and a 4 from the last month.

That’s made worse by the fact that even a 30-day late payment can lower your credit score by up to 100 points.

Can a Late Payment Be “Fixed”?

The good news is…sometimes.

In general, you have three ways to have negative payment information removed from your payment history. The bad news is that the quickest ones are only useful in specific circumstances.

Write a Goodwill Letter

As I said above, the credit bureaus truly aren’t looking to punish people for making little mistakes.

If you have good credit and your payment history reflects that you have always made your payments on time, but you’ve recently made a mistake that’s caused a 30+ day late flag on your file, you might have a case for getting it removed.

To do it, you can write a goodwill letter to the creditor in which you take responsibility for your mistake but let them know of circumstances that caused you to miss your payments.

Dispute an Error

The other situation in which you have a chance of getting a flag removed is if it shouldn’t be on your file in the first place. It happens.

No system is perfect, and sometimes your payment status is reported to the credit bureau incorrectly.

In this case, you should have proof that you made your payment on time, and reach out to your creditor to have the report changed on your file. It can take persistence, unfortunately, but with evidence, your chances are good.

But You May Have to Wait it Out

Sorry. In every other circumstance, the only way to clear negative reports on your payment history is to wait.

On the plus side, even though it takes seven years to rid yourself of a late payment, the older a flag like that is on your file, the less it will typically affect your score.

This is why it’s so important to actively maintain your credit: Prevention is the best defense.

What’s the Best Way to Prevent Missing Payments?

It can sometimes be difficult to keep up with your bills. Thankfully, in today’s technology-focused future, there are a lot of options available that can help make it easier.

Consolidate Your Due Dates

If you have multiple credit products, chances are you also have multiple due dates. That can get confusing, and while marking them on a calendar or setting a reminder does work, you can also change your due dates to suit your schedule.

Why not set all of your bills to be due on the day following payday, or on the first of the month?

Use Less Credit

OK, this one is cheating – but it makes sense. Since your closed credit accounts still positively affect your credit score, if you pay them off and start paying cash for more things, you can keep your score at its highest.

It might not be realistic for everyone, but it’s an option if you know you’re going to be looking to take out a major loan in the future and need a high credit score to get the best interest rate.

Set Up Auto Pay

For those with a consistent income, this is a godsend. If you’ve struggled to remember to pay your bills in the past, have your financial institution set up automatic bill payments before your credit payments are due.

Keep in mind, though, that this can train you into bad behaviour. If you’ve relied on auto pay for a long time and eventually get a credit product that doesn’t have the option, you could be more likely to miss payments because it’s simply not something you think about anymore.

Check Your Credit

Remember how I said that creditors sometimes make mistakes? The best way to hold them accountable is by knowing your own credit.

By law in the U.S., you’re entitled to a free credit report from each of the three major credit bureaus every 12 months. That means that you could get one every three months to stay on top of your payment history.

Curtis Westman is a professional writer who judges the merit of each day by scoring it a three digit number between 350 and 850.

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

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Bad Credit? No Problem: 5 Ways You Can Still Buy a Home

Sometimes, it can feel like the deck is stacked against you. You’ve been told you have “bad credit” and that means you’re having trouble getting a traditional mortgage loan.

But wouldn’t getting off the rent cycle treadmill be a first step to rebuilding your finances?

What’s worse is that bad or poor credit could mean so many things: a low credit score, a short credit history, a recent job change and so on. Even open credit report disputes can make a mortgage lender say no — I once had to pay an incorrect medical bill just to get a mortgage.

That was as irritating as it was costly, but at least it could be fixed fairly fast. The bad news is that when it comes to being flagged as having “bad credit” — even just having a credit score below 640 — several of the causes can’t be fixed without potentially waiting years for your score to rise.

Why Bad Credit Is Such an Issue for Getting a Mortgage

First of all, it’s important to know what constitutes “good” and “bad” credit. When lenders query the credit bureaus (like Equifax, TransUnion or Experian), they’re given a full credit report made up of details like your payment history, your total debt load, how much unused credit you have, and more.

All of those things work together to calculate your credit score, which is an estimate of how likely you are to repay any new loan on time. If your score is low, you’re considered high risk.

Remember that lenders are in the business of making money, and someone who defaults on a loan is a major issue for them. When it comes to something like a mortgage, when you’re borrowing hundreds of thousands of dollars, a high risk borrower can mean even bigger trouble.

The good news is that in 2019, there are still many ways to buy a home with bad credit.

How to Buy a House with Bad Credit

Some might seem like common sense, but remember that even simple solutions can have major benefits! Without further ado, here are 5 options open to the home-buyer with less-than-optimal credit.

1. Save for a Larger Down Payment

Sometimes your credit is only part of the problem. What can make it even harder are the debt-to-income ratio rules.

Lenders want to see you using less than 43% of your income for all debt repayment. That includes your credit card debt and any other debts you might be carrying, so it helps to pay those off first. But what if your mortgage payment alone is still above the 43% mark?

A simple solution is to start saving.

With a larger down payment, you’ll need to borrow less, which lowers your loan payments, and can give lenders more reason to look favorably on your loan.

A good place to aim for is a down payment that’s at least 20% of the purchase price of the home.  Not only will this give you a better chance of getting a mortgage, but with that loan-to-value ratio, you can also avoid private mortgage insurance (PMI), further lowering your payments.

Family stands in front of house they purchased.

2. Borrow Privately

This is, admittedly, a tough situation to think about, but if you’re desperate to move into a place of your own, it makes sense.

The people who know you best would obviously know better than a bank if you’re a good credit risk — and they may be more forgiving of an occasional late payment.

They also won’t charge you loan fees and can be more flexible about terms.

And the advantages of borrowing from family for a home go both ways. Parents or siblings might appreciate making a decent return on their money compared to what’s available from savings accounts.

Of course, that’s only if you’re extremely vigilant about your payments. No home-buying timeline is worth alienating the people closest to you.

At the same time, there are also seller-financing options. This might be more elusive than borrowing from family, but if you have the wherewithal to research the types of seller financing (mortgage, lease option, contract for deed, etc.), you could deal directly with the current homeowners. Keep in mind, though, that you may pay a higher price overall and even a higher interest rate.

3. Get a Co-Signer

If you’ve already approached someone close to you to help, but they’re uncomfortable actually lending you the money, there’s another option: getting them to co-sign the loan.

The primary advantage to this is that the co-signer’s income will be considered in determining how much you can borrow.

This might be exactly what you need if your problem is a business for which you don’t yet have two years of tax returns, or if you have other income you can’t use to qualify, such as capital gains income, or investment income you haven’t been receiving for at least two straight years.

That said, having someone with good credit co-sign on your mortgage loan will not completely cancel out your bad credit, according to TheMortgageReports.com. Lenders will still consider your low credit score or other credit problems.

Unfortunately, there’s a major downside for your co-signer as well: Being a co-signer to a loan of that size could affect their credit. In the worst case scenario, if you default on your loan and go into foreclosure, their credit will undoubtedly suffer major setbacks.

4. Look into an FHA Mortgage

Most conventional home loans are held privately, by lenders like banks. In the United States, though, there is a government-backed option from the Federal Housing Administration (FHA), dedicated to home buyers in situations just like this one.

There are several differences between a conventional loan and an FHA loan, but one of the biggest is the rules about credit. If you have a credit score over 580, you can get an FHA mortgage if you can make a down payment of 3.5% of the total value of the home. For a $ 100,000 house, that’s $ 3,500.

If you have a credit score under 580, you can still get an FHA mortgage if you can make a down payment of 10% of the total value of the home. That might seem like a lot of money to save up, but when compared with the difficulty of repairing your credit, it can actually be a lot easier.

And if your job history is a problem, an FHA loan might be able to help. Lenders who issue FHA loans look at a number of factors to determine your “probability of continued employment,” and you don’t always need the traditional two years of employment to qualify.

Going this route does mean a bit more hassle, though. FHA loans are required to have a specific kind of insurance called Mortgage Insurance Premiums (MIP), and unlike a conventional mortgage, these never expire and will have to be paid for the life of the loan. That means added costs every month, which can limit the amount of home you can afford.

Welcome to your new home

5. Other Options

If you’ve exhausted this list and you still need other ways of potentially becoming a homeowner, there are still some avenues left to you…they just might not be the easiest of solutions. Remember that it’s always worth thinking outside the box. For example:

Buy a House for Cash

It’s not that far out of the realm of possibility! I’ve made it work and there are plenty of ways to make what seems like a pipe dream much more palatable.

Buy a Cheap Mobile Home

Mobile homes have their advantages, including lower prices than site-built homes, which is great if you have to pay cash. Plus, if you buy a mobile home on land, you even get appreciation like you do with other homes.

Shop Around for Loans

Most banks either sell home loans or want the option to do so, which means meeting the requirements of the secondary mortgage market.

But some small banks and credit unions keep loans in their portfolios because the loans have more flexible qualification rules. Ask around to see which banks keep loans and are willing to look at the whole picture, rather than a bad mark or two on a credit report.

Improve Your Credit

OK, so it’s not a quick solution. But improving your credit is always a good idea, and if you can wait a few more years to buy a home, you might even be able to save up more money to afford something better.

Start by looking at how to raise your credit score. Find the strategies most likely to work for you and implement them!

Steve Gillman is the author of “101 Weird Ways to Make Money” and creator of EveryWayToMakeMoney.com. He’s been a repo-man, walking stick carver, search engine evaluator, house flipper, tram driver, process server, mock juror, and roulette croupier, but of more than 100 ways he has made money, writing is his favorite (so far).

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

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What Credit Score Do You Need to Buy a House? We’ve Got the Details

Whether you’re eyeballs-deep in mortgage paperwork or you’re just beginning to consider (figuratively) kissing your landlord goodbye and buying a home, one question is probably weighing heavily on your mind: What credit score is needed to buy a house?

The answer is — like practically everything about real estate and the homebuying process — complicated.

Lenders do care a lot about your credit score because it tells them how you’ve managed money in the past. The lower your score, the higher your risk of defaulting.

But the truth is, there’s no one magic credit score that guarantees you’ll be approved for a mortgage.

And while your credit score is one of the most important factors your lender considers when you apply for a mortgage, that three-digit number isn’t the only thing that determines whether you’re approved or denied.

Wait, What’s a Credit Score? And What Credit Score Is Needed to Buy a Home?

First things first: A credit score is a number that tells creditors how likely you are to repay debt.

But you do not have just one single credit score. You have three scores, one with each of the major credit bureaus: Equifax, Experian and TransUnion. The scores are generated by FICO, a data analytics company, using information provided by each bureau.

But where it gets tricky is that lenders often use industry-specific versions of your score. That’s because your risk of defaulting on a home loan is different from your risk of not making your car payment.

FICO scores range from 300 (relax, there’s almost zero chance yours is this low) to 850. As of 2015, the average credit score was 695, according to ValuePenguin.

You’ll typically get the best rate and terms on a mortgage if you have good credit — usually about 760 or higher.

But what’s the lowest credit score you can have if you want to buy a house? Let’s say it all together now: It’s complicated.

You may have seen advertisements for homebuyer programs with low minimum credit score requirements.

We’ll discuss the requirements for specific programs later, but for now, let’s look at the increasingly popular FHA mortgage, which is a loan insured by the Federal Housing Administration known for its low down-payment requirements and credit score leniency.

You can qualify for an FHA loan with a 3.5% down payment with a credit score as low as 580 — which is considered a poor credit score.

But having a 580 credit score does not guarantee you will be approved for an FHA loan or any other mortgage. That’s just the minimum for the federal government to insure your loan.

Each lender has its own criteria that determine whether you’re approved for a mortgage, and with a 580 credit score, it would probably be difficult to find a lender to approve your mortgage.

Consider the following Credit Sesame survey of 600 people who applied for a mortgage:

Of those who applied for a $ 150,000 mortgage, 62% of respondents with a credit score in the “fair” range (650-700) were denied. Applicants with a “good” score of 700-750 were denied 23% of the time. Meanwhile, 91% of applicants with a score below 550 were denied.

The bottom line is: There’s no absolute minimum credit score to get a mortgage, but the higher your score, the better your odds are of approval.

A row of houses.

Do Mortgage Lenders Look at All Three Scores?

It depends on the lender. Some will just pull one score; others use two or all three. If your lender pulls two scores, it will usually use the lower one. If it pulls all three, your middle score will typically be used.

Can You Get a Mortgage if You Don’t Have a Credit Score?

The frustrating thing about credit is that paying your rent, utilities and other bills on time doesn’t help you build a credit history.

According to ValuePenguin, about 1 in 7 adults in the U.S. have no credit score, typically because they haven’t used credit in at least six months.

