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How long will negative information stay on our credit reports?
Did you miss a credit card payment, have a bill go to collections, or even had to file bankruptcy recently? If so, your credit score has probably taken a pretty big hit. You’re also probably wondering when it will stop showing up on your credit report so you can move on.
Luckily, negative information that’s reported on your credit doesn’t last forever. In fact, we know the timeline when they will “fall off” and not be reported anymore thanks to the Fair Credit Reporting Improvement Act of 2014, which defines the timelines for how long negative information can remain on your credit file.
Here’s a rundown of how long common items will remain on your credit report, where they very well could be hurting your score:
Credit cards, store cards, retail accounts, auto loans, and other credit accounts that are paid on time can keep reporting on your credit for up to 10 years from the date of last activity.
Late payments for credit accounts
However, if you missed payments or failed to pay on time, that negative data will also be reported, but for a period of 7 years (starting from the exact date the account was first past due.)
Late payments for other debts
While late payments on common credit accounts will show up for 7 years, those same rules don’t apply for revolving or installment loans. In fact, if you have a revolving or installment debt that is now current but does have a late payment some time in the past, that negative item (late payment) will appear on your credit report for 10 years past the date of last activity.
While it may get a little confusing, the late payment history will be removed for these installment and revolving debts after 7 years, but the reporting for accounts that are current will show up for 10 years.
Collection accounts usually will show up on your credit report for a full 7 years after the date the account first became past due. Remember that the date it was past due will be earlier than the date it was sent to collections, which could be 90 days or more after that.
If you’ve been through a chapter 7 bankruptcy (most common for consumers), a chapter 11 bankruptcy, or a non-discharged or dismissed chapter 13 bankruptcy, that will typically keep reporting for 10 years from the date the bankruptcy was first filed (not the date they were discharged).
However, chapter 13 bankruptcies that have been discharged can only stay on your credit report for 7 years from the date they were first filed.
Judgments usually stay on your credit report for 7 years after the date they were filed, whether you have satisfied (paid) them or not.
If you have a tax lien and then pay it off in full, the lien will still report on your credit for 7 years from the day it was satisfied.
However, tax liens that go unpaid (unsatisfied) will stay on your credit report indefinitely – which means that you’re stuck with them until they’re paid off.
When a third-party requests a copy of your credit report (usually a lender, retailer, or employer), that activity shows up on your credit report, and can possibly impact your score. But the good news is that there’s usually not a big hit, and the credit bureaus only keep this on your report for 1 or 2 years.
But there are different types of credit inquiries that might have different reporting timelines. For instance, promotional inquiries (when you received a pre-vetted offer for credit) don’t affect your score and generally remain on your credit for only 12 months. When one of your current creditors performs a review of your account, it also does not affect your score and remains for 12 months. Finally, when you request a copy of your own credit report, it does not affect your score and will remain on your credit file for up to 24 months.
However, there are some slight variations on these timelines depending on state law:
For instance, in California, paid or released tax liens will stay on your credit file for 7 years from the date released, or ten years from the date filed. And unpaid tax liens remain on your credit file for only ten years from the date they were filed – not indefinitely.
New York State residents see their satisfied (paid) judgments only remain on their credit file for 5 years and paid collections only reporting for five years from the date of last activity.
I know – that’s a lot to remember. So we’ve put together this easy list so you can quickly see how long a certain negative item will stay on your credit report:
The item remains two years (or less);
The item remains no more than 7 years:
Released tax liens
Charged off accounts.
Note: the timeline begins from the date of default OR 180 days after the date of the first delinquency that eventually went to collection.
The item remains no more than 10 years:
A Chapter 7 bankruptcy can remain on a credit report for up to 10 years from the date it was first filed.
A Chapter 13 bankruptcy can also remain on a credit report for up to 10 years.
The item will remain indefinitely (until paid):
Federally guaranteed student loans that are unpaid and in default can remain on a credit file indefinitely until such time as they are paid.
Unpaid tax liens may report on a credit file indefinitely.
Remember – there’s another way to get rid of negative items that are reporting on your credit BEFORE they naturally fall off after all of these years! Contact us for more information!
How men and women differ when it comes to credit and debt.
There are some profound differences between men and women when it comes to men and women, from what we earn, to what we spend our money on, and even how we go about investing. When it comes to credit and debt, there are some interesting comparisons between males and females, too – although it might not always be what you think.
For instance, when it comes to credit score, would you guess that men or women are leading the way with better scores?
In fact, according to surveys by Experian, women have a higher average credit score (675) than men (674).
