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10 More things you didn’t know about credit scores, credit reporting, and debt in America
Your credit score impacts so much in your life these days, from rent and homeownership to credit card approvals, interest rates on student and auto loans to even employment. But too often, we’re still in the dark when it comes to credit scores, credit reporting, and general financial knowledge about debt management.
As the nation’s leader in credit repair solutions, Nationwide Credit Clearing is committed to help educate you about these important topics. This is part two of our ongoing series, 50 things you didn’t know about credit score, credit reporting, and debt. Look for part one here, and contact us if you have any questions or credit issues at all!
1. Which company earns the title as the most popular credit card in the rest of the world? That honor belongs to both Mastercard, which has 551 million cards issued throughout the world as well as 180 million cards here in the United States. However, Visa wins top-dog honors on home soil, with 278 million cards floating around the U.S., as well as 522 in the rest of the world.
2. It’s no surprise that people often turn to their credit cards to pay bills and living expenses once they are unemployed, In fact, 86 percent of low and middle-income households who have a working member that is now unemployed turn to credit cards to fill the gaps monthly.
3. Likewise, almost 50 percent of low and middle-income households now are carrying credit card debt that comes from out of pocket payments they have to make on medical bills and expenses.
4. It’s interesting to look at a map and compute the average credit score for each state (OK, I don’t get out much!). In fact, the states with the lowest average credit scores are in the south and southwest, including New Mexico, Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Tennessee, Georgia, Alabama, South Carolina, Nevada, and Florida. In those states, an alarming 40 percent of the population have subprime credit scores!
5. However, the states with the highest average credit scores are found in the north and midwest. Minnesota and North Dakota are the states with the highest average credit scores, with 707 and 700 average FICOs, respectively.
6. Aside from the state you live in, there are some other puzzling correlations between the heights of your credit score and your seemingly unrelated behaviors. For example, one study found a direct correlation between credit scores and which email provider the participants used! They found that Comcast email user (692 average) and Gmail, (682) have above average scores, but MSN (669), Aol (668) and Yahoo! (652) email users have below average scores.
7. But more common-sense correlations also apply. For instance, there are significant differences in credit scores based on age. Baby Boomers and the Silent Generation (68-85 years old) have average scores of 700 and up, while Gen Xers average a 655 score, Millennials average a 634 score, and Gen Z is lagging with a 631 average Vantage Score.
8. One correlation that we could have easily predicted is that between scores and homeownership, In fact, a Federal Reserve study found that the average credit score among homebuyers and homeowners is 728 – significantly higher than the national average. Additionally, they found that only 6.8% of homebuyers or homeowners had scores below 620 in the study.
9. We hear about our credit scores impacting home ownership, credit cards, interest rates on other loans, renting, and even employment. But did you know that your credit score can make a big difference on…your dating life? It’s true! According to a 2016 Bankrate survey, almost 4 in 10 U.S. adults say that they’d rather date someone with a good or excellent credit score, but they’d be wary of dating a sup-prime suitor. In fact, 43% of women and 32% of men said that a person’s credit would have an impact on if they dated them.
10. Americans are still pretty mixed up, confused, and turned around when it comes to basic knowledge of credit scores and credit reporting. In fact, studies have shown that of an average sample Americans, 47% didn’t know that credit scores are used by non-creditors like electric utilities and home insurers, 68% didn’t know that cell phone companies use credit scores, and 32% had no idea that landlords could check their credit!
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Do you have questions about your credit or looking to improve your score? Contact Nationwide Credit Clearing for a FREE credit report and consultation at (773) 862-7700 or mynationwidecredit.com!
The 15 most common credit score wrecking balls!
1. Paying late (or not at all)
Of course, one of the biggest wrecking balls that smash through your credit score and finances is paying your bills late. For accounts on your credit report, like mortgages, credit cards, auto and student loans, and many others, paying even just a day or two late can trigger a 30-day late, which will significantly ding your score.
Even worse, being 90 days late causes further damage to your credit report that. Remember that payment history (paying on time every month) is 30% of your score, so pay on time to dodge this wrecking ball!
2. Max out credit cards or accounts
Your credit ratio, or the amount of total debt you hold compared to your available credit, is also a major factor for your score, making up 30% of your FICO as well
So, when you max out your credit cards, even if they are paid on time, your score will get smashed.
3. Have an account charged off and go to collections
Once you are 90 days late with your credit card payment or bill, the next step is typically that your creditor soon charges off the debt, sending it to a third party for collections, causing even more damage to your credit score that can be hard to erase.
4. Cosign for someone who doesn’t pay
Maybe you have a friend or even family member that asks you to be a cosigner on their credit card, auto loan, or another account. I know that you’d like to help, but aware that if they don’t pay, YOU are fully responsible for their debt. In fact, those late payments will show up on your credit report just like you took out the debt, yourself.
5. Filing bankruptcy
If you want to talk about a big, heavy wrecking ball, filing a Chapter 7 or 13 Bankruptcy is one of the most damaging events to someone’s credit score. However, for some people, legal insolvency is still the best option if they are drowning in debt with no way out. The good news is that Nationwide Credit Clearing can work with you during and after the BK process to repair the damage!
6. Foreclosing on your home
Another major wrecking ball is foreclosure, which occurs when you miss enough house payments so the bank legally repossesses the home. Foreclosures cause serious damage to your credit score and will take seven years to fall off your credit report.
7. A judgment against you
This is a dangerous and scary wrecking ball for consumers. When you don’t pay your debt obligations, your lender or third-party collection agencies may take you to court, trying to secure a judgment for the amount you owe (plus late fees, penalties, and court costs). Also, there are state and federal judgments for unpaid child support, alimony, IRS tax liens, etc. that will never disappear from your credit file until they’re satisfied! Contact us immediately if you have judgments!