If you don’t have a credit score, it will be difficult (but not completely impossible) to get a mortgage.

If you have a history of paying your bills on time, you may be able to qualify for an FHA loan with no credit history, although it might be tough to find a lender.

You’re more likely to get approved through a smaller lender, particularly one that offers manual underwriting, which basically means that a human, rather than an algorithm, decides whether you’re approved.

What if I’m Applying for a Mortgage With a Spouse or Someone Else?

Your lender will look at both of your credit scores — which means that if your spouse or any other co-applicant has a low credit score, it could disqualify you.

If your partner has bad credit, one workaround would be to leave them off the application, meaning the home and debt would be solely in your name.

You could always refinance and add them as a co-borrower once they improve their credit.

What Other Factors Do Mortgage Lenders Consider?

Your credit score can absolutely make or break your application.

That said, lenders want to know A LOT about you before they approve you for what’s probably the biggest purchase of your life. Here are some other factors they’ll consider.

Income

While lenders have different requirements, a good rule of thumb is that your principal, interest, property taxes and insurance payments (both property and private mortgage insurance), plus homeowner association fees if applicable, shouldn’t exceed 28% of your pretax income.

Debt

Lenders want to make sure you don’t have too much debt. That’s why they pay close attention to your debt-to-income ratio, which is the percentage of your gross household income that goes toward minimum debt payments.

To get a qualified mortgage — that is, one that complies with the Consumer Financial Protection Bureau’s regulations that were designed to make sure borrowers could afford to repay their loans — you’ll need a debt-to-income ratio of 43% or lower.

You may still be able to get a mortgage if your debt-to-income ratio is higher than 43%, but it’s likely to come with high fees and other risky features.

Down Payment

Chances are, you won’t need the traditional 20% down payment. But if you can afford it, it does come with lots of advantages: lower interest rates and monthly payments, and you might not need private mortgage insurance.

We’ll get into specific types of mortgages and how much you need to put down for each later, but the median down payment for first-time homebuyers is just 6%, according to the National Association of Realtors. And some programs allow you to put down even less.

If you have a weak credit score, a larger down payment could help you get a mortgage loan for that new home.

Employment History

Your lender will typically want to see at least two years of continuous employment before approving you.

This doesn’t necessarily mean you need to have stayed in the same job for the two years before you get a mortgage, although if you’ve recently switched to a completely different field, this could make your lender nervous.

Minimum Credit Score by Mortgage Type

A house with a sun low in the sky.

The government “backs,” or insures, some mortgage loans, such as the FHA loans we discussed earlier.

With these loan programs, the government guarantees lenders that they’ll get paid even if borrowers default.

As a result, riskier borrowers with lower credit scores are able to get mortgages they might not qualify for otherwise. These are known as unconventional loans.

A conventional loan is a mortgage that isn’t backed by the government. That means banks have stricter criteria for approval.

They typically require that these loans meet the standards set by Fannie Mae and Freddie Mac, the giant government-controlled companies that buy up loans and sell them on the secondary mortgage market.

(Fun fact: Your bank or credit union will probably sell your home loan on the secondary mortgage market, rather than holding on to it for the life of the loan.)

Below are the minimum requirements for each type of loan.

Remember, though: These are just the minimum requirements that the government sets to back unconventional loans. In the case of conventional loans, they are the requirements set by Fannie and Freddie to repurchase loans. Your bank or credit union will often require a higher score.

Conventional Loans

If you qualify for a conventional loan, you’ll pay lower interest rates. You can also often avoid paying an upfront mortgage insurance payment, which many unconventional loans require.

Conventional loans typically require a down payment of at least 5%.

Minimum credit score: 620-640

FHA Loans

These FHA-insured mortgages have smaller down payments and closing costs than conventional loans, but you have to pay an upfront mortgage insurance premium of 1.75% of the loan’s value.

Also, your monthly payment can’t be more than 31% of your gross monthly income.

Minimum credit score: 500 if you put 10% down; 580 if you put down 3.5%.

VA Loans

The U.S. Department of Veterans Affairs insures parts of mortgages for active-duty military, veterans and surviving spouses.

No down payment is required, but you have to pay an upfront funding fee of 2.15% to 2.4% of the loan unless you qualify for a waiver.

Minimum credit score: No minimum score is required by the VA, but lenders usually require a score of 620.

USDA Loans

The U.S. Department of Agriculture (USDA) backs mortgages for homes in certain rural areas through this program. No down payment is required.

Minimum credit score: No minimum score is required by the USDA, but lenders usually require a 640.

How Your Credit Score Affects Your Mortgage Rate

The lower your credit score, the higher you can expect your interest rate to be on your mortgage. That’s because your interest rate is based in part on how risky you’re considered as a borrower.

FICO has a handy mortgage calculator that shows you how much interest you can expect to pay on a mortgage loan based on your credit.

As of Feb. 1, 2019, if you have a credit score of 760 or above, you could expect to pay an annual percentage rate (APR) of 3.979% on a 30-year fixed loan of $ 150,000. But if your credit score is between 620 and 639, your APR would be around 5.568%.

You may be thinking: “So what? What’s a measly 1.6 percentage points?” Well, consider how your interest rate affects your payment over the life of the loan:

FICO score APR Monthly principal payment Total interest paid
760-850 3.979% $ 714 $ 107,151
700-759 4.201% $ 734 $ 114,101
680-699 4.378% $ 749 $ 119,710
660-679 4.592% $ 768 $ 126,570
640-659 5.022% $ 807 $ 140,610
620-639 5.568% $ 858 $ 158,914

In the example above, having a credit score of 760 or higher would save you more than $ 50,000 over 30 years compared with if your score was in the 620-639 range.

How to Get Your Free Credit Score

OK, so now you know that having a good credit score is mega important when you apply for a mortgage. But how do you find out your credit score?

To keep a closer eye on your credit, get your credit score and a “credit report card” for free from Credit Sesame. It breaks down exactly what’s on your credit report, how it affects your score and how to address it — in layman’s terms.

4 Steps for Improving Your Credit Score Before You Buy a House

A couple moves into a house.

So, what if you’ve checked your credit score and what you found was less than desirable? You can improve your score. It’s not going to happen overnight, but these tips can help.

1. Make On-Time Payments No Matter What

Your payment history is the most important factor in determining your credit score, accounting for 35% of your score.

Set up automatic payments for at least the minimums using your bank’s online bill-pay system so you’re never late on a payment.

2. Look for Errors on Your Credit Report

More than 1 in 5 consumers have at least one possible error on their credit reports, according to the Federal Trade Commission.

Removing inaccurate negative information, such as a delinquent account that doesn’t belong to you, is the quickest way to boost your score.

If you find errors on any of your credit reports, your first step is to dispute the information with the bureaus.

3. Ask Your Credit Card Companies to Increase Your Limits

Your credit utilization ratio — the percentage of your overall credit that you’re using — accounts for 30% of your credit score. Generally, you want to keep this number below 30% to have a healthy credit score.

By increasing the amount of credit you have available, you’ll lower your credit utilization. Because opening a new account can ding your score, asking for more credit on your current accounts is usually better.

4. Keep Paying Down Your Balances

Make an action plan to pay down debt, and avoid adding new charges so you can continue to lower your credit utilization ratio.

Remember: Mortgage lenders want to see a healthy debt-to-income ratio, so paying down debt will increase the odds of your approval.

Even if you can’t get a traditional mortgage because of your credit score, there are still alternative ways to buy a house without credit.

But if you want to own a house, it might be in your best interest to keep paying off your debt and improving your scores. Think of all the money you’ll save in the long run.

Robin Hartill is a senior editor at The Penny Hoarder.

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

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New Credit Can Boost — or Bust — Your Credit Score. Here’s When to Apply

Your credit score determines your eligibility for loans, credit cards and even renting a house. Credit reports are determined by a company called FICO, which assigns a three-digit score showing lenders whether giving you a loan or a credit card is a good idea or a risky one.

Credit scores range from 300 (bad) to 850 (excellent), with anything above 700 typically seen as “good.” But it’s not always easy to get to the “good” or “excellent” ranges, especially if you’re starting from scratch or trying to improve a shaky score.

While new credit is sometimes helpful, as in my case, it can often be seen as a bad thing.

What Is New Credit?

Taking on any loan or credit card counts as new credit.

According to CreditCards.com, FICO’s new credit category takes into consideration:

  • The number of accounts you’ve opened in the past 12 months
  • How many recent credit inquiries you have
  • How long it’s been since your last inquiry
  • The length of time you’ve had your newest accounts.

You could also be dinged when an older card that had previous payment problems reappears on your credit report.

When I first moved to the U.S. from the U.K. I had no credit to my name. The first thing I did to establish myself was open a new credit card with a high interest rate and a low limit. At the time, it was all I could get. From there, I made a plan to get new credit in order to build my score gradually.

In my case, my new credit card opened the door to higher-limit cards. I used my first card to buy groceries, paying the balance off in full every month. Within a year, I was able to open a second credit card with a better interest rate that I used in conjunction with my first card to continue building my credit.

What Percentage of New Credit Factors Into Your Credit Score?

Your FICO credit score is based on five factors, which weigh differently on your score:

  • Payment history
  • Credit utilization
  • Credit history
  • New credit
  • Credit mix

Of these factors, new credit only makes up 10% of your score.

Payment history and credit utilization have a heavier consequence on your score, but that doesn’t mean you should ignore the effect that adding new credit could have.

As I started to add different lines of credit to my name, like a car loan and a mortgage, I stuck to my two initial credit cards to avoid adding too many lines of credit. At the same time I was diversifying my credit and continuing to make on-time payments so my credit score wouldn’t be negatively affected.

Can Too Many Cards Hurt Your Credit?

Two people sit in the grass, each holding a fan of credit cards as if they are playing a card game.

Too many cards could hurt your credit if they are all fairly new.

FICO looks at the average age of your credit cards, and having more recently acquired cards lowers that age.

If you have a few more-established credit cards and open one or two new accounts, the effect on your score is not as bad. This is especially true if you have a history of paying loans and credit cards on time.

Since payment history counts for a larger chunk of your overall credit score than new credit does, having a couple of newer cards you pay on time could actually help your credit score, especially if you’re trying to improve it.

I eventually closed my very first credit card, but not before I added a new one and a couple of store cards (because who can resist the discounts that come with those cards?).

Will Opening a New Card Hurt Your Credit Score?

Opening a new account could hurt your credit score, especially if you add new lines of credit often.

How New Credit Can Help

Opening a new credit card could also improve your overall credit mix, which also accounts for 10% of your score. If you have a mortgage and car loan but no credit cards (or even just one), a new card helps diversify your borrowing, which shows lenders you’re trustworthy. Of course, this is only true if you make on-time payments and keep your credit utilization low.

A new credit card could actually help your score by decreasing your credit utilization.

For example, if you have a current credit card with a $ 10,000 limit and an $ 8,000 balance (i.e., 80% utilized), your FICO score will take a bigger hit because credit utilization accounts for 30% of your overall score. If you open a new account with a higher limit, your credit utilization will drop.

How New Credit Can Hurt

But be careful with opening new accounts to try to lower your credit utilization. You’re better off trying to pay down your existing high-balance credit card to lower your utilization than opening a new credit card.

Do New Credit Inquiries Hurt Your Score?

There are two types of credit inquiries: soft and hard. Only one affects your score.

Soft Inquiries

A soft inquiry happens when you check your own credit score or apply for a job that checks your credit as part of the hiring process.

Credit card companies might also run soft inquiries when they check your credit to see if you qualify for an offer they want to send to you. Soft inquiries don’t affect your credit score.

Your credit card company might provide you with your credit score (my USAA card does, and that’s how I keep tabs on my credit score). You can also sign up for services like Credit Karma,

which use soft inquiries to keep you posted about your credit score without damaging it.

Hard Inquiries

A hard inquiry is when a credit card or loan company checks your score when you apply for a new line of credit.

This is the type of inquiry that has a detrimental effect on your credit score. You need to give permission for a lender to make a hard inquiry. Too many hard inquiries on your credit report suggests to lenders that you’re risky, and they may make the decision to not give you a loan.

FICO keeps hard inquiries on your credit report for two years, though it only takes inquiries from the past 12 months into account when calculating your credit score. Soft inquiries do not appear on your credit report.

When Will I See a New Credit Card on My Report?

New lines of credit, along with things like missed payments, generally appear on your credit report within 30 days of the end of the billing period.

That means you won’t see a new credit card show up on your credit report immediately. You may have a couple of months, depending on your billing cycle. But you shouldn’t use that as an excuse to open a bunch at once. They might not have an immediate effect, but they’ll eventually catch up with you and make a dent in your credit score.

