Credit Education

15 Things to stop doing that are making your broke!

Posted on December 28, 2017 by Norm Schriever

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.

Posted on December 6, 2017 by Norm Schriever

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!

10 Credit and financial tips for the holidays

Posted on November 27, 2017 by Norm Schriever

The holidays are here, and while it’s a golden time to enjoy family, friends, give back to others and the many blessings in our lives, it’s also a time of year that can be dangerous financially. In fact, most households see a huge spike in spending and debt over between Thanksgiving, Christmas or Hanukkah, New Years – so much so that many retailers make 15-20 percent of their total annual sales during that period. Add in Valentines Day, winter family vacations and possibly a couple of birthdays, and it’s a time of year that could break the budget and crash your credit score.

The good news is that the holidays don’t have to time to see your debt and spending spin out of control. Here are 12 tips to help you save money, plan responsibly, keep your debt level down, and protect your credit score.

1. Set a budget

Did you know that the average American plans on spending $812 on Christmas or holiday gifts? While that is a significant amount of money, the reality is that we often shoot far past what we intended to spend, especially if you add in extra holiday meals, entertainment, decorating, parties, etc. So this holiday season, set a realistic budget and stick to it, skipping those extra money wasters that are necessary.

2. Consider spending cash

Studies show that we spend far more when we pay for purchases with a credit or debit card compared to cash. So this holiday season, visit the bank and take out the cash you’ll need for each gift on your list. You’ll end up spending less overall and also won’t have a big credit card bill come January or February – or a potential hit to your credit score.

3. Set gift limits

Have you ever given someone three presents totaling $150, only to receive a $20 gift in return? Have a conversation with your friends and family to determine if you’ll exchange gifts, how many, and set a spending limit. You may be refreshed to hear that many of your friends would rather spend time with you or go out to dinner than receive a gift, which means you’ll have more money to spoil the kids!

4. Don’t open store cards

You’re at the cash register at your favorite store at the crowded mall, doing some late Christmas shopping, when the friendly cashier asks the inevitable question, “Would you like to open a store card and get an additional 20 percent off your purchase today?”

You look at the pile of your things and do the math – saving 20 percent on the bill would add up to enough to buy you a nice lunch AND a Starbucks for the ride home.

Wait! Stop! This scenario is played out millions of times during the holiday season and throughout the year, with virtually every big retailer offering store credit cards these days. But even though it seems like a hospitable offer for a generous discount, applying for additional credit may really hurt your credit score. Store retail credit accounts often have high interest rates, low balances, hidden fees, and aren’t looked at favorably by the credit bureaus. Instead, skip the store cards and keep a responsible, low-interest card that gives you cash back or rewards points.

5. Be wary of identity theft

Identity theft and crimes of financial and data theft are more prevalent than ever in the United States, especially with the recent Equifax hack. Each year, approximately 20 million people see their identities used fraudulently, with the bill on that theft upwards of $50 billion dollars. (That’s three times more than the combined $14 billion in losses from all other types of consumer theft – burglary, motor vehicle theft, property theft, etc.) combined.

It also takes a lot of time and often money to clear up the mess identity thieves leave behind, as a compromised credit report will set off a domino effect of raising interest rates and even insurance premiums. On average, each identity theft victim suffers direct losses of $9,650, up from just $3,500 a few years ago.

So review your credit report with the help of Nationwide Credit Clearing, don’t use credit cards on fishy sites, don’t ever make purchases or give your financial details on public or unprotected Wi-Fi networks, change passwords frequently, and generally stay vigilant and protected.

6. Don’t max out credit cards

It’s really easy to max out credit cards during the holidays, but that could cause serious harm to your credit score. In fact, consumers with a score over 760 have an average credit card utilization (aggregate credit card balances relative to credit limits) of only 7 percent, and keeping under 30 percent will keep your score healthy.

7. Have a plan to pay off debt

If you don’t do you your holiday shopping with credit cards, not cash, make sure you have a sound plan how and when you’ll pay them off. It’s best to pay it off in one lump sum before interest charges even kick in, but if that’s not possible, then set a schedule of extra payments you’ll make to get your card paid off at least within the first couple months of the next year.

8. Put some money aside for emergencies

Murphy’s Law dictates that the least convenient time something can go wrong, it will. So put a few hundred dollars aside in case of emergencies or special events over the holidays. That way, if the water heater explodes Christmas morning, the car breaks down on the way to the office holiday party, or you run up your cell phone bill wishing everyone a happy New Year, you’ll be covered. The best part is that if nothing happens that warrants spending your emergency fund money, you can use it to pay off debt, add it to savings, or invest the money.