8. Applying for new credit recklessly
If you start filling out a lot of credit card and loan applications within a short period, it shows the credit bureaus that you’re financially desperate, or something is wrong. Since their main job is indicating risk for lenders, your credit score will take a hit, accordingly.
9. Close old credit cards in good standing
It may seem like good financial sense to cancel old or unused credit cards, but by shutting down a seasoned card or credit line in good standing, you’ve just effectively erased a positive track record of paying on time. Sorry, but your score will go down once that positive payment history is taken out of the equation.
10. Not pay student loans
Remember when we were talking about judgments? Unpaid federal student loans will level your credit very quickly, and they also won’t naturally disappear from your credit report until they’re paid. Unfortunately, unpaid student loans are the fastest growing form of credit score “wrecking ball” in the United States.
11. Utilize payday loans, cash advances, or financing through Rent-a-Centers
All credit is not created equal, and when you take out loans that are deemed risky, it will hurt your score. Payday lenders, check cashing services, certain retail credit cards, and financing purchases like furniture can shake the foundation of your score.
12. Try to outthink the credit card companies with balance transfers
Are you “jumping around” between credit card offers, taking out 0% interest or cash-back offers and moving balances around just to stay one step ahead? The chances are that questionable financial practice will catch up with you sometime, in the form of penalties, late fees, small print you miss, or higher interest rates. But even if it works, your credit score will be battered and bruised.
13. Not using your credit at all
About 30 million Americans are considered “Credit Invisible,” as they don’t have a sufficient – or any – credit history. If you don’t have any credit cards or other accounts, there’s no established payment history for the credit bureaus to judge you by, and your score will be rock-bottom. Luckily, you can contact Nationwide Credit Clearing, and we will guide you through how to establish credit and build a good score.
14. An imbalanced mix of credit
Do you have only credit cards on your credit report? Or, is have you taken out four installment loans but nothing else? An imbalance between credit cards, installment debt, auto or student loans, mortgages, etc. can also act like a demolition crew to your credit score.
15. Not checking your credit frequently
These days, credit and identity theft is the fastest growing form of crime around the world, and companies that collect your sensitive financial data – and even credit bureaus (like Equifax) are susceptible to hackers. Even if you pay all of your bills on time and do everything else correctly, the best way to protect your credit and finances is to regularly monitor your credit report.
Start by contacting Nationwide Credit Clearing for a free credit report and consultation at (773) 862-7700 or MyNationwideCredit.com.
5 Ways to jump-start your credit score.
Is your credit score far less than ideal these days? If your FICO is lagging, just like about 30 percent of all Americans, it may be holding you back from getting a better credit card, applying for a mortgage loan to buy a house or even being hired for your dream job.
But the good news is that there are strategies you can use to build your credit, raising it to the point that you are considered a prime candidate for the best interest rates and credit approvals from banks, lenders, and other financial institutions.
Some of these strategies are part of a long-term plan to maintain good credit, but we also have ways to almost instantly boost your score.
If you are planning to apply for a home mortgage, finance a new car, or try to get a job that checks credit as part of the hiring process (like about 45 percent of all employers these days), you’ll want to utilize these five tactics.
Remember that Nationwide Credit Clearing is the U.S. leader in fast, effective, and affordable credit repair, so call us if you’d like a free credit report and consultation to get started!
- Pay down balances.
We know that the ratio of your debt to total available credit – called credit utilization ratio – makes up about 30 percent of your credit score. Therefore, people with maxed out credit cards or high debt loads compared to their available credit will see their scores steadily sinking.
So, the first thing you want to do when improving your credit score is to pay down as much debt as possible.
It’s important to get your credit utilization ratio below 30 percent (so you only owe $3,000 or less on a credit card with a $10,000 available balance). Credit experts even suggest keeping a utilization ratio of 10% or less to achieve a great credit score. However, don’t go all the way to 0% because it won’t show an established payment history they can use in their calculations (since you won’t have any payment).
- Request a credit line increase.
Don’t have enough money sitting around to pay down your credit balances enough to raise your scores? Another sneaky-good way to improve your credit utilization ratio – without paying down one cent of debt – is to increase your total available credit. For instance, let’s say you had a $10,000 credit line but owed $4,000 (so your utilization ratio was 40 percent).
Instead of paying down your debt, if you could get the credit card company to increase your available limit to $15,000 from 10k, your utilization ratio just went down to about 27 percent – and your score would go up! To do this, simply call the credit card company or lender and make your case over the phone and they’ll either approve or deny your request or approve a lesser increase.
- Ask your creditors to remove late payments from your credit report
Did you know that you can simply ask your creditors to remove evidence of late payments from your credit report? Why not? It’s free for you to ask (nicely), and the worst thing they can say is “no.” Called ‘Goodwill late-payment removal,’ this practice is more common than you may think. In fact, any creditor has the power to remove a late payment from your credit report.
For instance, department store credit accounts and other retail accounts are usually pretty liberal with goodwill late-payment removals. They may do just that if you can make a good case that it was a one-time incident because you didn’t receive the bill on time, an address change, etc. and that you otherwise have a perfect record with them.
Once they tell you that the late payment is removed, ask for payment history update letter, which is your confirmation in case you need to present documentation to the credit bureaus.
- Pay for deletion of collections
Many of us have collections on our credit reports, which can do some serious and ongoing damage to your score But there may be a way to get it removed. If you’ve missed enough payments to have an account in collections, your creditors may agree to erase any negative credit reporting for that account if you pay it off.
The good news is that you can also negotiate your payoff, and if it’s in collections, they may accept less than the full amount to settle you up – sometimes even 50 percent of your balance or far less!