After 12 years of building my credit, I have a score firmly in the “good” range. New credit played a part in getting me there, but now I stay away from opening new lines of credit unless they are absolutely necessary.

In general, new credit can be helpful to your score if you use it correctly. But as with many things, abusing new credit can harm you in the long term. The best thing to do is ask yourself before opening a new credit card whether you really need it or whether you can make do with what you have.

Catherine Hiles lives in Ohio with her husband and their two children. By day she manages a team of writers and graphic designers, and catches up on her own writing in her spare time.

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

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Women Have Lower Credit Scores Than Men. Here’s How to Close the Gap

We talk about the gender wage gap, but what about the gender credit-score gap?

The median credit score for men is 22 points higher than for women, according to a Federal Reserve analysis.

In an ideal world, society would shift toward gender equality, like, yesterday, and make it possible to effortlessly close this gap.

Unfortunately, that’s not going to happen, so you’ve got to take control. Not to be cliche or anything, but knowledge is power, and understanding why women have lower credit scores — and exactly how to increase yours — is the first step to closing this gap.

But here’s at least a little bit of good news: Managing your credit score might not be as difficult as you’d expect. Free services make the process fairly straightforward. I’ve used Credit Sesame for my free credit score and personalized recommendations to better manage it.

Why Women Have Lower Credit Scores Than Men

The Federal Reserve analysis looked at more than 8,000 VantageScore 2.0 credit scores from single men and women (because singles tend to make more independent decisions and lean on one income).

For those aged 31 to 40, men’s credit scores averaged 828, while women’s averaged 806. (Note: On the VantageScore 2.0 scoring model, the scale runs from 501 to 990, unlike FICO and later VantageScore models, which run 300 to 850.)

No, women don’t have a lower credit score because they’re bad with money or like to go shopping when they’re sad. Puhlease give that a break.

Rather, the credit score gap can be attributed to, in part, the gender wage gap.

Looking at incomes within this same demographic, men make, on average, nearly $ 3,500 more per year than women, according to the 2017 Census Bureau American Community Survey. That means women have $ 3,500 less to cover the same expenses men face.

This could lead to more debt, higher credit-utilization rates or more bills in collections… which is exactly what seems to happen.

The Federal Reserve found that women’s median debt owed is $ 11,000 more than men’s. They also have higher credit-utilization rates and higher rates of late payments. Credit utilization and payment history together make up 65% of your credit score.

“The credit-score gaps reflect the fact that single women have more intensive use of credit and have experienced more difficulties repaying their debt in the past,” the Federal Reserve concludes.

Why Your Credit Score Matters — and How to Manage It

Looking to take out a loan, secure a mortgage, open a credit card, apply for insurance or even sign up for a new cell phone plan?

Your credit score can affect all those decisions.

You might be thinking 22 points won’t make that big a difference. But it can.

Just a few points’ difference in your credit score can drastically change the interest rates on your mortgage, which will result in you paying hundreds, if not thousands, of dollars more over time.

This can turn into an endless cycle, which is why it’s time we need to close the credit score gap — even if we do have to fight harder. (’Cause, ya know, change takes time. *eye roll*)

You can start by checking your credit score for free with Credit Sesame. It takes less than two minutes to sign up, and, once verified, you’ll immediately see your score for free.

To find out exactly what’s holding you back, you’ll want to tap into your credit report card — also free. Credit Sesame takes each factor that affects your score and gives you a grade.

For example, I currently have a “D” in the account-mix category because I only have two accounts open. I also have a “B” in credit usage, because my credit utilization rate is approaching the recommended 30% limit right now.

The best part is Credit Sesame offers actionable tips. For me, it’s to open another credit card; that’ll pump up my account mix and alleviate some of the debt on my single card. It even gives me an option where my approval odds are “very good.”

Doing this could increase my credit score 11 points — if not more.

Heck, that simple moves gets me halfway toward closing this darn gap.

So if you’re ready to close the gender credit-score gap, too, access your credit score and credit report card for free from Credit Sesame.

Carson Kohler (carson@thepennyhoarder.com) is a staff writer at The Penny Hoarder. The Penny Hoarder data journalist Alex Mahadevan contributed reporting to this article.

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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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New Zealand February Overall Credit Card Spending Rises 0.1%

Overall credit card spending in New Zealand added a seasonally adjusted 0.1 percent on month in February, Statistics New Zealand said on Monday – in line with expectations following the 2.0 percent gain in January.
RTT – Economic News

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These 5 People Added up to 284 Points to Their Credit Scores by Making the Same Move

Everyone who’s saddled with bad credit has a unique story.

A man burdened with $ 6,000 in unpaid bills. A couple recovering from job loss and foreclosure. A woman who fell behind on payments while living abroad. A single mom with a terminally ill child. A young woman with so much debt she couldn’t even get a credit card.

One of the toughest parts about paying down debt and fixing your credit score is knowing where to begin.

To create a rebuilding plan, first you have to know what you’re dealing with.

Your credit report will give you this information. You can get a free copy of it once every 12 months from each of the three major credit reporting bureaus — but they can be tough to decipher.

If you want to keep a closer eye on your credit, get your credit score and “credit report card” for free from Credit Sesame. This website breaks down exactly what’s on your credit report in layman’s terms, how it affects your score and what you should do about it.

Folks who’ve used it tell us it’s a lifesaver.

5 People Who Raised Their Credit Scores Using Credit Sesame

We spoke with five different people who’ve had profound problems with their credit. All five turned things around with Credit Sesame.

James Cooper: +277 Points

James Cooper knows all about having bad credit. As recently as 2017, his credit score was a lousy 524.

“I never had a credit card,” he says. “I had $ 6,000 worth of unpaid bills.”

He vowed to sort out his financial situation and fix his credit.

Although there are legitimate credit repair services, there are also shady ones that demand money upfront and promise way more than they can deliver. Then they’ll milk you for money until you wise up.

Cooper and a friend went through this ordeal with three companies. Then they found Credit Sesame, and the free credit monitoring service taught them how to fix their credit.

Cooper raised his score by 277 points — from 524 to 801 — over the six months from June to November 2017.

Inspired by his experience, now Cooper teaches high school students the importance of good credit.

Jerry Morgan: +120 Points

In 2008, the housing bubble burst. The three-bedroom home in New Port Richey, Florida, where Jerry Morgan and his wife, Vivienne, had lived for 10 years plunged into the foreclosure process.

Then Vivienne lost her job.

By 2017, the family’s financial situation started to look up again. So in September, Morgan decided to address his credit score.

“Frankly, with the experiences we have gone through, I was embarrassed to even check my score,” he said.

Before coming across Credit Sesame, Morgan hadn’t bothered to check his credit score in, well, quite a while. He says finally getting his finances on stable ground encouraged him to take a peek at this three-digit number.

Following recommendations from the service, he’s raised his score 120 points in six months.

Elisabeth Nyang: +168 Points

At the end of 2016, Elisabeth Nyang was in debt to the tune of $ 17,500 — a mix of credit card debt, overdue bills and lingering student loans. She found herself there after two years of living in China.

In China, where it’s difficult to send money to the U.S., Nyang fell behind on her payments. In hindsight, she admits, the difficulty in transferring money was just an excuse — out of sight, out of mind.

But when she decided to move back to the States, she knew she needed to get her finances back on track.

“I can’t live like that,” she remembers thinking.

Since signing up for Credit Sesame in January 2017, Nyang has paid off that $ 17,500 pile of debt and raised her score from 495 to 663. That’s a 168-point jump.

Melinda Smieja: + 284 Points

In 2005, Melinda Smieja’s 13-year-old daughter was diagnosed with a terminal brain tumor.

“So here I am a single mom, and my daughter gets sick,” she explains. “And I’m like, ‘What am I gonna do?’”

Between continuing to care for her younger daughter and moving from Seabeck, Washington, to Seattle to be near her 13-year-old’s medical care, she racked up credit card debt.

“I used [a credit card] for dinners, I used it for food,” she says. “For a place to stay. It got to the point where all of my credit cards were maxed out.”

Her credit score was down to 480 by the time she checked. And she’d racked up somewhere between $ 20,000 and $ 30,000 in debt on 11 credit cards.

In 2010, an email campaign led her to Credit Sesame, a new company (at the time) offering an easier way to monitor your credit history.

“It was something that I had been searching for [without realizing it],” Smieja explains.

It made her overwhelming situation manageable.

“I could look and I could say, ‘Okay, this is what’s all going on here. This is my debt. This is what’s happening. This is what’s making my credit [interest] high.’”

And she could finally tackle her debts, one at a time. The work wasn’t quick. It was slow and steady — but it paid off.

In 2016, for the first time, Smieja’s credit score hit 680, crossing the line of what lenders consider “good credit.” By late 2017, it was up to 764.

Dana Sitar: +68 Points

At 30, Dana Sitar’s history with credit cards, student loans and medical bills was pretty bad.

Student loan interest was piling up. Hospital bills were out to collection agencies. No one would give her a credit card. She landed a loan for a new car by the skin of her teeth. Her security deposits for car rentals and apartments were through the roof.

She wanted to fix it, but didn’t even know where to start.

Sitar, an editor for The Penny Hoarder, found Credit Sesame in 2016, and today, she’s breathing a little easier.

Credit Sesame, Sitar writes for The Penny Hoarder, is “answering all the questions swirling in my head, keeping me awake at night and threatening a panic attack every time I authorize a credit check.”

Since she started tracking her credit score with the app, she’s watched it rise — slowly but surely — by 68 points.

“Motivated by the easy access to my free credit report card through the app,” she says, “I haven’t been able to ignore my credit like I used to.”

Keep an Eye on Your Credit Score

Your credit score is important.

And why is that?

The better your score, the better deal you’ll get on a mortgage, car loan or credit card. We’re talking big money here.

To keep a closer eye on your credit, get your credit score and a credit report card for free from Credit Sesame.

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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

The Penny Hoarder

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Can’t Qualify for a Cash-Back Credit Card? Try This Instead

Those cash-back credit cards are wicked cool, aren’t they?

Buy a cartful of groceries; get cash back. Fill up your gas tank; get cash back.

As long as you pay off your balance each month, this is basically free money — especially if you’re just buying stuff you’d need to purchase anyway (like gas or food).

Unfortunately, it can be hard to qualify for these cards. The Credit Card Gods are awfully picky when it comes to handing them out. To get your hands on that sweet, sweet cash-back plastic, you might need a near-flawless credit history. Let’s face it: That’s something many of us don’t have.

We found another option, though.

It’s called the Aspiration Spend and Save Account. This online account comes with a debit card that gets you 0.5% cash back on purchases. It basically turns your debit card into a cash-back card.

An Account We Love as Much as an Everything Bagel

This is actually an all-in-one account that does a bunch of different things. You can pay your bills, build your savings, invest and earn interest — all in one place.

Here’s what Aspiration offers:

  • You get your cash back, obviously. (Bonus!)
  • The debit card comes with no ATM fees, so you can use any ATM you want.
  • It pays up to 2.00% APY on your savings.
  • The company also offers two investment funds for middle-class investors. These require only a $ 100 minimum investment.

Declutter Your Financial Life

Are you a little leery about using an online account? Aspiration makes it super easy.

Its mobile app lets you access the account from anywhere and deposit checks from your phone. It offers unlimited ATM fee reimbursements anywhere in the world.

There’s no monthly fee and no minimum balance. All of Aspiration’s services work on a “pay what is fair” model. You choose your price and pay as a “tip” — up to $ 10 a month and as little as $ 0.

It’s also simple to set up. The whole sign-up process takes about five minutes, and you can open an account with just $ 10.

So go get that cash back!

Get cash back at the grocery store, at the gas station, at the gardening center — heck, wherever you’re spending your hard-earned money.

Tell the Credit Card Overlords to take a hike. You don’t need them or their approval anymore.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He doesn’t qualify for a cash-back credit card — not that he’s bitter about it or anything.

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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

The Penny Hoarder

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These 5 People Added up to 284 Points to Their Credit Scores by Making the Same Move

Everyone who’s saddled with bad credit has a unique story.

A man burdened with $ 6,000 in unpaid bills. A couple recovering from job loss and foreclosure. A woman who fell behind on payments while living abroad. A single mom with a terminally ill child. A young woman with so much debt she couldn’t even get a credit card.

One of the toughest parts about paying down debt and fixing your credit score is knowing where to begin.

To create a rebuilding plan, first you have to know what you’re dealing with.

Your credit report will give you this information. You can get a free copy of it once every 12 months from each of the three major credit reporting bureaus — but they can be tough to decipher.

If you want to keep a closer eye on your credit, get your credit score and “credit report card” for free from Credit Sesame. This website breaks down exactly what’s on your credit report in layman’s terms, how it affects your score and what you should do about it.