Men have more debt, with an average of $26,227 compared to $25,095 for women.
The average man owes $5,282 in credit card debt, compared to only $4,867 for women in credit card balances.
Women have 4.1 credit cards on average, while the average man only carries 3.7 cards.
But at least part of that debt total for men can be attributed to home loans. Of all people who are mortgage holders, men have an average of $187,245 in home loans compared to $178,140 for females.
In fact, the average U.S. man has $50,425 in mortgage debt versus only $35,116 for the average American woman.
Another check in the “Men” column is that 60% of men have more savings than credit card debt, while only 49% of women have more in their savings account than their credit card balances.
While both sexes sometimes exhibit less than stellar use of credit cards, women lead the way in a metric called “problematic behaviors” when it comes to cards.
In fact, only 33% of men display two or more problematic behaviors with credit card usage, compared to 38% of women.
But men carry a larger total of debt than women (+4.3%), and females also use only 30% of their available credit, while men use 31% or higher on average.
Men comparison shop for better rates and terms on their credit cards more than women (37% to 31%).
Women also carry a bigger balance from month to month on their cards (60% do so) compared to men (55%).
And 42% of women only make the minimum payment every month, compared to only 38% of men (a big no-no for your credit score).
Backing up that statistic, 45% of men pay their balance in full every month, compared to only 39% of women.
Women also pay late fees on their credit cards far more than men, at a rate of 29% (of women who have to pay late fees) versus only 23% of men.
Despite having lower credit scores (slightly), men also have better interest rates on their credit cards than women. In fact, the average rate for men is 14.3%, compared to 14.9% for women’s credit cards.
How about student loan debt? On a per-student basis, women have far more student loan debt than men. In fact, the average woman has $11,786 in student loans, compared to only $8,187 for men.
But men finance far more for their cars, with an average auto loan tally of $8,249, while women only owe $6,693 on their car loans on average.
While the one-point credit point advantage favors women by a small margin, the data reveals that women do have a better understanding of credit scores and credit reporting. The Experian study concluded that:
48% of men incorrectly believe that marital status factors into credit scores, compared to only 38% of women who mistakenly think the same thing.
46% of men mistakenly think marital status is a factor in scoring, versus only 34% of women who get that wrong.
74% of women understand that the credit bureaus collect the information that’s used for scoring, while only 68% of men realize that.
Women are more apt to know when scores are free (65%) than men do (60%), know when lenders are mandated to discloses scores (53% to 46% for men), and better understand the importance of regularly checking and monitoring their credit reports (77% to 72% for men).
So which gender wins the title of “Best with Credit and Debt?” It seems like women win out over men on average in certain important factors, but men are profoundly better in a few others. Overall, well call it a tie and just say that BOTH men and women need to work hard, educate themselves, and do better with credit and debt if they want to improve their finances and get ahead!
And you can start with a free credit report and consultation from Nationwide Credit Clearing! Contact us to get started.
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!
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!
10 Ways to Start Saving Money TODAY!
Of course you do!
In this ongoing series, we’ll point out effective ways you can save a lot of money this year, next month, and even today!
Here are our first 10 ways to start saving money today:
- Cut down on beverage costs.
Did you know that the average American spends about $650 a year just on soda and soft drinks! For a family of four, that adds up to $2,600 – enough to pay off a credit card or put aside for savings, perhaps. Add in bottled waters (when you could just bring your own reusable bottle and fill up at water coolers), energy drinks, and expensive coffee drinks (more on that later), and you may be able to save $300 or $400 every month just by watching what you drink!
- Compare homeowners or renters insurance policies.
Most families purchase a homeowners insurance policy, pay the high premium, and forget about it. But it’s a good idea to contact your agent every six months or so, just to check in if there are new programs, specials, or lower rates available. It’s also prudent (and free!) to shop around a little and see if you could save significant money with another company or agent. Something as simple as installing new smoke detectors, adding an alarm system, or other health and safety upgrades may qualify you for a discount.
- Shop around for a better auto insurance plan.
While you’re at it, contact your insurance agent and ask him or her if there are better deals available for your auto insurance. You may get a discount for signing up with a company that holds your other insurance policies, too. Or, if your driving record has improved (or just stayed uneventful), you live or work in a different zip code, or your credit score has gone up, there may be a price break you’re not currently taking advantage of.
- Hit the OFF switch on electronics and appliances.