Once you negotiate the payoff amount AND they agree to remove the item from your credit report, only pay the collection via a mailed certified check, with “Cash only if you delete account from credit report” written above the endorsement line. Also, make sure you get their promise in writing via a letter of deletion. We can use the letter to apply for a rapid rescore instead for you, so you won’t have to wait a month or more to see your credit score rise!
- Dispute any errors on your credit report.
Most people don’t realize that credit reports often contain mistakes, misreporting, duplicate items, or outdated information. All of these things may be lowering your score, but they can also be removed. Start by contacting Nationwide Credit Clearing for a copy of your credit report, and we’ll help you review it carefully for any errors or inaccuracies.
By reviewing it line-by-line, we’ll be able to highlight inaccuracies or items that are lowering your score. Remember that there are three major credit bureaus and they each may report different information, so it might be a good idea to check all three. Look for errors on larger accounts first, length of history, payments reporting on time, and that your balances are accurate.
The last step is formally disputing each inaccuracy or error with each of the credit bureaus, Equifax, Experian, and TransUnion, separately. They are legally obligated to get back to you in a certain amount of time with proof that the information you’re disputing is correct – or they have to change it or remove it.
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If you have more questions about disputing items, how to boost your score quickly, or want a free copy of your credit report, contact Nationwide Credit Clearing!
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Are Americans illiterate when it comes to credit, credit scoring, and finances?
As a nation, are we credit illiterate?
And if so, how much is it costing us?
Let’s start with that second question, which is easy to answer.
According to Marketwatch, the lack of financial literacy by the average American has cost us a collective $200 billion over the last 20 years! That’s the estimated cost of paying higher interest rates, late fees, not saving for retirement, and the impact of bad decisions caused by living paycheck-to-paycheck.
That comes to $20 billion each year from our lack of financial knowledge – including illiteracy when it comes to credit!
Likewise, The National Financial Educators Council just released a survey that found the average respondent lost $9,724 each year due to their credit and money illiteracy! That backs up the findings of another national study that found that with a mere 20-point increase to our average national credit score, each adult in the U.S. would save almost $5,000 each year!
Now, let’s try to answer the first question we posed, are we just as financial illiterate when it comes to credit scores – or credit illiterate?
On first glance, we might not think so. In fact, the average FICO score reached 700 for the first time ever in 2017, which is a very good score.
But there’s a lot more to the story.
Only 58 percent of Americans have a credit score above that golden 700 number.
And consider that 60 percent of American adults haven’t checked their credit report in the last 12 months, and 66 percent haven’t checked their credit score. That’s about 2/3 of all Americans that don’t even know what’s going on with their credit!
Only 32 percent have received a copy of their free credit report over the last year, and nearly one-in-five Americans haven’t pulled their credit in the last three years!
What’s even scarier is that about 1/3 of all American adults surveyed said that they really didn’t see any reason to pull their credit report or check their score.
Additionally, 56 percent of respondents confessed that they had no idea their credit score was the most important factor when applying for new debt like a mortgage, car loan, or credit card.
And while our national average may be healthy, there’s a wide discrepancy between credit score haves and have-nots.
According to Experian, almost 1/3 of all Americans (30%) have a credit score lower than 601 – which is considered sub-prime. VantageScore also estimates that of the 220 million U.S. adults, 68 million of them have poor or bad scores.
But this isn’t just a snapshot of the good and bad when it comes to credit because we have to factor in those who are credit invisible, too.
Studies have found that about 26 million U.S. adults are credit invisible. While this means that they don’t even have enough of a credit history to garner a score, it’s effectively the same thing as having terrible credit.
Many people are also denied credit even though they want more of it. A reported 67 percent of people who applied for new credit cards in 2015 were denied, and one out of three were approved but for a lower available balance than they’d requested!
Younger adults are really scoring an F when it comes to credit score literacy.
An alarming 68 percent of Americans make at least one significant and costly financial mistake before they even hit the age of 30! These mistakes often cost them dearly as they’re trying to start down the right financial path, and credit score blemishes make take seven to ten years to fall of their reports.
But that doesn’t stop young people from getting credit, as 50 percent of respondents said that they received their first credit score by the age of 21, even though 72 percent had no financial education at all before going to college!
Millennials and Gen Xers are also taking out more debt than ever thanks to student loans, not credit cards. In fact, student loan balances are at an all-time high, with the average student loan balance at $23,186. Our national student loan balance is now $875 billion – higher even than credit cards – and increasing at a rate of $2,853.88 every second!
But it’s not just younger people that are fumbling when it comes to debt, especially credit cards. Seventy-seven percent of us have a credit card, and the average U.S. adult with credit card debt owes $16,048. With a sizable average interest rate of 13.66%, that means $183 is accumulated in interest every month.
One in three carry a balance month-to-month without paying it off, often paying just the minimum payment.
Even worse, nearly 16 percent of people with a credit card balance don’t even know their card’s APR, or true interest rate, and that’s even more prevalent (21 percent) among lower-income households.
So if we’re so credit illiterate, what’s the solution?
It seems the simple fix is just to start teaching financial education in schools. In fact, 99% of adults surveyed thought it would be a good idea to teach about credit, debt, interest rates, personal finance, and credit in high schools or even earlier.
However, the plan runs into a snag when you consider that only 1 in 5 teachers feels qualified to teach a class on financial or credit education!
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Until they start making the grade, the better solution is to contact Nationwide Credit Clearing for a free copy of your credit report, a complimentary consultation, and the #1 credit repair firm in the country!
15 Things to STOP doing that are still making you broke! (Part 2)
Most of us have high hopes for a better financial situation this year. For some, that may mean saving more; for others, landing a better-paying job; and homeownership is still the American Dream for most families.