9. Start saving for next year

Now that you’ve had a great holiday, it’s time to start thinking of next year! Open a separate savings account or out aside an envelope and deposit some money every month once you get paid, not to be used for anything else. Even $25 or $50 a month will add up to big bucks that can cover most of your holiday gift-giving budget come next winter!

10. Keep your resolution to improve your credit score

Our credit scores factor into just about every lending and financial decision we make these days, including even renting a home or getting a job with some employers. Furthermore, just be improving your score from the Fair or Poor range to Great (around 720 or 760 and up), you can save a LOT of money over time. In fact, over your lifetime as a consumer, you could potentially save tens or even hundreds of thousands of dollars in interest payments on mortgages, student loans, credit cards, and auto loans, just by keeping a great score.

Therefore, it’s more important to make a firm resolution to finally improve your credit score The good news is that it’s easy to analyze your credit report and see what needs fixing with the help of Nationwide Credit Clearing – and free!

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Contact us at MyNationwideCredit.com for to set up your free credit report review and consultation, and make it a happy holiday!

Can your credit score go down because of your social media activity?

Posted on November 22, 2017 by Norm Schriever

Like it or not, social media is a big part of our lives. In fact, 81% of Americans have at least one social media profile, and we now use 2,675,700 GB of Internet data per minute! Twitter, Instagram, Snapchat, LinkedIn, and YouTube are popular social media platforms, but Facebook is still the biggest, with more than 2 billion users worldwide.

People post just about every detail of their lives these days, share droves of links and content from others, and reach far past their circle of friends that they know in real life.

But it might not just be other social media users who are watching your Facebook and social media accounts and judging you. In fact, banks, lenders, and credit bureaus may soon be paying attention to your social media usage – denying you for a loan or lowering your score based on what they see.

Already, the scope that our personal data from social media is collected, shared, and sold is startling. Pretty soon, you might be denied for a loan on a credit card, a car, or even a mortgage because of who you’re friends with on Facebook. For instance, the average credit score of your social media friends and network could be a factor that influences your credit worthiness, too – a scary proposition. It’s not as far-fetched as you may think.

Back in the “good old days,” lending in the U.S. usually took place on a more personal level, with consumers walking into the local branch of their hometown bank. They sat down with a banker whom they already knew a long time and made their case for approving the loan during a conversation, with the bank granting or denying their request based on their character and reputation.

We’ve come a long way since then, and now, lending decisions are made uniformly with mountains of data collected and interpreted by nameless, faceless credit agencies with advanced algorithms – the credit bureaus.

But even with all of our advanced technology, some things never change, as credit bureaus and lenders may well be turning back the clock and trying to gauge your character, lifestyle, and reputation before approving you for a loan. Not only can they look at what you post, but check-ins, what content you like and share, and even the groups or brand pages you belong to.

The U.S. Patent office recently granted an updated patent on technology that combs social media for evidence of a person’s closest network of friends. It then relays that information to potential creditors, who can make lending decisions based on the friends’ perceived financial stability.

The patent, which Facebook first acquired from Friendster and inventor Christopher Lunt in 2010, actually has a much broader scope of intended use than just data mining for lenders. In fact, the main purpose of the patent is to protect technology that formulates and tracks how social media users are connected in a social network, protecting them from spam

But another use in the patent’s official application (called use cases in patent-speak) definitely outlines that same technology functioning as a way for lenders to aggregate credit scores and financial data from your Facebook friends when you apply for a loan.

All of this can eventually factor into their complex algorithms that gauge you as a solid candidate for a new loan – or a big credit risk.

However, there are several reasons why credit risk monitoring via social media may not be practical, ethical, or even legal.

First off, we have the Equal Credit Opportunity Act, a federal law that states that credit must be granted to all creditworthy applicants without paying credence to their race, religion, gender, marital status, age and other personal characteristics. That’s the exact reason you aren’t asked your race, religion, etc. on any loan application or credit form. But that information is often readily available on many Facebook and social media profiles, which opens the door for discriminatory practices.

Next, credit decisions are all supposed to be transparent and disputable. That means you’re supposed to know why your score goes up and down, and there can’t be mysterious or secret factors that play into your score that are disclosed on your credit report. Likewise, you have the right and ability to dispute incorrect items on your credit such as duplicate items, bad information, or even accounts opened and used by ID thieves.