Folks who’ve used it tell us it’s a lifesaver.

5 People Who Raised Their Credit Scores Using Credit Sesame

We spoke with five different people who’ve had profound problems with their credit. All five turned things around with Credit Sesame.

James Cooper: +277 Points

James Cooper knows all about having bad credit. As recently as 2017, his credit score was a lousy 524.

“I never had a credit card,” he says. “I had $ 6,000 worth of unpaid bills.”

He vowed to sort out his financial situation and fix his credit.

Although there are legitimate credit repair services, there are also shady ones that demand money upfront and promise way more than they can deliver. Then they’ll milk you for money until you wise up.

Cooper and a friend went through this ordeal with three companies. Then they found Credit Sesame, and the free credit monitoring service taught them how to fix their credit.

Cooper raised his score by 277 points — from 524 to 801 — over the six months from June to November 2017.

Inspired by his experience, now Cooper teaches high school students the importance of good credit.

Jerry Morgan: +120 Points

In 2008, the housing bubble burst. The three-bedroom home in New Port Richey, Florida, where Jerry Morgan and his wife, Vivienne, had lived for 10 years plunged into the foreclosure process.

Then Vivienne lost her job.

By 2017, the family’s financial situation started to look up again. So in September, Morgan decided to address his credit score.

“Frankly, with the experiences we have gone through, I was embarrassed to even check my score,” he said.

Before coming across Credit Sesame, Morgan hadn’t bothered to check his credit score in, well, quite a while. He says finally getting his finances on stable ground encouraged him to take a peek at this three-digit number.

Following recommendations from the service, he’s raised his score 120 points in six months.

Elisabeth Nyang: +168 Points

At the end of 2016, Elisabeth Nyang was in debt to the tune of $ 17,500 — a mix of credit card debt, overdue bills and lingering student loans. She found herself there after two years of living in China.

In China, where it’s difficult to send money to the U.S., Nyang fell behind on her payments. In hindsight, she admits, the difficulty in transferring money was just an excuse — out of sight, out of mind.

But when she decided to move back to the States, she knew she needed to get her finances back on track.

“I can’t live like that,” she remembers thinking.

Since signing up for Credit Sesame in January 2017, Nyang has paid off that $ 17,500 pile of debt and raised her score from 495 to 663. That’s a 168-point jump.

Melinda Smieja: + 284 Points

In 2005, Melinda Smieja’s 13-year-old daughter was diagnosed with a terminal brain tumor.

“So here I am a single mom, and my daughter gets sick,” she explains. “And I’m like, ‘What am I gonna do?’”

Between continuing to care for her younger daughter and moving from Seabeck, Washington, to Seattle to be near her 13-year-old’s medical care, she racked up credit card debt.

“I used [a credit card] for dinners, I used it for food,” she says. “For a place to stay. It got to the point where all of my credit cards were maxed out.”

Her credit score was down to 480 by the time she checked. And she’d racked up somewhere between $ 20,000 and $ 30,000 in debt on 11 credit cards.

In 2010, an email campaign led her to Credit Sesame, a new company (at the time) offering an easier way to monitor your credit history.

“It was something that I had been searching for [without realizing it],” Smieja explains.

It made her overwhelming situation manageable.

“I could look and I could say, ‘Okay, this is what’s all going on here. This is my debt. This is what’s happening. This is what’s making my credit [interest] high.’”

And she could finally tackle her debts, one at a time. The work wasn’t quick. It was slow and steady — but it paid off.

In 2016, for the first time, Smieja’s credit score hit 680, crossing the line of what lenders consider “good credit.” By late 2017, it was up to 764.

Dana Sitar: +68 Points

At 30, Dana Sitar’s history with credit cards, student loans and medical bills was pretty bad.

Student loan interest was piling up. Hospital bills were out to collection agencies. No one would give her a credit card. She landed a loan for a new car by the skin of her teeth. Her security deposits for car rentals and apartments were through the roof.

She wanted to fix it, but didn’t even know where to start.

Sitar, an editor for The Penny Hoarder, found Credit Sesame in 2016, and today, she’s breathing a little easier.

Credit Sesame, Sitar writes for The Penny Hoarder, is “answering all the questions swirling in my head, keeping me awake at night and threatening a panic attack every time I authorize a credit check.”

Since she started tracking her credit score with the app, she’s watched it rise — slowly but surely — by 68 points.

“Motivated by the easy access to my free credit report card through the app,” she says, “I haven’t been able to ignore my credit like I used to.”

Keep an Eye on Your Credit Score

Your credit score is important.

And why is that?

The better your score, the better deal you’ll get on a mortgage, car loan or credit card. We’re talking big money here.

To keep a closer eye on your credit, get your credit score and a credit report card for free from Credit Sesame.

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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

The Penny Hoarder

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Welcome to IGN’s Daily Deals, your source for the best deals on the stuff you actually want to buy. If you buy something through this post, IGN may get a share of the sale. For more, read our Terms of Use.

We bring you the best deals we’ve found today on video games, hardware, electronics, and a bunch of random stuff too. Check them out here or like us on Facebook and follow us on Twitter to get the latest deals.

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How to Pay Off Credit Card Debt When You Have No Idea Where to Start

We know how easy it is to rack up credit card debt. Over 41% of American households carry a credit card balance, and the average balance for those households is $ 9,333, according to a study from financial data website ValuePenguin.

But here’s the thing about credit cards: They only benefit you when you’re building credit and receiving perks — but not paying interest. If you’re carrying a balance beyond an interest-free period, your cards only benefit the card issuers.

With average interest rates on new credit cards north of 17%, paying off credit card debt is a smart move.

If you’re ready to get rid of credit card debt, be prepared for inconvenient choices and a lot of saying no. But you can do it. And every difficult step will be worth it.

How to Pay Off Debt From Multiple Credit Cards

A woman sitting at her table contemplating expenses

Before you start, you should stop using your credit cards altogether until you can use them without putting yourself in financial risk. Though the specifics will vary based on your situation, we only recommend using credit cards if:

  • You don’t have any consumer debt.
  • You have an emergency fund with three to six months’ worth of expenses saved.
  • You can pay off your balance in full every month.

However you do it, make paying off your credit cards — and learning to use them responsibly — a high priority.

Credit card usage has a huge impact on your credit score. If you spend too much of your overall limit or miss payments, you’ll hurt your score. If you keep your balances low and make on-time payments, your score will probably increase over time.

1. Debt Snowball vs. Debt Avalanche: Determine Your Plan of Attack

First, determine how much credit card debt you have. You can do this using a tool like Credit Sesame.

Instead of looking at your debt in its entirety, we recommend approaching it bit by bit. By breaking your debt down into manageable chunks, you’ll experience quicker wins and stay motivated.

Two popular ways to break down debt repayments are the debt avalanche and debt snowball methods.

Using the debt avalanche method, you’ll order your credit card debts from the highest interest rate to the lowest. You’ll make minimum payments on all your cards, and any extra income you have will go toward the highest-interest card.

Eventually, that card will be paid off. Then, you’ll attack the debt with the next-highest interest rate, and so on, until all your cards are paid off.

With the debt snowball method, you’ll order your debts from the lowest balance to highest, regardless of the interest rates on the cards. You’ll make minimum payments on all your cards, and any extra income will go to the credit card with the smallest balance.

Starting with the smallest balance allows you to experience wins faster than you would with the avalanche, but you will spend more money on interest. While both have trade-offs, you can’t go wrong with either method.

Here’s an example of how each method would work if you’re paying off four credit cards of varying balances and interest rates.

  1. $ 654 with 0% interest
  2. $ 5,054 with 15% interest
  3. $ 2,541 with 23% interest
  4. $ 945 with 17% interest

If you followed the avalanche method, you would pay off card 3 first, followed by 4, 2 and 1. If you followed the snowball method, you would pay off card 1 first, followed by 4, 3 and 2.

Let’s say you have $ 600 per month to put toward debt. Using the snowball and avalanche comparison calculator from Dough Roller, you can see that it would take you 18 months to pay all of your cards off using either method.

The debt avalanche method would save you $ 105.73 of interest in the end, but you’d pay off your first card six months faster by going with the snowball.

Choosing the right method comes down to deciding whether you’d rather get quick results or save money on interest. We encourage you to check out Dough Roller’s calculator yourself, so you can calculate what each method would cost you.

2. Don’t Let Credit Card Companies Trick You Into Overspending

Credit card companies make it so easy to get in the habit of overspending. The introductory APR offers, new credit card sign-up bonuses and cash back offers are designed to get us using cards more frequently and thinking less about what items cost.

So if you want to be credit card debt-free, you need to change your lifestyle to lower your spending and maybe even increase your income.

Stop Blowing Your Money on These 3 Things

The quickest way to save a lot of money isn’t to nickel-and-dime your spending. It’s to save as much as possible on big-ticket items.

The three largest expenses in the average American family’s budget are housing, transportation and food, according to the Bureau of Labor Statistics.

To save on housing, you can rent a cheaper apartment or house if it’s not too far away from work. You can rent out a room in your house to a roommate or on Airbnb. You could even try an alternative living situation like an RV.

The easiest way to save on transportation is to get rid of your car payment. Trade in your vehicle for a used car you can pay cash for. If that’s not a possibility, consider trading it in for a car with a smaller payment. It may also be in your best interest to move closer to work if rent in that area is comparable or cheaper.

Finally, to lower your food spending, you’ll have to cut back on eating out and making random purchases at grocery and convenience stores. Plan out your meals each week based on what’s on sale, and try to use what’s in your pantry and fridge before you buy new groceries.

Side-Hustle Your Way to Paying Off Debt Faster

A side hustle is a great way to make money fast to put toward debt. You can use an app like Uber or TaskRabbit to get small jobs or see the unique services you can offer with your talents.

Taking surveys or doing mystery shopping won’t bring in cash fast enough to make a dent in your credit cards, so look for opportunities that don’t require spending upfront and pay more than minimum wage.

This credit card debt calculator is a great tool for estimating how much extra income you need to pay off your debt and how much you can save by paying it off faster.

3. Try These 4 Strategies to Lower Your Interest Rates

Cutting up credit cards

Many people will start by trying to lower their interest rates, but that typically doesn’t help. It can often just trick you into thinking you’ve solved your problem. This step is better left until you have a plan and are already working it.

Once you’ve started paying off your debt, you may find that you don’t need to go through the hassle of getting a lower rate. But if your debt payoff is going to take a significant amount of time, here are some of the ways you can get lower rates and save a little money.

Balance-Transfer Credit Card

If you have good to excellent credit (typically a FICO score of 690 or above) and can feasibly pay off your debt within a year, a balance-transfer credit card is a great option. Balance-transfer cards can save you money on interest charges by letting you transfer the balance of a card with a high interest rate to a card with zero percent interest.

Most of these cards offer zero percent interest for 12 to 18 months with no annual fee. They generally have a 2-5% balance-transfer fee, but you can easily find balance-transfer cards with no fee. A higher credit score will help you qualify for a card with better terms.

Personal Loan

You can also consolidate your debt with a personal loan. Online banks will allow you to prequalify for a personal loan without doing a hard inquiry of your credit, so if you want to shop around, head there first. Then, try your local credit union; they’re known for having the most affordable rates on loans.

It’s also important to note that lenders may tack on origination fees and prepayment penalties, or even require collateral. Read the fine print before you commit to anything.

Debt Consolidation Loan

If you don’t qualify for a personal loan, you can try for a debt consolidation loan. You’ll take out a new loan to pay off multiple debts, and then pay back the new loan — essentially consolidating your debt into one loan.

Debt consolidation is the go-to method for people who’ve fallen on temporary hard times or who have done the work to improve their finances and want to take care of their debt quickly.

It’s important to know that your debt consolidation loan may not cover the entirety of your debt. In those cases, you’ll want to prioritize paying off the remaining debts based on the terms of your new loan.

Home Equity Loan

If you own a home with equity, you have the option of taking out a home equity loan or home equity line of credit, or doing a cash-out refinance.

For homeowners, these options will most likely offer the lowest interest rates, but they’re also the riskiest, because your home is the collateral.

4. Get Help if You Need It

The world of debt collections and creditors can be confusing, intimidating and sometimes even illegal. There’s a common misconception, for example, that someone can take your house or you can go to jail for not making your payments. But credit card debt is unsecured civil debt, meaning no one can put you in jail or take your house for not paying it.

If you’re being harassed by creditors or have circumstances that make your debt repayment confusing, don’t give up before finding out what options you have for assistance.

You’ll also want to be careful when seeking help. While some companies are legitimately there to assist you, others take your money and do very little to help your situation. Always seek reviews online and referrals from friends and family, and go with your gut when talking to their representatives.