But before we can tackle this financial Bucket List and move forward, it’s important that we identify the money mistakes that we’re making that are continuously setting us back. We’ve identified 15 things that are common among the average American consumer, causing them to always be short on cash!
So, if you want this year to be your best yet for your finances and finally turn around your money mistakes, stop doing these 15 things!
In part one of this blog we covered the first seven things to stop doing if you don’t want to be broke, and here are the next eight:
- Not improving your credit score
Your credit score dictates so much about your financial picture, from credit card interest rates to mortgage payments, student loans to auto financing. But it also influences your insurance premiums, utility bills, and can even prevent you from getting a new job!
In fact, it’s estimated that for every 20 points you improve your credit score above sub-prime, you’ll save an average of $10,000 in interest and payments over the course of your life as a consumer!
The first step to improving your finances is always to take account of your present situation, so contact us for a free credit report and consultation!
- Not educating yourself about finances
Should you lease a car or buy it? What’s the best home loan for you? Should you be investing your money first or paying off your existing debt? From saving for retirement to healthcare options, choosing the right credit card to filing your taxes correctly, we can all stand to learn a lot about money.
However, too many people neglect to educate themselves when it comes to financial matters. Even worse, they often make critical financial decisions based on rumors, advice from their “expert” neighbor, or water cooler talk from coworkers. In fact, the average person spends much more time planning their vacation every year than they do planning for retirement!
Instead, empower yourself and make sure you have the best information to build a strong financial future by reading articles, credible blogs, books, and watching personal finance videos. You’ll be amazed what you learn in a very short time!
- Renting instead of buying a home
Home ownership is still the American Dream, and for good reason. In fact, there are a wide range of benefits to owning your own home instead of renting, from social, community involvement, family and, of course, financial advantages.
When you have a fixed rate mortgage, your monthly payment will never go up, but you’ll actually being paying it down to $0 over the years, owning your home free and clear. But when you rent, the monthly price can and will go up periodically, and you’re amassing no equity, no appreciation when the value goes up, and don’t even get tax advantages.
Studies show that the average homeowner has a 3.5x higher net worth than the average renter, as well as more savings, more funds for retirement, and pay less in total taxes. Their children are also more likely to do better in school, more likely to graduate from college and enjoy a much more stable and happier home life.
These days, with mortgage loans that are geared towards first-time buyers that require low down payments, there’s really no reason NOT to buy!
- Not planning for the future
Do you enjoy going to work every day, working long hours, coming home exhausted, and still only bringing home enough to live on until the next paycheck?
Well, get used to it, because many of us will be working way past traditional retirement age, or even well into their senior years. There’s no denying that Americans aren’t putting enough away to retirement comfortable any 65 (or anywhere close!). In fact, 40% of the workforce have nothing saved for retirement, and 60% aren’t on track.
But here’s the good news – you still have time to save, and the time-value of money dictates that the earlier you start investing, the faster your money will grow. So make sure you deduct the maximum retirement savings form your check, definitely take advantage of any employer matching, and focus on savings and acquiring assets that produce cash flow – not racking up debt and liabilities. You’ll thank me once you can retire on schedule!
- Straight up wasting money
New polls show that we have learned our lesson from the past recession. In fact, 55% of households are still spending more than they take in every month (the difference made up in debt), and our personal savings rates are at a rock-bottom 2.2% annually.
Of course, many of our costs – from rent to health care to food – have increased sharply over the last few years, so it always feels hard to get ahead. But we’re still spending – or wasting – money on a ridiculous list of things that show that we’re living well above our means.
Sure, the average person has a closet full of new clothes they hardly wear, but we’re even talking about things more substantial. For instance, it’s estimated that Americans spend $443 billion every year in wasted energy bills, with most people overpaying by a whole one-third!
And we’re all eating out at restaurants and on the go WAY too much, which is costing us.
The average American household now spends $6,759 on food every year but $2,787 of that total is for meals in restaurants or outside of the home. We also spend an average of $1,200 on fast food every year – or $117 billion!
We also spend $65 billion on soft drinks and $11 billion on bottled water every year, we dump countless billions gambling, and this one will blow you away: the average cigarette smoker puffs away 14% of their total income on cigs every year, which adds up to about $80 billion, or 1/7 of our total discretionary income budget!
Stop wasting your money on things you don’t need – and won’t even miss!
- Paying too much for your car loan (not your car)
Of course, we all need transportation to get to and from work, school, and home. And transportation costs actually remain reasonable, with low gas prices and car buying easier than ever. In fact, it’s not the cost of cars that’s eating up our budget, but the high price of the financing we’re using to purchase them.
In fact, the average monthly payment for a new car is now almost $500, as the typical car shopper is financing $28,524 at 16-28% interest rates over terms of 73 to 84 months! Ouch!
So before you go shopping for a car, talk to Nationwide Credit Clearing about improving your credit score so you’ll qualify for a better auto loan. Then, you’ll be free to purchase that fantastic new car – on your terms!
- Paying late
It’s hard enough to manage our finances and get ahead without choosing to spend more, but that’s exactly what we do when we pay our bills late.
In fact, about 1 in 4 U.S. adults don’t pay their bills on time, and only half of 18 to 34-year-olds do so. When we pay late, whether it’s a credit card, a phone bill, or our rent or mortgage, we get hit with unnecessary late fees.
The typical American pays $250 each year in late fees just to their bank! So always pay on time if you don’t want to be broke!
- Getting whacked with unnecessary fees and charges
Likewise, overdraft fees, ATM fees, and other extraneous fees from financial institutions are really putting a dent in our wallets. Banks charge their own consumers an average of $412 in overdraft fees every year, adding up to about $33 billion annually!
We also pay about $329 per year in ATM fees, and they’re often tacking on charges just for doing business with them on many checking and savings accounts! Make sure to read the fine print and pay attention to how much you’re wasting in fees!