But when credit bureaus track and use your social media usage to help determine your credit worthiness, they’re using factors that are neither transparent or disputable.

Furthermore, pundits point out that social media accounts can be easily manipulated. For instance, if a social media user knows that creditors are watching, they might purposely post certain things, like certain brands, check-in at certain places, etc. that would reflect positively upon them in the eyes of creditors. Basically, they could also set up fake or duplicate social media accounts, or you have the risk of someone else setting up a social media profile in another real person’s name.

Lenders will always look for “alternative data” to improve the accuracy of their credit lending decisions, some things. Cell phone usage, paying rent on time, and even bank account activity could possibly impact your credit score shortly.

But the potential for creditors to track your social media usage raises some serious concerns.

Can you achieve a perfect credit score? We’ll show you how!

Posted on November 7, 2017 by Norm Schriever

When you get together with your friends, family, and coworkers, there’s always one person who loves to brag about how well they’re doing. It may be about their new car, high-paying job, or even the amazingly low interest rate they just got on their mortgage.

So wouldn’t it be great if the next time they opened their mouth to be braggadocious, you could one-up them by reporting that you had a perfect credit score? There’s no topping that!

But there are plenty of financial benefits to a perfect (or excellent) credit score, too.

FICO, the most popular credit scoring model, issued by the Fair Isaac Corporation, ranges from 300 all the way up to 850. Generally, a score above 680 or so is considered “good,” and once you hit the 720 to 740 range, your score is considered “excellent.”

But there’s another level or two above that for consumers to strive for. In fact, 32.8 million people have FICO scores between 700 and 749, but approximately 70 million consumers have FICOs above 760.

Don’t stop there, because it’s possible to raise your credit score even higher. An estimated 36.4 million people have scores between 750 and 799, and 38.6 million are in the 800+ FICO range.

Only about 1% of consumers, around 2 million people, ever reach high-end 800-850 scores.

In fact, FICO estimates that only about .5% (half of one percent) of all consumers with a credit score have a perfect 850 FICO. To put in in context, the average FICO score in the United States has just reached 700 for the first time.

Remember that FICO isn’t the only credit scoring model, as there are dozens of other scoring models that banks and lenders use to make lending decisions, and then different versions of each depending on what kind of loan or even consumer they’re vetting.

So let’s say you reach an 800 credit score, or even an enviable 850 – a perfect credit score. Beyond bragging to your friends, what are the benefits?

An 850 credit score may not help as much as you think IF you compare that to another great score, like an 800, 780, or even lower. That’s because FICO uses algorithms that rate scores within “brackets,” which means that if you have above 750 or maybe 780, there really won’t be an additional benefit the higher you go.

“It’s important to understand,” reports FICO spokesman Anthony Sprauve, “that if you have a FICO score above 760, you’re going to be getting the best rates and opportunities.”

For instance, a consumer with an 850 FICO will most likely be offered the same mortgage interest rate, auto loan rate, or 0% interest credit card offer as another consumer that “only” has a 780 score.

While you may expect little perks, additional beneficial terms, and premium services with a perfect credit score, you most likely won’t see any huge benefit once you reach the “super-prime” scoring bracket.

So why strive for a perfect score? Remember that credit scores are dynamic, constantly going up and down, so today’s perfect score may be a little less next month. Furthermore, it certainly doesn’t hurt to aim for a perfect score and still have an excellent FICO even if you fall a little short. And since your credit score is a good indicator of your financial acumen and dealings with debt, a perfect credit score most likely means that your financial house is well in order.

Whether you want a perfect credit score – or just trying to improve your score until you reach 700 or even 800 – here are ten important strategies:

Pay on time (and never miss a payment)

Even one late payment can hurt your score, and paying on time is about 35% of how FICO calculates your score. In fact, 96% of people with a FICO score of 785 or greater have no late payments on their credit reports.

Pay down your balances

Your credit utilization ratio – how much debt you keep compared to total available balances – makes up about 30% of your credit score calculation. While you commonly hear that you should pay your credit cards and debt down below 30% of the available balances, to shoot for that perfect credit score, you’ll want to pay then down to 10% or below. In fact, a survey of consumers with 800+ scores revealed that their average credit utilization rate was just 7%.)

Keep older and seasoned accounts

About 15% of your credit score is calculated by the length of your accounts, so older is better. According to FICO research, the average credit super scorer has an account that’s 19 years old. Likewise, the average age of their accounts is between 6 and 12 years, and they opened their most recent account 27 months ago or more.