Sure, we know to turn lights off when we leave a room and shut off the TV before we leave the house. But even when you’re gone and things are supposedly off, certain appliances still drain a lot of electricity – and run up your energy bills. In fact, toaster ovens, coffee makers, mixers, kitchen radios, some microwaves, cable boxes, video game consoles, and other entertainment systems and appliances STILL draw electricity even if they’re off. As a general rule, if an appliance has. LED light or digital display, unplug it – don’t just turn it off – and you’ll start saving.
- Install a new SMART thermostat.
Heating and cooling costs add up big for most homeowners, whether you live in a place with the coldest arctic-like winters (hello, Chicago!) or sweltering, humid summers (hi again, Chicago!). But most home heating or cooling systems are outdated – and their thermostats are wildly inefficient, too. You don’t have to replace your whole HVAC system to save money, but switch out your old thermostat for an energy-efficient smart model.
In fact, a new Energy Star thermostat allows you to program specific temperatures for different times of the day. You can even program it higher or lower based on different zones of the house or adjust for when you’re not home. How much money will that save you? The U.S. Department of Energy estimates that you can cut back on energy costs by up to 15% per year just by getting a smart thermostat!
- Bundle your cable, internet, and phone services.
It’s ridiculous home much the average person pays for cable TV, Wi-Fi at home, home phone, and cell phone service every month. While you may not think you can live without all of those, you may be able to save a pretty penny just by bundling your services. In fact, most telecom companies are so motivated to get your business (and keep it), that they’ll give big discounts and special pricing for consumers that sign up for all of these services with them. Just by calling around and comparing bundled packages and offers, you may save $100 a month or more!
- Take a close look at your memberships and subscriptions.
From monthly magazine subscriptions to membership clubs, internet sites that require a monthly fee and smartphone apps with recurring monthly payment. In fact, the average household pays $129 in memberships and subscriptions like this every month! That’s well and good if you use them and like them, but most of us don’t even realize all of the things we’re paying for! Take a careful look at all of your memberships, subscriptions, and online recurring payments, cutting the fat where necessary
- Cut out those ATM fees.
The average American spends at least $290 in ATM fees every year. That’s not banking fees, but just the cost to access their own money at ATM machines. In fact, the average out-of-network ATM fee is now $4.52. There are even ATM operator fees of $2.50 to $3 for non-members, and steep international fees. Some opportunistic banks even charge ridiculous ATM fees based on location, such as many Las Vegas money machines that charge $10! In total, you may be wasting $30 or $40 every month in your household just by using the wrong ATM and the wrong bank.
- Pack your lunch most days of the week.
Of course, everyone loves to eat out when they’re at work. But the cost really adds up. Let’s do the math – if the average brown bag lunch costs about $4, but going out to a restaurant, sandwich shop (or even fast food) comes to about $9 a meal, you’ll be saving $5 a day by not eating out. Add that up over 20 working days, and you’re at $100 savings a month, or $1,200 a year. However, realistically, you probably spend more on nicer sit-down restaurants, tips, beverage costs, snacks, etc. So make it a policy to brown bag it Monday through Thursday and then splurge on Friday. You’ll save a lot of money and not feel you’re missing out!
- Request that your credit card companies lower their APRs.
Credit cards will often reward good customers with lower APRs, reduced interest rates, or by fixing a low interest rate if you’re currently paying a variable rate. It doesn’t hurt to call them and ask for some sort of better terms, rate, or savings. The worst they can say is “no!” But if you’ve paid on time and they value your business, they’ll often do something to keep you. Do this for all of your credit cards, and you may start saving significant money every year!
- Know your credit score.
About one-third of Americans have no idea what their credit score is right now, and nearly 45% of us haven’t checked our score or report in the last twelve months. That lack of attention can cost us big money. In fact, errors, inaccuracies, duplicates, and even ID theft cost American consumers countless millions of dollars each year.
To make sure you save as much money as possible, pull your credit report at least three times a year.
Contact Nationwide Credit Clearing for a free credit report and consultation to make sure you aren’t overpaying!
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!
Improve your finances this year starting with a free credit report and consultation from Nationwide Credit Clearing!
25 Facts about the U.S. auto industry (including how a good credit score will save you a lot of money when buying!)
Here are 25 facts about the auto industry – including car loans and how a good credit score can save you a lot of money when buying!
1. In 2017, we bought a lot of cars! In fact, 6.2 million new cars were sold, as well as 11.1 million SUVs and light trucks, adding up to approximately 17.3 automobile transactions.
2. Considering that there are approximately 323 million people in the United States, that means more than 1 out of every 18.6 people bought a brand new car…just this year!
3. While those numbers are impressive, they’re slightly off of the high point of auto sales in 2016, when nearly 17.5 million light passenger vehicles sold, as well as 17.4 million in 2015.