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Improve your finances this year starting with a free credit report and consultation from Nationwide Credit Clearing!
15 Things to stop doing that are making your broke!
Many of us set resolutions every new year, and chief among them is the goal to improve our finances. For some, that may mean saving more; for others, landing a better-paying job; and home ownership is still the American Dream for most families.
But before we can tackle this financial Bucket List and move forward, it’s important that we identity the money mistakes that we’re making that are continuously setting us back. We’ve identified 18 things that are common among the average American consumer, causing them to always be short on money and even hurting their families.
So, if you want 2018 to be the best year yet for your finances, stop doing these 15 things that are making you broke!
- Maxing out credit cards
We’re certainly a nation that loves debt, as we now have more than 1 trillion in credit cards and other revolving debt, an all-time high. Add in mortgages, student loans, car loans and medical debt, etc., and U.S. consumers personally owe more than $12.9 trillion – the GDP of about half the countries in the world!
In fact, the average adult with debt in the U.S. has 8 credit accounts, $16,000 worth of credit card debt alone, and is paying about $430 a month just in minimum payments.
While there’s nothing at all wrong with having credit cards and using them responsibly (you should keep some revolving debt), the problem comes when we max them out – with no plan to pay them off.
Paying only minimum payments means that the average $10,000 balance at 15% interest will take 15 years and about $22,000 to pay off completely.
Maxing out cards also impacts your credit score, since about 30% of your FICO is calculated by the amount of debt you hold compared to your total available credit (called credit utilization.)
So stop maxing out those cards and make more than just the minimum payment this year!
- Not saving
We understand that money is tight and there’s usually more month than paycheck; not the other way around. But one of the principal ways you can ensure that money isn’t always this tight in the future is to start saving. And there’s no better way to put away funds for a rainy day than automatically saving out of every paycheck (or tax refund).
In fact, the majority of Americans couldn’t even come up with $600 today without borrowing or selling something, and sudden financial setbacks like a job loss, medical problem, broken car or other unexpected expense can send about 40% of families into dire financial circumstances.
The best way to combat that – and make sure that you’re always prepared and won’t make even worse short-term financial decisions – is to save a certain percentage of your paycheck automatically, before you even see that money. To resist the temptation to spend it, keep a savings account without an ATM card so it’s not easy to access. You’ll be amazed how it adds up!
- Using payday loans, check cashing, and rip-off credit accounts
Remember how we just mentioned financial emergencies? When the roof leaks, someone gets sick, or the job starts laying people off, those cash crunches often result in people making panicked, short-term financial decisions just to get by. Frequently, those result in cash advances on credit cards, payday loans, using check cashing establishments, applying for a bunch of new credit cards at once, or looking for other personal loans.
The terms and interest rates on these loans can range from incredibly high and expensive all the way to usurious and illegal, and usually put people in a much worse financial situation than when they started.
- Making impulse purchases
Have you ever noticed that retail, department, and grocery stores line the checkout aisles with certain items? They do that on purpose, of course, because they understand that the majority of consumers will make impulse purchases; buying things they don’t need and didn’t plan on purchasing.
Just how much can you save by skipping the magazines, sodas, electronic knick-knacks, and other impulse purchases every month? Furthermore, do you even know how much you’re spending on coffee, lunches, and meals out? It all adds up.
Try this: For one month, carry around a little notepad (or just use your smart phone – there are great apps that help you track every dollar you spend), and write it down every time you spend a dollar. At the end of each week, add it all up according to categories. You’ll probably be shocked how much you’re spending on things you don’t need or necessarily even want – and that money could be going to savings, paying down your credit cards, or other good use.
- Not checking your credit periodically
Did you know that only 1 in 4 people check their credit report annually, and 60% of Americans don’t even know what their credit score is now? Checking your credit report regularly is so important for a host of reasons:
- 25% of credit reports contain errors, inaccurate or duplicate information.
- ID theft and credit fraud now affects nearly 10% of the population every year, and the recent Equifax Hack saw the personal data of about 167 million Americans compromised.
- These days, your credit score is so more important than just getting a mortgage or applying for a new credit card. Getting an apartment, the insurance rates you pay, your utility and cell phone accounts, and even getting a new job may depend on a clean credit report and a good score.
- Not looking into refinancing your mortgage
If you do own your home already, congratulations! While it may be the best investment you’ll ever make, there’s no denying that you’ll be paying it off for a long time (usually 30 years) and for a huge sum of interest – probably more than the original home price! So every smart homeowner should inquire with their mortgage broker if a refinance is available and something that would help them save.
It’s free to talk to your favorite loan officer and get an idea about your options, and lower-interest mortgages or refinancing into a product like a 15-year loan may save you tens (or even hundreds) of thousands of dollars over the years. You may even be able to save money on your monthly payment AND pay the home off faster, but the worst that can happen is that they tell you that you don’t need to make a change.
By the way, the better your credit score, the lower your interest rates and payments will typically be!
- Not reading the fine print
That 0% credit card offer sure looks great, but what will the rate be after that introductory period? Is that great low mortgage payment fixed, or will it go up as other interest rates rise? What are the fees and charges associated with that new student loan or business loan?
Too often, we’re offered new credit that looks like a no-brainer, but comes with some important stipulations that will make it way more expensive in the future.
Nothing is free in this world (except great credit advice from Nationwide Credit Clearing!), so make sure to read the fine print and know exactly what you’re getting into before you sign on the dotted line. Any loan, investment, or other financial vehicle is sure to come with fees, charges, and interest rate details that are crucial to understand. Read all you can but it’s also a good idea to ask questions – and get the answers in writing!
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Look for part two of this blog soon, where we’ll cover the next eight things to stop doing if you don’t want to be broke!