Keep a good mix of credit

10% of your credit score depends on managing a healthy mix of credit, including mortgages, installment loans, and high-quality revolving accounts. Consumers with FICO scores 760 and up have an average of six accounts that are currently “paid as agreed,” and an average of three accounts with a balance.

Shop around in clusters

When you have your credit pulled to “shop around” for a loan, make sure it’s within a 30-day window and FICO won’t factor those pulls into your score. Even if they are spread out within 45 days, they’ll only be treated as one credit inquiry.

Check your credit report often

About 25% of all credit reports contain errors, and ID theft and fraud affect about 1 in 8 American consumers. So to achieve a great score, check your score frequently and consider a credit monitoring service.

Make payments before the due date

To earn an 800+ credit score, make payments well before you receive your bill and the due date. Try paying off (or down) your purchases at the end of every week for the best credit score.

Increase your credit limit when offered

Another way to improve your credit utilization rate and boost your score is to take advantage of any offers to increase your credit line.

Stick to one or two good credit cards

It’s best if you only use one or two cards on a regular basis. American Express is a great choice, as the balances don’t report to FICO since you pay them off in full every month.

Improve your score with Nationwide Credit Clearing!

We’re the trusted leader in credit repair done right. Contact us at (773) 862-7700 or MyNationWideCredit.com for a free report and consultation so we can get you started on the way to a perfect credit score!

Answering the top-10 Google searches about credit and credit scores

Posted on November 2, 2017 by Norm Schriever

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!

Just how much money will you save with a good credit score? The answer may shock you!

Posted on October 26, 2017 by Norm Schriever

Most people don’t think about their credit score on a daily basis, even as they use their credit cards, make their auto loan payment, or write a sizable check for their monthly mortgage. However, there’s a direct correlation between a good credit score and saving on all of these accounts – and more.

The top credit scorers typically save tens (or even hundreds!) of thousands of dollars over their lives, helping them pay off debt, amass savings, invest to retire comfortably, or achieve their other financial goals.

Meanwhile, consumers with subprime or even average credit scores get charged higher interest rates, fees, and see a lot of doors closed when they apply for new loans.

So how much money will a great credit score actually save you? Let’s take a look:

Credit Cards:

According to Bankrate.com, if your credit score falls between 600-679, the average U.S. credit card APR (annual percentage rate) is 22.9%

But if your score is in the 680-739 range, your APR drops significantly to 17.99%.

However, for the highest credit scores in the 740-850 range, the average APR is only 12.99%.

So how much can those lower credit card interest rates save you?

Looking at a popular tiered credit card with a $10,000 balance as an illustration, we see that with the lower 12.99 percent APR for high-score consumers, the monthly payment would be $297 for over five years to pay it off. But if you had that that higher 22.9% rate because your credit score was mediocre, that monthly payment would jump up to an astronomical $715…and for more than 7 years!

Therefore, keeping a great credit score could be the difference between paying $18,414 total to pay off this card or $44,330 – a whopping $25,000+ savings!

Auto financing:

When it’s time to purchase a car and apply for auto financing, your rates and terms can vary widely. But one thing is for sure: a great credit score will save you a lot of money when you’re paying off that shiny new auto month-after-month.

According to VantageScore, which is the main purveyor of credit scoring for auto lenders, a typical $25,000 auto loan for a 5-year term:

Below 550 Vantage Score (poor credit): 18.9% with $13,828 interest paid
Below 620 score (subprime credit): 17.9% with $13,009 interest paid
620 to 680 credit score (average): 11% with $7,614 interest paid
680-740 credit score (good): 6.5% with $4,350 interest paid
740-850 credit score (excellent): 5.1% with only $3,375 interest paid

While a 760 is considered a top-notch credit score for mortgage lending, you’ll probably qualify for the best auto financing with a 720 or higher score. In fact, consumers with excellent credit scores may even qualify for 0% financing on new car purchases.

Mortgage:

One of the biggest ways your credit score will save you huge bucks is when it’s time to buy a home. And unless you’re paying cash for that home, you’ll be applying for a home loan, with rates and pricing based heavily on credit score.

Assuming that the average sales price of a house is $343,300, with a mortgage of $274,640 (20% down payment) and a 30-year fixed mortgage:

Let’s start with a 5% interest rate just for illustration purposes (historically, that’s low, but right now it could be a little high):

Your monthly payment will be $1,474

Total payoff over 30 years is $530,758 (interest and principal payments)

But if you have a better-than-average credit score and qualify for a 4.5% interest rate on that same loan, your monthly payment will be $1,392 with a total payoff of $500,962.