Debt Management Program

With a debt management program, a credit counseling company will handle your consolidation in hopes of getting you better interest rates and lower fees. You’ll be assigned a counselor, who will set up a repayment and education plan for you. This program is specifically for unsecured debt, like credit cards and medical bills.

A debt management program pays your creditor for you to ensure you stay current on your debt payments. Your credit score may even improve during the program. But if you miss a payment, you can be dropped, and you’ll lose all the benefits you gained.

The program typically lasts three to five years, so it won’t help if you want to pay off your debt faster, but it is typically the best option for those who can’t.

Credit Card Debt Settlement

If you’re in more than just a temporary season of financial instability, and you can’t see yourself affording the amount of credit card debt you owe, debt settlement is an option, though we regard it as a last resort.

Debt settlement reduces the amount of debt you owe, but it will significantly lower your credit score and negatively impact your credit report.

The process isn’t as simple as debt consolidation, either. You have to convince every creditor that if they don’t settle with you, they probably won’t get anything at all. So, of course, during that time you won’t be making any payments — while interest and late fees accrue.

You can do this on your own, but most people seek the help of a debt settlement company.

Like a debt management program, a debt settlement firm will negotiate debts on your behalf, and the company will make lump-sum payments to creditors while you make monthly payments to the debt settlement company.

While you’re paying the debt settlement company, you’ll still be delinquent with any creditors the company hasn’t yet negotiated with, meaning you’ll still get calls from those creditors.

And there’s no guarantee the company will be successful. If it isn’t successful in negotiating, you’ll still be responsible for the full debt amount, plus any extra interest that accrued.

If the company is successful, you’ll have to pay the settlement amount in full. Then in April, you’ll owe taxes on the amount forgiven.

The settlement company will also charge you up to 25% in fees on top of the settlement.

Bankruptcy

Bankruptcy is another last resort. The two major types for individuals are Chapter 7 and Chapter 13.

Chapter 7 bankruptcy allows the filer to completely discharge all their debts in four to six months by liquidating their assets. A trustee gathers and sells all of your nonexempt assets to pay off your debt. Those assets can include property that’s not your primary residence, a vehicle with equity, investments or valuable collections.

Those who earn a high income or have significant assets typically choose Chapter 13, which allows them to keep certain assets while still repaying some of the debts. It’s a long, arduous process that doesn’t guarantee to resolve your debt. It can be reversed if your income increases, and it wrecks your credit.

Both bankruptcy options have negative long-term ramifications on your credit.

Jen Smith is a staff writer at The Penny Hoarder. She and her husband paid off $ 78,000 of debt in less than two years on two less-than-average salaries. She gives money-saving and debt-payoff tips on Instagram at @modernfrugality.

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

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How criminals use Uber and Airbnb to launder money stolen from your credit card

Cybercriminals are mixing old school and new school methods of money laundering, including innovative methods for mixing ill-gotten cryptocurrencies with legitimate cash and recruiting Airbnb hosts and Uber drivers via the dark web.
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Crypto exchange Binance now lets you buy Bitcoin with a credit card

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Despite the plummeting prices, buying your way into the world of cryptocurrencies is getting easier every day. 

Binance, the world’s largest cryptocurrency exchange by volume, announced on Thursday it now supports purchases via credit and debit cards. 

Visa and Mastercard are currently supported, and users can buy Bitcoin, Ethereum, Litecoin and XRP. To do so, go here, choose the coin, enter the amount of coins you want to buy, enter your credit card details and you’re ready to trade those with the 150 coins and tokens supported by Binance.  Read more…

More about Cryptocurrency, Binance, Tech, and Cryptocurrency Blockchain


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Here’s a Simple Trick to Snag 1% Cash Back on Anything (Without a Credit Card)

Remember that sweet surround sound system you bought a year ago? “Game of Thrones” never sounded so cool!

You even used your special credit card so you could earn some cash back on that baby. Well, that was the idea, anyway. Six months later, when you still had a balance on that card, you realized you paid a lot more in interest than what you earned in cash back.

The score? Credit card company: 1. You: 0

Believe it or not, you don’t have to use a credit card to enjoy the benefits of cash back. You can earn 1% cash back just for making your everyday debit card purchases — if you have an Empower banking account

You Can Get Cash Back — Without the Risk

You love cash back. Who doesn’t?

The problem is, your credit card offers you a small percentage of cash back, but it charges you an astronomical interest rate.

Why not just get cash back without the risk of paying crazy interest rates?

Here’s the trick: Don’t get a cash-back credit card — get a cash-back debit card with Empower.

When you open an Empower checking account, you can start earning cash 1% back on your everyday purchases with your debit card up to the first $ 1,000 spent each month. Refer your friends to this awesomeness, and you could boost that number up to 2%.

Your morning coffee stop? Cash back.

Lunch? Yep, cash back.

That weekly trip to stock up on groceries? You guessed it. Cash back.

Stop risking your money with credit cards just to get cash back. With Empower, you can get the rewards you love without risking big interest charges. Plus, there are no ATM fees, annual fees or overdraft fees.

Handle all of your finances right from your phone with Empower. Pay nothing and earn cash back just for using your debit card.

The score? Credit card company: 0. You: 1%.

Winner winner.

Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.

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

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How to Raise Your Credit Score in 2019

Working at Experian and in banking, I have knowledge on how to raise your credit score in 2019. For instance, did you know you should have two credit cards maximum, for personal or business use? As always: pay your bills on time; keep long-line history. And two new credit programs can help you boost your credit score in 2019.

New Credit Program from Experian 

Experian recently announced Experian Boost, which will allow consumers to influence their credit scores by showing on-time payments for utilities, phones, and cable TV.

In order for the program to work for you, you have to give Experian permission to access your bank account information so that the agency can access your payment history. Once access is given, you can calculate your immediate score. Roughly 8 million people could potentially move into the fair (580-669) or good (670-739) credit ranges under the new system,” according to Experian. This credit boost can help with getting apartments, homes, insurance, and more.

UltraFICO Program 

Another new program is Ultra FICO. UltraFICO was created for people with dings on their credit histories. About 4 million consumers may see an increase of 20 points with the new program, according to representatives at FICO. The average card interest rate is currently at a record 17.41%, according to CreditCards.com. That’s up from 16.15% one year earlier and 15.22% two years ago. Credit card debt is now $ 1 trillion. In addition, tax liens have now been excluded from credit reports for a little time now.

In addition, remember:

  • Keep your credit utilization below 30%
  • Dispute inaccuracies on your credit report either online or by letters in the mail
  • Use 0% interest balance transfers to your advantage
  • Do not close long-standing credit card lines
  • Keep inquiries to a minimum

Black Enterprise Contributors Network 

The post How to Raise Your Credit Score in 2019 appeared first on Black Enterprise.

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1.18.19 Paying bills will increase your credit score; Clark Stinks

Paying bills could now have a direct positive impact on your credit score thanks to Experian; Christa reads listener posts about how Clark has missed the mark in his advice this week. If you have a “Clark Stinks” to share you can leave it here

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Man Uses Stolen Credit Card To Buy $3K Piece Of Pool Equipment

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Investigators are looking for a man who may be part of a “ring of thieves” targeting small businesses in the Houston area.

Click 2 Houston reports, surveillance cameras at a Pool Supply store captured images of the suspect entering the store and helping load a nearly $ 3,000 pool heater into a truck.

According to store owner Jeff Harper, there was nothing unusual about the transaction at first.

“We accepted the credit card, the customer paid for the heater and came and picked up the next day, it was gone,” Harper said.

The man reportedly called himself Christopher, and said he was calling from Austin, and needed the heater “for a job.” He said he would call around to check on pricing and call back.

When he did, Harper checked his phone number, address and email, to be sure he was legitimate.

But two weeks after the sale, American Express informed Harper the credit card used to buy the heater had been stolen from someone in Michigan.

According to police this incident is connected to a large ring of thieves and Harper is not the only victim.

“It takes a lot of effort for me and my dad to even buy that heater to be able to sell to someone,” Harper’s son, Dylan, said. “For someone to just come in and just take it and then there’s no recourse. We don’t have that money in our account.”

Click 2 reports, the bumper on the white van that hauled away the heater had been stolen from a junkyard to disguise the getaway vehicle.

To contact the Harris County Sheriff’s Office with information about this case, call 713-221-6000.

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1.15.19 Hospitals now posting prices; Car theft on the rise; Contactless credit cards

Hospitals are now posting prices but it doesn’t look like it will actually help consumers right now; Car theft is on the rise mostly because drivers are leaving their key fobs in their cars; Contactless credit cards are coming to your mailbox this year in droves.

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12.27.18 Flight cancellations and what to do; Are credit card annual fees worth it?

Clark tells you what to do in the case your flight is cancelled; Credit card annual fees are often said to be bad. But sometimes they can be worth it. Clark tells you how to judge whether a card with an annual fee is worth it for you or not.

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The best travel rewards credit cards of 2019

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Traveling can be pretty expensive, you’ll have to pay for flights, hotels, transport, and food. The costs soon add up, but there are ways that you can save money by spending money. Many financial companies will offer travel rewards credit cards to encourage their customers to spend money while they are on vacation. Here are the best of the bunch that are worth investing in.

Bank of America Travel Rewards Credit Card

Many travel rewards cards require you to pay an annual renewal fee, but that is not the case with this card from Bank of America. You earn points on everything that you buy with this card, 1.5 points per dollar spent and if you spend $ 1,000 in the first 90 days of signing up, you will get a free bonus of 20,000 points, which adds up to $ 200 worth. It’s a pretty quick return on signing up with the credit card service as you can book your vacation after signing up and pretty much make yourself $ 200 in points just spending money were going to spend anyway. If you are a Bank of America customer, you can earn a bonus ranging from 10% to 75% when you redeem your points, all depending on how much money you have in your bank account.

The Platinum Card, American Express

The Platinum Card doesn’t come cheap, but you get some incredible perks for your money. It’ll cost $ 550 to renew each year, but some will say that is money well spent. Using your card within your first three months can earn you up to 60,000 reward points, allowing you to make $ 5,000 worth of purchases. You’ll get $ 200 worth of Uber credits each year and also $ 200 worth of credit for airline fees. For every dollar you spend using your card you’ll receive five reward points, meaning the rewards will soon add up if you travel a lot. The Platinum Card will gain you access to over 1,000 airport lounges across the world, meaning you’ll be able to grab some food and a drink in peace away from the masses in the main airport lounges of the world.

Marriott Rewards Premier Plus Credit Card

For many people, they don’t really care about how they get to their vacation destination as long as they can enjoy their stay when they are there. For those people, the hotel they stay in is more important than pretty much anything else. For those who spend most of their travel budget on their hotel then the Marriott Rewards Premier Plus card is for them. It has a low annual renewal fee of $ 95, and for each year that you remain a customer, Marriott will gift you a free stay in one of their hotels. Each dollar that you spend at a Marriott Rewards participating hotel will earn you 6 reward points, meaning you can rack up the points pretty quickly on vacation. You’ll be upgraded to silver status on renewing your account, giving you exclusive offers, late checkout options and a 20% bonus on rewards points earned.

The cost of travel soon adds up, so it is often worth getting a rewards card if you travel pretty regularly. You’re going to be spending that money anyway so you might as well try and get some rewards for doing so.

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The post The best travel rewards credit cards of 2019 appeared first on Worldation.

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85 Million Americans Could Have Credit Report Errors. Here’s How to Find the Mistakes

Your credit score is important. The better your score, the better deal you’ll get on a mortgage, car loan or credit card. We’re talking big money here.

Even if you’re not buying a house anytime soon, a lousy credit score means you’ll get hit with a high security deposit whenever you rent a car or move into a new apartment.

But did you know your credit score could be inaccurate? One out of four credit reports have an error, according to a study by the Federal Trade Commission.

To keep a closer eye on your credit, get your credit score and a “credit report card” for free from Credit Sesame. It breaks down exactly what’s on your credit report in layman’s terms, how it affects your score and how to address it.

Because it simplifies everything, you should be able to spot any errors. For instance, if you find an “unpaid” credit card that you know you paid, or a bill in collections you know never existed, you can dispute the incorrect information and raise your credit score.

James Cooper, a motivational speaker, raised his credit score 277 points using Credit Sesame. Now he talks to high school students about the importance of having good credit and uses what he’s learned through Credit Sesame as a blueprint for his lessons.

“We want to touch the Z Generation,” Cooper says “We’re not in the business of fixing credit. We want to get to you before you have to fix your credit.”

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

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Pay off Credit Card Debt Without Selling Jewelry or Getting a Second Job

If they made a movie about paying off your credit cards, it would be called “Mission: Impossible.”

Seriously, paying down your credit card debts is a Herculean task. It can feel like you’re trying to climb a mountain that’s made out of quicksand.