What do couples fight about? Money, finances, and even credit lead the list – but it doesn’t have to be that way.
Ask any couple that’s been married for a while and they’ll probably tell you that marriage is difficult – but well worth it.
Likewise, people in longterm relationships or even just dating often have ups and downs, bumps in the road, and even fights.
But did you know that the number one cause of arguments and disagreements among couples?
You might be surprised that it has more to do with spending, savings, and even use of credit than more romantic concerns.
According to research, here are the top 5 things couples fight about:
1. Money
2. Division of domestic responsibilities
3. Sex
4. Parents
5. Power dynamics
It turns out that the number one cause of relationship disagreements, squabbles, and wars of the roses is money.
What specific money issues count as a relationship red flag?
Here are the most common financial issues or topics we couples fight about:
• The cost of raising children
• Taking care of aging parents or family
• One person makes more than the other
• Risk tolerance
• Financial objectives
• Personalities and values
• Power dynamics in the relationship
• Previous debt or debt accrued during the relationship
So why is money such a hot button issue, to the point that it breaks up so many seemingly happy relationships?
For most people, money is one of the most stressful and emotional problems. In fact, data from the American Psychological Association reveals that money is the leading cause of stress for Americans today.
Our attitudes, background, and values about work, money, security, and retirement are passed down from our parents starting at an early age, and so they are deeply ingrained, right or wrong.
In fact, many people won’t jump into marriage – or even start dating someone – if they don’t feel they are financially compatible. A recent national survey found that 57% of men and 75% of women say that the other person’s credit score factors into their decision to date them or not. And about 30% of women and 20% of men say they won’t marry a person with a low credit score!
The truth is that arguments over money compound, more than any other reason, except perhaps infidelity, and this type of fight is the most likely signal that the relationship is ending. In fact, studies have shown that fighting over money is a leading indicator of rocky relationship roads in the future. In fact, only substance abuse problems and cheating are bigger predictors of divorce than money issues!
These days, the average couple getting married has a 40-50% chance of getting divorced at some point. But couples with no significant assets at the time of their marriage are 70% more likely to get divorced than couples that are solid financially. In fact, if your income is at least the U.S. median (about $50,000), your risk of divorce is decreased by 30% (compared to those who make $25,000 or less).
It’s no wonder why money plays such a critical role in our relationships, as “financial infidelity” is also on the rise, a form of dishonesty when partners hide their financial dealings from their better half – or even lie about them.
However, if you feel that your spouse spends money irresponsibly, your likelihood of divorce is increased by 45%. Researchers also found that newly married couples who took on a lot of credit card debt became less happy over time. But newlyweds who cut back, saved, and paid off or stayed out of debt measured higher levels of happiness over their marriages.
But before you start second guessing your current relationship because you have disagreements about money from time to time, note that relationship experts and marriage counselors say almost all couples have these heated exchanges over dollars and cents.
“People should expect to fight about finances,” says Laurie Puhn, a New York City-based couples mediator. “It’s a part of any marriage and any long-term relationship. You will fight about finances.”
What’s a “normal” amount of fighting over finances? About 31% of all couples — even the ones that say they are very happy – have at least one fight over finances and money once a month or more.
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Look for part two of this blog where we cover tips and tactics to help ensure that money doesn’t ruin your relationship!
Answering the top-10 Google searches about credit and credit scores
Google is by far the world’s biggest search engine, with about 63% of all search traffic and 30 billion inquiries every month. In fact, type in “credit score” and you’ll get more than 69 million results! While we won’t try to answer all of those queries, here are the top 10 Google searches about credit and credit scoring:
- How is my credit score calculated?
There are several versions of your credit score, but the most common is issued by the Fair Isaac Corporation (FICO). While FICO keeps its credit scoring algorithms secret, we do know that the fundamental building blocks of any credit score are:
30% Credit utilization.
Your ratio of debt to available credit. It’s recommended you keep all of your debt balanced within 30% or less of your total available credit.
35% Payment history.
FICO and the other credit bureaus want to see that you’ve paid on time and in full every month, an important predictor of future payment behavior.
15% Length of credit history.
The longer your accounts have been open and in good standing, the better it reflects on your credit score.
10% Mix of credit.
A good mix of quality revolving accounts, mortgage debt, and installment debt, etc.
10% New credit.
Opening new accounts – or the wrong credit – is deemed risky and can lower your score.
- How much will a late payment hurt my credit score?
Since 35% of your credit score is based on your payment history, you always want to avoid paying any credit card or account late. Generally, if you do pay after the due date, your score will drop about 80-100 points. But you definitely don’t want to miss a payment for 60 days or even 90 days, which will cause serious damage to your credit score.
- What credit score do you need to buy a house?
If your goal is to buy a house, you’ll want to start with the mortgage process, and that means making sure your credit score is good enough to qualify for a loan, among other factors. While you’ll always have access to the best programs, terms, and the lowest interest rates with a great credit score (above 720, or even about 760 are considered “prime” scores), there are options for homebuyers with lower scores.
The Federal Housing Authority (FHA) has a great loan program that allows you to put only 3.5% down and qualify with a credit score in the 600’s, or possibly even lower in some circumstances. However, it’s always a good idea to come talk to us about six months before you plan on applying for a mortgage so we can increase your credit score and save you money.
- Will it hurt my score if my credit is pulled several times while I shop for a loan?
When you apply for new credit cards or loans with multiple creditors at the same time, it may signal to the credit bureaus that you’re recklessly taking on new credit – an indicator of future default. Therefore, your credit score may drop with these “hard” credit inquiries.
But the credit bureaus also understand they most consumers want to “shop around” for the best rates and terms when they’re making big purchases, like mortgage or auto loans, and that means having your credit pulled more than once.