4. Worldwide, 78.6 new cars sold in 2017!
5. In 2017, the motor vehicle industry (including manufacturers, dealerships, used part dealers, service centers, etc.), employed almost one million U.S. workers (approximately 940,000).
6. In fact, the auto industry is responsible for about 3 to 3.5% of our entire U.S. gross domestic product.
7. We also manufacture a lot of cars in the United States these days. In fact, nearly 12 million light passenger vehicles were built in the good ‘ole U.S. of A last year.
8. At least 2.1 million of those automobiles were exported and sold abroad, spanning almost every country in the world for a total value of $57 billion.
9. Additionally, the secondary automobile parts export market is worth an impressive $80 billion, and we also exported $5.5 billion in used cars.
10. While that’s a whole lot of new cars, the U.S. is still second to China for automobile markets, both in terms of sales and production.
11. Of course, a lot of car sales mean a lot of car sales dealerships. In fact, there are currently 18,250 new vehicle dealerships in the United States.
12. According to government estimates, there are about 222 million licensed drivers in the United States, which means that about 69% of our country has a driver’s license.
13. We also know that there are approximately 260 million passenger cars, trucks, and SUVs on the roads, which adds up to 1.24 automobiles for every person with a driver’s license in the U.S.!
14. In fact, there are 260,350,940 registered vehicles in the United States, which is an all-time high.
15. That also accounts for 20 million more automobiles than 2007, and in 1990 there were only 193 million registered autos in the U.S.
16. But the car market is still heating up around the world, with new car dealers expected to bring in 916 billion by 2020, with used car sales following with 106.6 billion in sales.
17. An interesting data point is the Scrappage Rate, which measures the number of cars sent to junkyards and put out of service every year. Over the last couple years, the Scrappage
18. Rate fell to only 11.5 million annually, a record low when compared to the number of cars on our highways and roads.
19. If we look at the monthly budget of the average America, their rent or mortgage payment tops the list, but transportation costs (including car payments) comes in second.
In fact, when added together, housing and transportation account for about 50% of the typical American’s income.
20. The average American’s monthly spending chart looks like this (based on a $51,442 per capita): income:
33% Housing, $16,887
17% Transportation, $8,998
13% Food, $6,599
11% Insurance, $5,591
7% Health Care, $3,556
5% Entertainment, $2,605
3% Clothing, $1,736
11% Total other expenses, $5,470
21. While we may be buying new cars at record rates, we’re still using financing to purchase the vast majority of them. In fact, in 2017, auto lending hit a new record with more than $1.1 trillion in car loans owed by consumers!
22. In fact, the average person with a car loan now has $18,694 in auto debt, and the average new car came with a sticker price of about $35,000 in 2017.
23. But last year, the average person who financed their car purchase borrowed $30,032 in loans (the first time that average exceeded $30,000). The average monthly payment for a new car loan is now $503, the first time that number has risen over $500.
The average loan term is now 67 months (5.58 years) for new automobiles and 62 months (5.16 years) months for used autos, both record highs.
24. However, car loans are being extended to people with marginal or even poor credit scores like never before. These days, almost 20% of all auto loans go to people with credit scores of 620 or less – called “subprime” (a score of 680 is typically considered good.)
According to Experian, 19.3% of auto loans now go to consumers with subprime or deep subprime credit scores. That means less than two-thirds of auto loan borrowers (61.3%) have prime or super-prime credit.
25. There’s no denying that it’s a great feeling to buy a new car, and reliable transportation is a must for most of us. However, subprime auto loans tend to come with sky-high interest rates and cost us way too much in total interest. For example, a person financing a $23,000 car might spend $9,615 just in interest with a 66-month loan at 14.99 percent!
So, in order to get a great car loan, have a better monthly payment, save a lot in total interest, AND get that beautiful new car you love (and deserve), talk to Nation Wide Credit Clearing first about improving your credit score!
50 things you didn’t know about credit scores, credit reporting, and debt. (Part 1)
2. People often talk about their “credit score” as if they had just one. In fact, there are more than 100 credit scoring models used by banks, lenders, and financial institutions.
3. But FICO is the biggest and most recognizable credit scoring model. FICO is an acronym for the “Fair Isaac Corporation” and is based on the risk-predicting algorithms developed by mathematician Earl Isaac and engineer Bill Fair in 1956, and then rolled out in the 1980s as a credit scoring system.