You reach a point where you’re paying so much interest, you can’t pay down the principal.  

It’s tempting to take drastic measures. Sell off all your jewelry. Take a second job and say goodbye to your free time. You don’t have to do that. Don’t despair.

We’ve Got Ideas You Haven’t Thought of

Before you drive to the pawn shop or check the job listings, we’ve got eight tips for how to pay off your credit cards.

1. Let This Company Cut Your Interest Rates

When you think about how much debt you have, you might feel a little anxious.

That’s where a company like Fiona can be helpful. It can help you find personalized lending options to refinance or consolidate your debt to potentially save thousands dollars in interest.

Fiona will show you all the lenders willing to help you pay off your credit cards and eliminate the headache of paying bills by allowing you to make one payment each month.

You can borrow up to $ 100,000 (no collateral needed) and compare interest rates, which start at 4.99%. The idea is to secure a loan at a lower interest rate, potentially helping you save thousands. Repayment plans range from 24 to 84 months.

Take, for example, Katherine, who faced $ 12,000 in credit-card debt. Holding her back? The 15.24% interest rate. By refinancing with a 5%-interest, seven-year personal loan, she saved $ 12,000 in interest.

If she’d kept on the same road, she would have paid something like $ 14,000 in interest alone over 25 years. Yikes.

So even if you’re simply curious about what’s out there, know that checking rates on Fiona won’t hurt your credit score — and can probably save you in interest.

2. Get a Strategic View of Your Debt

One of the toughest parts about paying down debt is knowing where to begin.

To get yourself out of this hole, first you have to know what you’re dealing with.

Your credit report will give you this information. You can get a free copy of it once every 12 months from each of the three major credit reporting bureaus — but they can be tough to decipher.

If you want to keep a closer eye on your credit, get your credit score and “credit report card” for free from Credit Sesame. This website breaks down exactly what’s on your credit report in layman’s terms, how it affects your score and what you should do about it.

It offers personalized tips for how to deal with your debts. Folks who’ve used it tell us it’s a lifesaver.

3. Find out If You’re Paying Too Much for Car Insurance

Woman posing in front of a mural of a car.

You’re probably overpaying for car insurance and wasting money you could use to pay down debt.

Have you shopped around lately? Have you compared rates from the 20 largest auto insurers that do business in your area? That sounds kind of difficult and time-consuming, doesn’t it?

Fortunately, a service called Gabi will do it for you, and you don’t even have to fill out any forms. Simply link your insurance account and provide your driver’s license number, and Gabi will go to work.

Once you link your insurance account to Gabi, it will:

  • Scan your existing insurance plan.
  • Analyze what coverage you have.
  • Compare the major insurers’ rates for that same coverage.
  • Help you switch on the spot if it finds you a better rate.

Gabi says it finds an average savings of $ 720 per year for its customers.

It is a true apples-to-apples comparison at the same coverage levels and deductibles you currently have. Once you sign up, you never have to shop again. Gabi’s software has your policy on file and keeps on monitoring for savings as your life changes.

4. Find Some Hidden Cash

Before you start hashing out a plan to tackle your debt, it might make you feel better to find areas in your life where you can save. Then you can funnel that money directly toward those outstanding balances.

For consistent savings, download TrueBill, an app that’ll negotiate your bills, cancel unwanted subscriptions and refund your bank fees. On average, Truebill says it saves customers $ 700 a year.

You can also try digging up some extra cash with Paribus — a tool that gets you money back for your online purchases. It’s free to sign up, and once you do, it will scan your email for any receipts. If it discovers you’ve purchased something from one of its monitored retailers, it will track the item’s price and help you get a refund when there’s a price drop.

One of our favorite ways to save on everything is with Ebates, a cash-back site that rewards you nearly every time you buy something online. For example, Ebates gives you 10% cash-back on online purchases at Walmart. Plus, you’ll get a free $ 10 gift card to Walmart for giving the site a try.

Disclosure: Paribus compensates us when you sign up using the links we provide.

5. Earn Rewards When You Repay Your Debt on Time

Woman on laptop.

When you were a kid, your mom probably gave you an allowance for washing the dishes and sweeping the floor. Now all you get for doing that is a kitchen that’s clean for, like, 15 minutes.

Now that you’re a grown-up, you no longer get rewarded for just doing the things that are expected of you — like, for instance, paying bills on time.

Not until now, anyway. MoneyLion, a free app for managing your personal finances, will reward you for things like paying your bills and monitoring your credit — even just setting up an account in the app.

Much like that childhood allowance, it’s basically bribing you to be good.

You’ll earn points in the app’s rewards program, and you can redeem them for gift cards to more than 15,000 retailers, including places like Walmart, Applebee’s and Amazon.

If you want to take it a step further and work on paying down debts, for example, MoneyLion can help with a loan to consolidate your debt and potentially reduce your interest rates. And it’ll reward you for that, too!

6. Start Saving Without Trying

Saving money is tough. So what if you could do it in a way where you wouldn’t even notice?

Digit makes that possible.

This innovative app automates saving for you. Simply link it to your checking account, and its algorithms will determine small (and safe!) amounts of money to withdraw into a separate, FDIC-insured savings account.

Bonus: Penny Hoarders will get an extra $ 5 just for signing up! Additionally, savers will receive a 1% bonus every three months.

Digit is free to use for the first 30 days, then it’s $ 2.99 per month afterward.

7. Make Extra Money While You Watch TV

For those times you choose the frugal route and stay in for the night, why not cash in on your free time? Survey sites aren’t the fastest way to earn money, but they’re a great way to build a little savings while you veg out.

Here are some of our favorites:

  • Swagbucks is definitely a reader favorite, probably because of the wide variety of ways to make money beyond taking surveys. Plus, you get a $ 5 bonus when earn 2,500 SB within your first 60 days.
  • InboxDollars lets you actually get paid to watch TV online. The site hosts a ton of stuff to watch, including cooking, entertainment, news and health shows. The shows are sponsored by brands that need to get them in front of as many eyeballs as possible. Every time you watch one, InboxDollars will credit your account with a little bit of cash.
  • MyPoints: This platform lets you earn gift cards for taking polls, answering surveys and other things you do online — a great way to cash in on long lines or an endless commute. You’ll earn a $ 5 bonus when you complete your first five surveys.

8. Negotiate Your Bills

Remember what your grandma used to say when you wanted a cookie? “Ask nicely!”

It turns out that’s amazing life advice when it comes to tackling your debt, as well.

Sometimes you can lower your bills, especially crippling medical bills, just by asking to have them reduced. Let your provider know a good reason why you can’t pay what it’s asking. You might get a little relief.

Also keep an eye on late fees and other sneaky charges that are added on to your bill. Those are easy for your debtors to remove if they choose.

It doesn’t hurt to ask, right?

Mike Brassfield is a senior writer at The Penny Hoarder.

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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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7 Mistakes We All Make When We Have Credit Card Debt

Let’s just come right out and say it: We all make mistakes.

Accidentally dyed your whites a startling shade of pink in the washing machine? Check. Set off the fire alarm when you attempted your first home-cooked meal? Of course. Said “thank you” to a waiter when they told you to enjoy your meal? Find us one person who hasn’t done that.

And when it comes to money, particularly credit card debt, we’ve all had our fair share of missteps.

In fact, it seems like we’re all making the same mistakes over and over, a la “Groundhog Day.” But the time has come to break that cycle.

7 Mistakes We All Make When We Have Credit Card Debt

If you find yourself dealing with credit card debt and worry you’re not handling it in the best way possible, don’t worry. We’re all in the same boat.

1. Overpaying for Interest (and Never Questioning It)

A woman looks in her empty wallet.

When you think about how much debt you have, you might feel a little anxious.

That’s where a company like Fiona can be helpful. It can help you find personalized lending options to refinance or consolidate your debt to potentially save thousands dollars in interest.

Fiona will show you all the lenders willing to help you pay off your credit card and eliminate the headache of paying bills by allowing you to make one payment each month.

You can borrow up to $ 100,000 (no collateral needed) and compare interest rates, which start at 4.99%. The idea is to secure a loan at a lower interest rate, potentially helping you save thousands. Repayment plans range from 24 to 84 months.

Take, for example, Katherine, who faced $ 12,000 in credit-card debt. Holding her back? The 15.24% interest rate. By refinancing with a 5%-interest, seven-year personal loan, she saved $ 12,000 in interest.

If she’d kept on the same road, she would have paid something like $ 14,000 in interest alone over 25 years. Yikes.

So even if you’re simply curious about what’s out there, checking rates on Fiona won’t hurt your credit score — and can probably save you in interest.

2. Sticking to a Budget That Doesn’t Work For You

So, you decided you were going to tackle that credit card debt. The best place to start is making a budget, right?

You did some research, picked out a budget method and have followed it to a T — or tried to at least, because we all know budgeting hiccups are inevitable. So why, even though you did the so-called adult thing and made a budget, are you still feeling overwhelmed by looming credit card debt?

It’s pretty simple, actually: There isn’t one magical, cure-all budget. Everyone’s financial situation is different, so it’s important you find a method that actually fits your lifestyle. You want to control your budget, not the other way around.

Don’t just think about numbers such as income and debt when creating a budget. Consider outside factors that could make your planned budget destined for failure.

How much time and energy are you willing to devote? Are you a schedule-follower by nature, or more go-with-the-flow? Are there any obstacles conflicting with your budget, such as an irregular pay schedule?

Finding a budget that works for you will make you feel more in control of your finances, including that pesky credit card debt.

3. Overpaying for Other Monthly Bills

A notebook with a paged labeled budget sits on a bed with some pens.

You’ve made a budget, you’ve checked it twice — so why are you still wondering where the heck your money is going?

It’s time to dive deep and figure out which bills are taking more than their fair share. Instead of manually sorting through every single credit charge, let someone else do it for you… or something, really.

First, download TrueBill, an app that’ll negotiate your bills, cancel unwanted subscriptions and refund your bank fees. And yes, that includes the Barnes and Noble membership you’ve had since 2009 — even though you haven’t set foot in a brick-and-mortar bookstore in roughly five years. Tsk tsk.

Another bill that makes your eyes involuntarily widen every single month? You guessed it: Insurance.

Insurance bills can be hard to swallow, but the mere thought of shopping around for new rates is arguably worse. Fortunately, Gabi will do the leg work for you.

And the best part? You don’t even have to fill out any forms. Simply link your insurance account and provide your driver’s license number, and Gabi will go to work..

The service will compare major insurers’ rates for your same level of coverage, and even help you switch on the spot if it finds you a better rate.

Once you trim some of your monthly bills, you’ll have a bit more breathing room for paying off that credit card debt!

4. Overpaying for, Well, Everything Else

A woman sits on her couch and uses her laptop.

Dealing with credit card debt doesn’t mean you can just stop spending money. And a major part of life is shopping, whether it’s at the grocery store for necessities or at the mall for a treat yo’self day.

Luckily, there are services that can help you feel a little less guilty every time your swipe that card. How, you ask? By ensuring you’re getting the best deal possible, one way or another.

First up we’ve got Paribus, a tool that gets you money back for your online purchases. It’s free to sign up, and once you do, it will scan your email for any receipts. If it discovers you’ve purchased something from one of its monitored retailers, it will track the item’s price and help you get a refund when there’s a price drop.

For once, it’s a good thing to not clear out your inbox.

Another way to avoid overpaying while shopping online? Ebates, a cash-back shopping site that rewards you simply for buying something online! You can earn 1% to 25% on purchases from more than 2,500 online retailers.

There’s no charge, and Ebates even offers you a $ 10 Walmart gift card as a sign-up bonus.

Disclosure: Paribus compensates us when you sign up using the links we provide.

5. Letting Bills Fall Behind

It’s no secret that falling behind on payments is basically the opposite of what you want to do when dealing with credit card debt or any kind of debt, for that matter. What we all need in this situation is a little incentive to stay on track.

That’s where MoneyLion comes in This app offers rewards to help you develop healthy financial habits and will literally pay you for logging onto the app.

You connect it to your bank accounts, credit cards and other financial accounts. Based on your income and spending patterns, it offers personalized advice to help you save money, reduce your debt and improve your credit.

The app’s reward program will give you points for being financially responsible. Make a loan payment on time? Boom, 200 points right there. You can redeem them for gift cards to more than 15,000 retailers, including places like Walmart, Applebee’s and Amazon.

Let MoneyLion help you stay on top of those credit card bills, and handle them like a boss.

6. Thinking You Can’t Afford to Save

A man looks at the cash in his wallet.

Sure, you want to pay off your credit card debt as quickly as possible. But that doesn’t mean you shouldn’t still be devoting some money to your savings.