And if you have a great credit score that grants you a 4% interest rate, that means you’ll only pay $1,311 per month with a $471,960 payoff

So how much will a good credit score save you when it comes to this typical mortgage illustration?

-Savings in 1 year (compared to a 5% rate)

4.5% $984

4% $1,956

-Savings in 5 years

4.5% $4,920

4% $9,780

-Savings in 10 years

4.5% $9,840

4% $19,560

-Savings in 30 years

4.5% $29,796

4% $58,736

And for a $500,000 home, the difference between a 760 and a 620 credit score could cost you about $150,000 or more in additional interest payments due to higher rates!

In fact, according to Michelle Chmelar, the vice president of mortgage lending with Guaranteed Rate, every 20-point step down from a 760 credit score could cost the borrower 25 basis points when it comes to pricing, as well as higher fees and closing costs.

Other ways a good credit score will save you money:

Qualify for the best credit cards:

With a top score, you’ll have the best credit cards jockeying for your business, offering the lowest interest rates (sometimes even 0% for a period), options for low or no annual fees, and great perks and rewards. The credit card companies will also gladly extend you higher balances. Together, this can save you hundreds of dollars every year.

Better car insurance deals:

You may not have known that car insurers also rate and apply coverage based on credit scores. While some states, like California, Hawaii, and Massachusetts, don’t allow car insurance companies to look at credit, in most states, you’ll see much lower premiums with a better credit score – saving you money.

Cheaper cell phone plans:

If you’ve walked into a store recently to buy a new cell phone, you were probably asked to authorize a credit score check. In fact, cell companies will require a hefty security deposit and might even charge you higher rates – or outright deny you a contract – if you have enough blemishes on your credit report.

Get approved for rental housing and apartments:

Most landlords include an authorization for a credit check when you submit an application, and your payment history is a pivotal factor in approving you for a lease. Likewise, if you have judgments from past landlords or collections from utility companies on your credit history, you can probably kiss your chances of getting that nice apartment goodbye.

Utility bill savings:

When it’s time to sign up for a new electricity, heating, water, or trash account, a bad credit score can cause some serious problems, In fact, most utility companies will charge increased security deposits – sometimes hundreds of dollars – for bad credit consumers.

Make the grade with student loans:

The average college graduate now leaves school with $37,172 in student loan debt, an increase of 6% (or +$2,200) over just last year. You better believe that a great credit score will help you qualify for lower-interest student loans!

Don’t miss out on your dream job:

A bad credit score can hurt you in ways that have nothing to do with taking out a loan. In fact, employers are screening their potential employees for credit score, especially with government jobs or those in the financial sector. It’s estimated that 1 in 4 Americans have been subjected to a credit score check when applying for a job, and 1 in 10 have actually been denied a job because of a bad score or something on their credit report!

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Are you ready to start saving money? Let’s start with your credit score! Contact us for a free consultation and credit report.

Millennials aren’t making the grade when it comes to credit.

Posted on October 12, 2017 by Norm Schriever

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!

The 5 Factors That Go Into Your FICO Score

Posted on September 27, 2017 by Norm Schriever

Your FICO® score is a major factor when it comes to getting approved for a loan or new credit. In fact, the Fair Isaac Corporation (FICO) is used by 90% of top lenders and banks around the country to help gauge whether you’re a good candidate for new credit, as well as the interest rate they’ll offer. In total, it’s estimated that FICO scores are used for up to 10 billion decisions about credit around the world each year!

However, FICO has closely guarded their credit scoring algorithms, so we don’t know exactly how their computations will raise or lower our scores. But the good news is that FICO does publicize the specific factors that play into a credit score.

“FICO scores give the most attention to how you have paid back lenders in the past,” says FICO spokesman Craig Watts, “and how much you are using of the credit available to you, as shown on your credit report. Those two factors contribute roughly two-thirds of a typical person’s FICO score.”

Let’s take a closer look at those five factors that go into your FICO score:

Payment History

35 % of your total FICO credit score.

The single most important factor that influences your FICO score is your record of replaying past debts. This makes perfect sense, considering that past behavior of paying off debts on time and in full is the biggest predictor of future repayment.

When it comes to your payment history, FICO looks at both revolving loans, such as your credit cards, and installment loans, like mortgages or student loans. In fact, we do know that your FICO score will drop more if you miss a payment on a large installment loan, like your home mortgage, over a smaller credit card, for instance.