To make allowances for this common consumer practice, the credit bureaus don’t ding you a batch of inquiries, as long as they’re within a 30-day period or less. Just don’t overdo it, or have your credit pulled from different kinds of debts (credit card, retail, etc.) or it will signal to them that you’re desperate to take on new debt, and your score will drop.
- Why is it important to check my credit report often?
The news these days is filled with reports of data leaks and hacks, such as the recent one of Equifax’s database that saw 235 million records compromised. Identity theft is the fastest growing crime, and most of that sensitive financial information is obtained online. For that reason, you should be checking your credit report often to screen for accounts that have been opened in your name. Likewise, the credit bureaus make a lot of mistakes when it comes to credit reporting – which could impact your score. In fact, it’s estimated that 50% of all credit reports contain errors, duplicates, or misreported information!
- How long will a bankruptcy/foreclosure/judgment stay on my credit?
Most delinquent items will report on your credit for 7 years before falling off, but there a few exceptions:
Charge-offs stay on your report for 7.5 years from the first missed payment.
Chapter 7 bankruptcies remain for 10 years from the date filed.
Chapter 13 bankruptcies remain for 7 years from the date discharged or a maximum of 10 years.
Student loans can remain on your credit until they’re paid.
Foreclosures and short sales will probably report for the full 7 years, but the negative impact will diminish over time. But changes in the industry now make it possible for some people to buy another home in as little as 1-2 years.
If you’ve experienced one of these negatives, contact Nationwide Credit Clearing.com so we can start repairing your credit and get you on the track!
- What happens if my husband/wife or cosigner on a loan and the other person defaults?
When it comes debt responsibility among married couples, different states have different laws. Community property states (include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) deem that you’re responsible for your partner’s debts if they were charged up during the marriage. Even if you get divorced, you’re both accountable for the debt, and it will show on both credit reports.
That’s also the case when you co-sign for a loan with someone else – the debt obligation is shared, but both parties are fully responsible. So if the other person fails to pay, or even misses a payment, your credit score will go down, and the creditor will pursue you, too.
- Why is a good credit score important?
A good credit score can save you thousands or tens of thousands of dollars on mortgage loans, credit card interest rates, car and student loans, and even insurance. Many employers are even now looking at credit reports when screening applicants!
- What is credit repair/How can credit repair help me?
Credit repair is a process where you try to clear up inaccurate, outdated, or other misreported negative items on your credit history so that your score will go up. Credit repair entails a formal procedure where we send dispute letters to the credit reporting agencies to challenge the validity of negative information. The credit bureaus are governed by the Fair Credit Reporting Act, which requires them to either fix the problem or respond with evidence that it’s true within a certain timeline. Either they will fix the inaccurate negative credit item, or, if they don’t have evidence or don’t respond in time, the item will be removed. Both outcomes help your credit score rise to where it should be.
Credit repair done through an experienced and trustworthy firm like Nationwide Credit Clearing can increase your score, remove incorrect information, and save you a lot of money in the long run.
- Do I have to pay to check my credit score?
According to the Fair and Accurate Credit Transactions Act (the FACT Act), you are eligible to receive a free copy of your credit report once each year from each of the three major credit bureaus by going to www.annualcreditreport.com. This will show your credit history, not your score, but at least you’ll be able to monitor your credit activity and make sure you’re on track.
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For a more in-depth look at your credit score, credit report, and what you need to do to improve and save money, contact Nationwide Credit Clearing.com for a FREE credit report and consultation! We’re here to help you!
Millennials aren’t making the grade when it comes to credit.
When it comes to Millennials, the financial picture is less than glowing – including their credit scores. With 83.1 million young adults in our country between 18 and 34 years old (born between 1981 and 1997), Millennials are the largest demographic in U.S. history.
They’re also impossible to ignore since by 2025, they’ll make up about one-quarter of our total population and three-quarters of our workforce (about 53.5 million workers).
Still, research shows that Millennials are seriously stumbling when it comes to their credit scores, debt, and financial acumen.
Here are 25 facts about Millenials and debt, loans, and credit scores:
1. According to NerdWallet.com, the average Millennial credit score is only 628, the lowest of any age group in the country and significantly lower than the 700 average American FICO score.
2. Millennials may be young, but they’re already saddled with debt at an alarming rate, with an average of $23,332 in debt each. For reference, Gen X’ers have an average of $30,039 debt.
3. According to TransUnion, 43% of all Millennials have bad credit, considered subprime borrowers. The next highest group is Generation X with 33% bad credit, and only 20% of Baby Boomers.
4. Furthermore, only 6% of millennials have credit scores in the super prime (781 to 850) category, compared to 34% of Baby Boomers that achieve those credit score heights.
5. In fact, 28% of all Millennials have a credit score of 579 or lower. That’s one in four young people with a dismal credit score!
6. Other research shows that approximately 67% of all young adults under 30 have credit scores of 681 or less – two-thirds that don’t have good scores.
7. However, low credit scores may not be 100% their fault when we consider that the length of credit history makes up 15% of any person’s credit score. Of course, Millennials are far more likely to have shorter credit histories (and fewer accounts). So not only do they miss out on any score boost from seasoned credit lines, but missed payments or negative item wreak havoc on their score.
8. The most disturbing part is that Millennials seem to understand credit scores and credit reporting far less than any other generation, In fact, 44% of Millennials don’t even know what their credit score is right now, and only one in five have checked their credit report in the last year!
9. When they are granted new credit accounts, Millenials are also using it to rack up consumer debt at a higher rate than any generation. In fact, the average Millennial has $59,154 available credit but uses $47,089 of it – an astronomically high 79% credit utilization ratio.