What if you get hit with an unexpected expense, such as a busted water heater or a trip to the emergency room? Without ample savings to help you out, you’ll only add to your debt anxiety.

We know saving money can be tough, but what if you could do it without even thinking about it?

No, we’re not talking about sorcery, we’re talking about Digit, an innovative app that will automate your savings.

All you have to do is link your bank account, then Digit uses an algorithm to calculate how much money you can safely set aside each day. It will put that money into a FDIC-insured savings account.

The out of sight, out of mind strategy takes the stress and legwork out of saving. One Penny Hoarder, a self-proclaimed “bad saver,” managed to tuck away $ 4,300 using the app.

Digit is free to use for the first 30 days, then it’s $ 2.99 per month afterward.

7. Letting Your Debt Take All the Fun out of Life

Listen, we understand that credit card debt is always at the back of your mind, popping up uninvited, trying to stress you out. We’ve all been there.

But here is a money mantra we stick with and want you to give a try, too: My debt does not control me.

You can be responsible, make budgets and stick to them; pay your bills on time; and save on expenses when possible. And all the while, you can live your life without sacrificing all of the fun stuff. Your financial health is important, but so is your physical and mental health!

Constantly be on the lookout for sneaky ways to save while still enjoying your social life, like hosting happy hour at your house instead of going out. And if you’ve got the time, consider finding a side gig that not only lets you earn some extra income, but is just flat out fun.

Might we suggest dog-walking with Rover? I mean, come on: Getting paid to hang out with dogs? Sounds like a slam dunk.

In short, your credit card debt is obviously important, but don’t let it stop you from living your best — but still financially responsible — life!

Kaitlyn Blount is a staff writer at The Penny Hoarder. She’s made her fair share of money mistakes on her debt journey. Do you have five, maybe six hours to spare to hear about them?

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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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How Many End Credit Scenes Are in Spider-Man: Into the Spider-Verse?

With the reviews now in for Spider-Man: Into the Spider-Verse, we can reveal whether there are any end- or post-credit scenes in the Sony-Marvel film and, if so, how many.

Turn away now if you don’t want to know!

Still here? OK then…

There isn’t really a mid-credits scene in Spider-Man: Into the Spider-Verse, but there is a nice and touching tribute to Spider-Man creators Stan Lee and Steve Ditko.

The post-credits surprise, on the other hand, is a full-fledged scene.

Again, spoilers follow!

The scene features the surprise arrival of Spider-Man 2099, the Spider-Man of the future. The man under the mask is Miguel O’Hara, voiced by Oscar Isaac (a.k.a. Poe Dameron). His appearance leads to a fun retro-trip to the old Spidey cartoon from the 1960s.

Continue reading…

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Don’t panic, but the Labor Department might access your credit report

Dear John: I recently reviewed my TransUnion credit report and learned Labor Secretary Alex Acosta had accessed my credit reports. Since I don’t work for Labor and I’ve not applied for credit from Labor or its federal credit union, it is alarming to me that Acosta and his staff would access my credit reports. I…
Business | New York Post

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China to allow overseas firms to participate in credit info system-China Daily

China will allow overseas
credit information firms to participate in a nationwide credit
information monitoring system that the central bank is building,
the China Daily newspaper reported on Thursday, citing a senior
central bank official.


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She Ditched Her Debt Collectors — and Raised Her Credit Score Nearly 200 Points

Tabatha Pankop spends long days on her feet. She waits tables, sometimes working double shifts for 15 hours at a time. Like most hardworking Americans, she has dreams of financial stability and homeownership.

There was just one problem.

“I just never thought having a low credit score would really impact your everyday life,” the 31-year-old Tampa server says.

Some old, and apparently unpaid, bills had hurt her credit. They included an old cell phone bill and an old power bill, among others.

“I guess a deposit or some type of rent that I thought I paid off, but I didn’t,” she says.

With her credit score dropping into the low 500s, she and her boyfriend were living in an older apartment, because that’s all her credit would allow. Pankop dreamed of buying her own townhouse, but that looked out of reach.

The aggressive phone calls from debt collectors didn’t help, either.

“Debt collectors — ah, man, they just literally harass you,” Pankop says. “They will say things that are inappropriate, and sometimes they can make you cry because they will say things that are very rude.”

That’s when a co-worker told her about Collection Shield 360, a credit repair service that helps people clean up their credit reports and deal with collection agencies.

Quick Results: ‘My Credit Skyrocketed.’

She decided to give it a shot and signed up. She quickly saw a dramatic difference in her credit score.

“Within a few weeks — maybe three months at the most — my credit skyrocketed,” she says. “Before I started with Collection Shield, I was at [about] 520, 530. Now I’m almost at 700. It’s just amazing.”

Collection Shield 360 offers two membership options:

  • Basic membership provides free credit-repair services with no cost to sign up.
  • Premium membership provides faster results and includes automatic monthly updates of your TransUnion credit score and collection accounts. You can sign up for premium for $ 1 for a two-month trial; then it’s $ 9.48 a month.

Here’s what it does:

  • Contacts your debt collectors to have negative marks on your credit report removed.
  • Provides you with credit bureau dispute letters that can help scrub your credit report.
  • Connects you with consumer attorneys who provide free legal services to help you remove negative items from your credit reports.

In Pankop’s case, it helped her deal with lingering bills from T-Mobile, Bright House Networks and Verizon.

Now, Pankop has just signed a lease on a new apartment she never imagined she could get into. Next, she’ll start looking for a nice little townhouse to buy.

Then she’ll go to nursing school.

“With having great credit, I’m able to get student loans with a lower interest rate,” she says. “I plan on getting my RN within the next few years.”

For her, it’s like a breath of fresh air.

“This has put me in a position where I’m becoming an adult, instead of that young girl figuring out her life.”

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He knows what it’s like to get calls from debt collectors.

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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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Here’s How The New FICO Credit Scoring Will Help Your Credit

Have you checked your credit score lately? Well, a new FICO credit scoring system is expected to debut in early 2019—and it may lead to a favorable boost in your credit if your bank activity is in line with standards.

The Fair Isaac Corp., the originators of the coveted FICO Score, is planning to create a more holistic credit scoring method. Traditionally, a borrower’s credit-worthiness has been calculated based on payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%). Now, Fair Isaac Corp. will factor in a person’s ability to manage liquid assets such as checking, savings, and money-market accounts.

This new credit metric, the UltraFICO Score, is FICO’s solution to broadening lending eligibility. Experts believe this shift in credit scoring will increase access to credit products by leveraging consumer-driven bank information to assess an individual’s financial management capabilities. Lenders will now see an enhanced view of financial behavior that can impact lending outcomes and approval ratings.

Credit scores are synonymous to the report cards you get in school. It shows how well you’ve performed in a variety of financial areas to determine how likely you are to repay a loan. These scores are used by a variety of lenders to assess your credit personality and risk profile.

FICO estimates the UltraFICO Score scoring will improve credit access for the majority of Americans, especially those with credit scores ranging from the upper 500s to lower 600s and individuals with limited credit history or financially distressed individuals who are regaining their wind.

Most FICO scores range from 300 to 850, and the highest scores get access to the best interest rates in the market. According to FICO, the average FICO in the U.S. as of September 2018 was 704, rising approximately 15 points higher than average scores a decade ago when the recession was near its peak.

If you’re hoping the new credit scoring will work in your favor, pay close attention to the additional data points that will be taken into consideration and create a plan that will give you optimal results.

 

The post Here’s How The New FICO Credit Scoring Will Help Your Credit appeared first on Black Enterprise.

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A New Way To Score Credit Might Help You

YOU JOIN US THIS MORNING WITH CREDIT SCORE NEWS. WHAT DO YOU HAVE FOR US THIS MORNING?

An interesting story broke last week that could benefit some of our listeners with below average credit. Fair Isaac Corporation, the company responsible for the widely used FICO credit score, announced it would soon be testing a new score that takes a borrower’s bank account balances and cash management practices into account to supplement that traditional credit score metrics.

The goal of this new score is to provide a new path for people with borderline credit to qualify for loans or credit cards. Fair Isaac will partner with Experian, one of the big credit reporting bureaus, to test the new formula next year.

 \HOW WILL THIS NEW SCORE WORK?

The current system of calculating a FICO credit score – the three-digit number that lenders use to evaluate a borrower’s ability to repay a loan – are based primarily on a borrower’s history of repaying mortgages, loans and credit card balances.

The new score, which Fair Isaac is calling UltraFICO, would into account factors like how long accounts have been open, the frequency of activity and evidence of saving.

IF THEY ARE CONSIDERING ACCOUNT ACTIVITY, DOES THAT MEAN THEY HAVE ACCESS TO YOUR BANK STATEMENT?

A great question, Tom. Obviously, it would make many people nervous to let Fair Isaac or any company have access to your account details. Instead, UltraFICO would be offered to customers who were not otherwise able to qualify for credit or a loan with their traditional FICO score.

Lenders would then have to get a borrower’s sign off to collect information about their cash management habits and create an UltraFico score. Specifics like where you are spending money are currently not expected to be tested.

WHO WOULD BENEFIT?

Fair Isaac Corporation has said the UltraFICO would likely be most helpful for  people with credit scores in the high 500s to the low 600s, or those with scores just outside of a lender’s cutoff. A

dditionally, people who have limited credit history, like young people, and those who had a financial rough patch and are restoring their credit would likely benefit too. The company said that those who opt for UltraFICO could see their score jump 20 points if their banking behavior is deemed positive.

THIS IS AN INTERESTING PROPOSAL, BUT CAN YOU REMIND US HOW TO BOOST OUR REGULAR CREDIT SCORES?

It’s about the fundamentals. First, pay your bills on time. Because credit scores are designed to give lenders an idea of how reliable you are, the best thing you can do is be consistent. If you often forget the date or pay late, I would recommend signing up for automatic payments.

You also want to pay close attention to your credit cards. First, you want to keep your credit card balances as low as possible, if not at zero. High balances and high credit usage – the ratio of credit used to credit available – will be noted.

You also want to avoid having balances across a number of cards. Finally, review your credit reports regularly. With increased hacking and scammer activity, you want to be vigilant for false activity on your credit report.

 


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Identity Theft Concerns? Freeze Your Credit for Free, Now

A law that went into effect Sept. 21 allows you to freeze your credit with all three credit bureaus: TransUnion, Experian, and Equifax.

Why You May Want to Freeze Your Credit

According to the Federal Trade Commission, a credit freeze, also called a ‘security freeze,’ “lets you restrict access to your credit report, which in turn makes it more difficult for identity thieves to open new accounts in your name.”

Freezing credit is not something new, however many states allowed the credit bureaus to charge to do so, according to BizJournal.

Congress made credit freezing ubiquitously free after a hack compromised an estimated 143 million people’s personal information on Equifax’s servers in 2017. Sen. Elizabeth Warren (D-Mass.) pushed for the Freedom from Equifax Exploitation (FREE) Act.

FAQs about Credit Freeze

From the Federal Trade Commission’s Consumer Information web page:

Does a credit freeze affect your credit score?

A credit freeze has no negative effect on your credit score. It also does not prevent you from getting your free annual credit report. Nor does a freeze prevent you from “opening a new account, applying for a job, renting an apartment, or buying insurance.” However, you do have to lift the freeze before embarking on anything that requires a credit check (more on that later).

What is the difference between a credit freeze and a fraud alert?

A credit freeze prevents a crook from opening up an account using your credit or from identity theft. A fraud alert will not prevent identity theft but will alert you when there is suspicion of something shady going on.

Is credit freezing a 100% guarantee that your data and credit won’t be compromised?

No. According to a post on Experian’s blog, “In the event your credit card number falls into a fraudster’s hands after a data breach, know that a credit freeze won’t help.”

How to Freeze Your Credit

You can freeze your credit online or by calling each individual credit bureau. You will need your Social Security number, name, address, and date of birth. Additionally, each bureau will ask you to verify your identity by answering a series of questions: checking off previous addresses; past loans or leases you may have taken out, etc.

Here are the websites and phone number for each bureau:

Equifax

Equifax.com/personal/credit-report-services

800-685-1111

Experian

Experian.com/help

888-EXPERIAN (888-397-3742)

TransUnion

TransUnion.com/credit-help

888-909-8872

Lifting a Freeze 

After you’ve placed a freeze, each bureau will provide you with a PIN (Personal Identification Number). You must keep this PIN in a safe place because you will need it whenever you want to lift the freeze.

Also, there have been reports that since the law was passed, the credit bureau’s websites have been inundated with credit freeze requests. There may be some wonkiness with some of the sites (I had trouble placing a freeze on TransUnion’s site this past weekend). If you can’t use the site, call the bureau to place the freeze (and expect long waits to speak to someone, for now).