4. Did you know that these days, credit scores are even influencing people’s dating decisions? It’s true, as surveys show that the majority of people would consider someone’s credit score before dating them or getting in a relationship. There’s even an online dating site called CreditScoreDating.com with the motto, “Credit Scores are Sexy!”
5. Millennials – and especially college kids – are really missing the boat when it comes to keeping good credit scores. In fact, Millennials have the lowest Vantage credit scores of any generation, including Gen X (ages 30-46), Baby Boomers (47-65), and the Greatest Generation (66+).
6. Speaking to that point, surveys show that 85% of U.S. college students don’t even know their own credit score!
7. These days, your credit score impacts far more than just buying a house or getting a good rate on your credit card, as many employers now check the credit reports of their potential applicants. In fact, 1 in 4 Americans looking for a job have been subjected to a credit check, and 1 in 10 has been disqualified from getting hired because of something on their credit report!
8. According to reports by the Department of Labor, occupations that routinely check a job applicant’a credit include: 1) parking booth operator, 2) the military, 3) accounting, 4) mortgage loan originator, 5) Transportation Security Administrator (TSA), 6) law enforcement and 7) temporary service positions and many more.
9. FICO scores are based on a complex (and secretive_ algorithm that factors every nuance of credit behavior from tens of millions of consumers. Their programs then look for patterns that will help them predict future defaults (or on-time payments) for borrowers, which they then translate as a numeric spectrum of risk for lenders, or your credit score.
10. These days, an estimated 33% (one out of every three) of all American adults do not pay their bills on time every month!
11. How much bad credit card debt do the big banks take a loss on every year? Last year, the top 100 banks in the U.S. had an average charge-off rate of 3.87%, which means that nearly 4 out of every 100 people don’t pay,
12. Last year, the average Annual Percentage Rate (APR) for all U.S. credit cards was 13.14% – another great reason to build up your credit score and get out of debt this year!
13. About 19 countries around the world use some form of FICO scores, and many more have their own credit scoring system.
14. Nearly two-thirds of U.S. adults – or 144 million people – haven’t even looked at their credit report within the last 365 days.
15. And one-third of working-age Americans don’t even have a clue what their credit score is!
16. Visa is by far the biggest credit card in the U.S., with 278 million cards at home (that’s about one for every adult in our population!). Mastercard is next with 180 million cards
But while Visa has 522 million cards across the globe, MasterCard just beats them out with 551 million cards abroad.
17. Visa is also the largest credit card in the U.S. by sales volume, with $981 billion in annual charges. MasterCard is second with about $534 billion in yearly debt from cardmembers.
18. The average U.S. consumer has 13 credit accounts listed on their credit report, which includes 9 credit cards and 4 installment loans. (But remember, that doesn’t mean they’re all open and active, just reporting.)
19. In the 1990s, America saw an explosion of personal debt levels that was unprecedented. One of the main causes was the fact that banks, lenders, and financial institutions starting using credit scores en masse to help them gauge risk and make faster, more accurate decisions.
20. In fact, in 1995, the nation’s two largest mortgage financing agencies, Fannie Mae and Freddie Mac, started advising lenders to use FICO scores for their borrowers, allowing the floodgates on lending to tens of millions of Americans.
21. But at first, FICO didn’t want to reveal how they calculated a consumers credit score, opting to keep it a secret. But under intense pressure from financial advocates and governmental influence, in 2003 they released a list of 22 factors that go into their credit scoring model. That same year, the U.S. Congress passed a new law that granted consumers the right to access their credit score.
22. Remember that credit scoring systems weren’t designed to help consumers and the general public, but lenders and companies. Therefore, credit scoring models, reports, and computations weren’t supposed to be easy for the average person to understand!
23. Insurance companies are using credit scores and reporting like never before. In fact, insurance actuarials prove that the lower a customer’s credit score, the more likely they are to file an insurance claim – costing their insurer money.
24. These days, 90% of homeowners and auto insurance companies use credit score as a factor when assigning and rating premiums! Therefore, insurance companies reward customers with good credit scores, and your premiums will be much lower than for those with a low credit score.
25. If you want to improve your credit score (and keep it high), then try to only keep credit cards from well-respected, major banks, like VISA, Mastercard, American Express, etc.). They’ll show that you’re a better steward of your finances and a more responsible debt holder than if you open accounts with lesser known finance companies, retail cards, etc., and your credit score will reflect that.
Look for part 2 of this blog, with 25 more things you didn’t know about credit scores, credit reporting, and debt!
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!
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.
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:
2. Division of domestic responsibilities
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.
Look for part two of this blog where we cover tips and tactics to help ensure that money doesn’t ruin your relationship!