10. While these numbers are averages, looking deeper, we see a different story. Since about one-third of Millennials have never even applied for a credit card (and have no credit card debt), we see a portion of this age group that has amassed huge debt loads.
11. Of course, it makes sense that Millennials are also applying for credit cards at a higher rate than any other demographic, exceeding the U.S. average.
12. As we documented, they’re spending more on their credit cards and credit lines once they’re approved. In fact, Millennials now have an average debt (not including mortgages) that equals 77% of their income, compared to the national average of 49%!
13. The burden of student loan debt weighs most heavily on Millennials these days, with student debt skyrocketing 56% in the last decade to nearly 1.2 trillion dollars.
14. 38% of Millennials carry student loan debt, and 42% of Millennial households have student debt.
15. The average graduate leaves school with nearly $30,000 in student loans. Among all Millennials, the average student loan balance of $17,200 with $351 in monthly payments.
16. But their debt doesn’t just come from investment in education, with 35% of this age group also carrying an auto loan. On average, Millennials with car loans owe $11,000 owed and pay an exorbitant $503 in monthly payments!
17. Furthermore, only 20% have a home loan, which can be considered “good debt.”
18. When they do apply for credit cards or new credit (like store retail accounts), almost half (48%) of Millennials do so as an impulse decision – on the spot at a store, sporting event, mailing offer, or when an offer pops up online, etc.
19. A high debt load puts a strain on their monthly budget, often preventing Millennials from buying their first home.
20. Where do Millennials live?50% of Millennials rent on their own,Only 26% own their home, condominium, etc.,21% of Millennials still live with their parents,and 3% live in military or student housing.
21. Additionally, between 2006 and 2013, the number of young adults living with their parents jumped 15%, which means an additional 10 million working-age people still living at home.
22. Millennials are now renting for an average of six years before they buy their first home.
23. In a Fannie Mae survey, Millennial renters gave their top reasons why they weren’t buying a home. 57% of respondents said that they weren’t buying for financial reasons, including:
- Insufficient credit score or history
- Affording the down payment or closing costs
- Insufficient income for monthly payments
- Too much existing debt
(That’s right – a credit score that’s too low is the #1 obstacle to home ownership according to Millennials, followed by saving for a down payment).
24. According to financial polls, 62% of Millennials have less than $1,000 saved – and 21% have no savings at all!
25. In fact, a recent survey by SurveyMonkey found that almost half of all adults age 18 to 34 spent more on coffee than they contribute to investing for retirement! It’s true – about 44% of females and 35% of male Millennials spend more at Starbucks than in their 401K or retirement planning.
Still, the news isn’t all negative when it comes to Millennial home ownership, as one in three (33%) homebuyers in 2017 are Millennials, and 68% of first-time buyers this year are in that age group.
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Are you a Millennial and you’d like to improve your credit score? In college or just graduated and already facing debt? Or maybe your son or daughter needs some credit score help? Message us for a free consultation!
Secure a Solid Loan by Improving your Credit
Everyone knows that personal credit scores are crucial when it comes to obtaining a loan for a car, house, or anything that is a large purchase; however a business credit score is just as vital for small business loans. Understanding the ins and outs of building or regaining good credit may seem complicated, and here at Nationwide Credit Clearing, we want to help by providing you with these simple tips to be familiar with.
KEEP THE UTILIZATION % AT A LOW
The optimal proportion of utilization is 30% which means, if you have a $10K limit on your charge card, try to keep the exact balance below $3K. In a nutshell, you want to have a lot more credit available than you actually need. The more connected you allow yourself to reach your max amount, the higher risk you look like.
ORGANIZE MORE THAN ONE CARD
10% of one’s credit score will be based upon the mix of credit you ACTUALLY use as well as how effectively you manage them all, so be sure to have multiple cards open as well as spread utilization equally amongst them. Do NOT cancel your cards in an effort to improve your credit score. Your cards need to be kept open with a low utilization rate.
TIMING IS PRETTY MUCH EVERYTHING
Every time you submit an application, your credit score is checked. The greater number of applications you submit, the more reduced your credit score is going to b, unless you do all of your applying within a short period of time. Still, if all inquiries are set up within about 30 days or less, the reporting agencies will consider multiple inquiries as just one inquiry regarding a single purchase, so you want to keep your credit application window of this time as short as you possibly can.
MONITOR YOUR CREDIT SCORE OFTEN
Everyone is entitled to a free copy of their credit report from each one of the top 3 reporting agencies one time per year, meaning you can request a copy from a different agency every four months.
RECORD & TRACK ALL PAID OFF DEBTS
The more positive history you have of paid off debts, the better you look to prospective lenders, so make sure you keep those gold stars on your credit history as long as possible.
DON’T BE LATE
Your credit report doesn’t just cover credit cards & loan payments but it also includes every other payment you have made or are currently making. That unpaid $30 copay or electric bill will hurt you just nearly as much as a balance of $1k that hasn’t been paid on a loan or card (if it goes beyond 60 days that is).
Nationwide Credit Clearing recommends you check your report often and ensure you don’t possess unknown outlying debt..
If your credit score is not as solid as you would like it to be, start implementing these pointers and you will see your score begin to go up. Keep in mind, the right loans can in fact help develop your credit, and we can help get you there. Even though you may seem to have a hiccup and overlook a payment, do not let it discourage you. Pay the bill, and then keep moving forward; that dimple won’t be there for long.
If you still feel uncertain about how to even begin with these steps, Nationwide Credit is here to help guide you. We offer a free credit report and consultation. If it’s been a while since you have checked your credit score, please give us a call.
“Home of the Free Credit Report & Consultation”
2336 N. Damen
First Floor
Chicago, IL 60647
Phone: 773-862-7700
Toll Free: 877-334-3296
Fax: 773-862-7703
E-Mail: support@mynationwidecredit.com
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