In the meantime, if you are trying to clean you your credit, check out:

FIX YOUR SHADY FICO SCORE AND FIX YOUR CREDIT

FOUR TIPS TO INCREASE YOUR CREDIT SCORE FROM A CREDIT EXPERT

4 STEPS FOR BLACK ENTREPRENEURS TO BUILD THEIR FIRST BUSINESS CREDIT REPORT

 

 

 

 

 

 

 

The post Identity Theft Concerns? Freeze Your Credit for Free, Now appeared first on Black Enterprise.

Money | Black Enterprise

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Credit Card Debt? These 4 Sites Could Help You Pay It Down Faster

So, you have thousands of dollars in credit card debt, and the burden of paying off all that — and interest — is gobbling up your income.

Instead of financially treading water making minimum payments and paying maximum interest, make the smart move, and take out a debt consolidation loan. It’s a personal loan, usually at a lower interest rate that you can use to pay off your high-interest credit cards.

In the long term, you can save a ton of money, but first you have to shop around for a loan.

Sound difficult? It doesn’t have to be. Instead of spending hours scouring the internet, you can go window-shopping at an online marketplace that’ll help pinpoint the best loan for you.

We recommend you try more than one site and see what kind of results you get. Heck, try them all if you want. It won’t take long, and you have nothing to lose: Seeing your options won’t cost you anything, and it won’t hurt your credit score.

4 Marketplaces for a Credit Card Debt Consolidation Loan

To start, you’ll need to know your credit score, but that’s super easy. Just sign up for Credit Sesame, a free credit-monitoring service that helps you keep track of your credit. It’ll immediately show you your credit score, and it’ll offer you personalized tips to better manage your credit.

Here are four different options for places to find a loan online. At the end of this article, you’ll find a chart comparing them at a glance.

Credible

Credible is a one-stop shopping place where you can compare rates side-by-side from multiple lenders who are competing against each other for your business.

It allows you to compare quotes from seven different lenders: Avant, Best Egg, Freedomplus, Lending Club, Payoff, Prosper and Upstart.

Through Credible, you can borrow $ 1,000 to $ 50,000 with a loan term of two to five years, at interest rates ranging from 4.99% to 35.99%. The interest rates you’re offered will depend on your individual credit profile.

Credible is best for borrowers who have good credit scores and just want to consolidate their debt. It requires you to have a credit score of at least 680.

Even Financial

Compared to Credible, Even Financial allows you to borrow more money and borrow it for a longer period of time — if that’s what you want to do.

You can borrow up to $ 100,000 and spend up to seven years paying it back. That’s more money and time than you can get from any of these other three lending marketplaces.

Even’s lending partners include Avant, Best Egg, Freedomplus, Lending Club, LendingPoint, LightStream, Payoff, Prosper, SoFi and Upgrade.

You’ll need a credit score of at least 580. Interest rates range from 4.99% to 35.99%.

Lendvious

Lendvious is the newest of these four online loan websites.

Depending on your credit score and how much you want to borrow, you’ll immediately get offers from up to 10 lenders. You can borrow up to $ 50,000 with no collateral required.

Different lenders are looking for minimum credit scores ranging from 560 to 650. The company’s lending partners include Avant, Best Egg, Freedomplus, LendingPoint, Lending Club, Marcus, OneMain Financial, Prosper and Upgrade.

Interest rates range from 4.99% to 35.99%.

If your credit isn’t great, Lendvious might be your best option.

Upstart

Unlike those others, Upstart is a lending platform that manages the process from pre-approval through servicing your loan.

Founded by ex-Googlers, Upstart is a lending platform that’s striving to change the personal loan game. Rather than solely focusing on your credit score to determine your borrowing power, it looks at other factors, too, including your education and employment history.

Upstart tends to be especially helpful for recent grads, who have a short credit history and a mound of debt.

Many lenders judge consumers based only on their credit history. But Upstart believes this leaves out an entire segment of the population — even though they’re totally qualified.

When it comes to the length of the loan, Upstart offers three options: three, five or seven years. The company says its average three-year loan has a 16% interest rate*, with 36 monthly payments of $ 35 per $ 1,000 borrowed.

Comparing Your Options One More Time

Seeing your quotes from each of these platforms takes 5 minutes, tops, so you can easily try out more than one. Each conducts a soft inquiry on your credit, meaning it won’t affect your credit score at all.

Once you actually apply for a loan, the lender will perform a hard inquiry on your credit, which will ding your credit temporarily.

Here’s the chart we promised you:

  Credible Even Financial Lendvious Upstart
Interest rate 4.99% to 35.99% 4.99% to 35.99% 4.99% to 35.99% 8.92% to 29.99%
Term Two to five years Two to seven years One to five years Three or five years
Loan amount $ 1,000 to $ 50,000 $ 1,000 to $ 100,000 $ 1,000 to $ 50,000 $ 1,000 to $ 50, 000
Minimum credit score 680 580 560 620

*The average three-year loan offered across all lenders using the Upstart Platform will have an APR of 20% and 36 monthly payments of $ 35 per $ 1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on three-year rates offered in the last one month. Your APR will be determined based on your credit, income and certain other information provided in your loan application. Not all applicants will be approved.

All loans are made by Cross River Bank, an FDIC insured New Jersey state chartered commercial bank, equal housing lender.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He knows a lot about credit card debt from personal experience.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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.


The Penny Hoarder

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Bank of America earnings’ jump, topping Wall Street estimates, as consumer credit improves

Chief Executive Officer Brian Moynihan, 59, has focused on cutting costs while looking for profit opportunities that fit his "responsible growth" mantra. 
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Why Your Credit Cards May Deserve A Second Chance

(AP Photo)

While paying off $ 1,700 in credit card debt in 2014, Jamie Griffin cut up his card. To tackle the remaining $ 90,000 in student loans he and his wife carried, he read personal finance experts’ tips and turned to cash and a spreadsheet to budget. Now that most of their debt is paid off, he’s giving credit cards a cautious second chance.

Griffin has come to see credit cards as a way that he and his wife, Jenna, who are both teachers, can potentially defray the costs of travel. Instead of immediately applying for a travel credit card, though, the 31-year-old from Duluth, Minnesota, let his wife’s longtime rewards credit card lead the way as they transitioned from using cash to credit for most purchases.

“We wanted to practice to make sure we could actually do it rather than reverting back to our old spending habits of just swiping a card because we could,” Jamie Griffin says. “We haven’t had to pay any interest. We haven’t had any late payments.”

If you, too, have developed new spending habits — and potentially higher credit scores — since paying off debt, you might be a good fit for rewards credit cards that earn cash back for your emergency fund or miles for a vacation. Here are factors to consider.

REWARDS CAN HELP WITH EXPENSES

Rewards credit cards generally require a credit score of 690 or higher. They can earn cash back, points or airline miles in specific categories or on everyday spending. Rewards rates vary by card and some also offer sign-up bonuses with introductory zero percent interest rates for new cardholders.

Depending on the card, rewards can be redeemed for things like cash, statement credit, travel, gift cards or merchandise — all of which can help with household expenses, as long as you pay credit card bills in full every month to avoid interest charges.

Since early 2017, the Griffins have collected 38,000 points — that’s over $ 300 in cash back. They redeemed 20,000 points (about $ 200) into their bank account earlier this summer.

YOUR CREDIT MAY DEPEND ON IT

Paying off debt is a worthy goal. But if you later stop using a credit card, it can hurt your credit scores. That’s because credit utilization and length of credit history are key factors in the calculation of those scores, according to FICO.

Say you were to close an older high-limit credit card after paying it off — or that you use the card so infrequently that the issuer ends up closing the account for you. Shutting down the account would not only decrease your amount of total available credit; you would also lose the card’s account history.

Another factor in your credit scores is credit mix — the combination of different kinds of credit accounts. A healthy credit mix might include a mortgage or car loans, for example, and also credit cards.

“If you have a healthy mix of credit, and you’re using them wisely, and you have a good history, that should reflect in your credit score,” says Jeffrey Arevalo, financial wellness expert at GreenPath, a credit counseling agency.

Of course, without piles of cash on hand, you’ll need good credit if you want to qualify for a home or car loan at the lowest interest rates. Keeping a credit card active and using it responsibly is an easy way to maintain good credit.

But if the temptation to overspend is too great, closing a credit card account may be the way to go, Arevalo says.

CREDIT CARDS CAN HELP YOU PLAN

Before moving most of their expenses to credit, Jenna Griffin asked the issuer about benefits for longtime customers. The couple secured a six-month safety net with a zero percent interest rate that they didn’t have to use.

Recently, the couple was approved for a credit card that earns miles to help them save money on travel expenses. Jamie Griffin continues tracking all of their expenses on his spreadsheet.

If you’re ready to give credit cards a second chance, here’s how to use a rewards credit card and maintain good credit:

– Pay your bill in full and on time every month.

– Don’t stray from your budget just to earn credit card rewards.

– Keep charges below 30% of your available credit.

– Use your credit card as a budgeting tool to track your spending and review your purchases.

– Keep your no-annual-fee accounts open and active to avoid hurting your credit score.

[ione_media_gallery id=”811″ overlay=”true”]

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Life & Style – Black America Web

BEST DEAL UPDATE:

Identity Theft Concerns? Freeze Your Credit for Free, Now

A law that went into effect Sept. 21 allows you to freeze your credit with all three credit bureaus: TransUnion, Experian, and Equifax.

Why You May Want to Freeze Your Credit

According to the Federal Trade Commission, a credit freeze, also called a ‘security freeze,’ “lets you restrict access to your credit report, which in turn makes it more difficult for identity thieves to open new accounts in your name.”

Freezing credit is not something new, however many states allowed the credit bureaus to charge to do so, according to BizJournal.

Congress made credit freezing ubiquitously free after a hack compromised an estimated 143 million people’s personal information on Equifax’s servers in 2017. Sen. Elizabeth Warren (D-Mass.) pushed for the Freedom from Equifax Exploitation (FREE) Act.

FAQs about Credit Freeze

From the Federal Trade Commission’s Consumer Information web page:

Does a credit freeze affect your credit score?

A credit freeze has no negative effect on your credit score. It also does not prevent you from getting your free annual credit report. Nor does a freeze prevent you from “opening a new account, applying for a job, renting an apartment, or buying insurance.” However, you do have to lift the freeze before embarking on anything that requires a credit check (more on that later).

What is the difference between a credit freeze and a fraud alert?

A credit freeze prevents a crook from opening up an account using your credit or from identity theft. A fraud alert will not prevent identity theft but will alert you when there is suspicion of something shady going on.

Is credit freezing a 100% guarantee that your data and credit won’t be compromised?

No. According to a post on Experian’s blog, “In the event your credit card number falls into a fraudster’s hands after a data breach, know that a credit freeze won’t help.”

How to Freeze Your Credit

You can freeze your credit online or by calling each individual credit bureau. You will need your Social Security number, name, address, and date of birth. Additionally, each bureau will ask you to verify your identity by answering a series of questions: checking off previous addresses; past loans or leases you may have taken out, etc.

Here are the websites and phone number for each bureau:

Equifax

Equifax.com/personal/credit-report-services

800-685-1111

Experian

Experian.com/help

888-EXPERIAN (888-397-3742)

TransUnion

TransUnion.com/credit-help

888-909-8872

Lifting a Freeze 

After you’ve placed a freeze, each bureau will provide you with a PIN (Personal Identification Number). You must keep this PIN in a safe place because you will need it whenever you want to lift the freeze.

Also, there have been reports that since the law was passed, the credit bureau’s websites have been inundated with credit freeze requests. There may be some wonkiness with some of the sites (I had trouble placing a freeze on TransUnion’s site this past weekend). If you can’t use the site, call the bureau to place the freeze (and expect long waits to speak to someone, for now).

In the meantime, if you are trying to clean you your credit, check out:

FIX YOUR SHADY FICO SCORE AND FIX YOUR CREDIT

FOUR TIPS TO INCREASE YOUR CREDIT SCORE FROM A CREDIT EXPERT

4 STEPS FOR BLACK ENTREPRENEURS TO BUILD THEIR FIRST BUSINESS CREDIT REPORT

 

 

 

 

 

 

 

The post Identity Theft Concerns? Freeze Your Credit for Free, Now appeared first on Black Enterprise.

Money | Black Enterprise

FASHION DEAL UPDATE:

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10.1.18 Thawing credit getting easier; Spam cell phone calls; Great online banks

Thawing your credit might not require PIN numbers anymore. And that’s not good; Spam calls to your cell phone are becoming a pervasive problem; There are new online bank offerings that you should consider that pay more and offer more benefits and convenience.

Learn more about your ad choices. Visit megaphone.fm/adchoices

Watch the video
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