credit history http://www.wisebread.com/taxonomy/term/12012/all en-US 4 Surprising Things Lenders Check Besides Your Credit Score http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-surprising-things-lenders-check-besides-your-credit-score" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_paperwork_house_83751927.jpg" alt="Man learning things lenders check besides credit score" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know how important your FICO credit score is to mortgage lenders. They rely on this number to gauge how well you've handled credit and paid your bills in the past. A high credit score means that you'll qualify for a low mortgage interest rate. A low score? You might not qualify for a loan at all.</p> <p>But mortgage lenders don't look only at <a href="http://www.wisebread.com/7-reasons-you-are-more-than-your-credit-score" target="_blank">your credit score</a>&nbsp;when you apply for a home loan. They also consider several other key factors &mdash; everything from your job history to the size of your down payment.</p> <p>Here is a look at four noncredit factors that lenders will be studying when you apply for a mortgage loan.</p> <h2>Debt</h2> <p>Outside of your credit score, your debt-to-income ratio is the most important number for mortgage lenders. This ratio measures the relationship between your monthly debt obligations and your gross monthly income.</p> <p>As a general rule, lenders strongly prefer your total monthly debts &mdash; including your estimated new mortgage payment &mdash; equal no more than 43% of your gross monthly income (your income before taxes).</p> <p>If your debt-to-income rises past this level, lenders won't be as willing to lend you mortgage money. They'll worry that you're already overburdened with debt, and the addition of a monthly mortgage payment will only make your financial situation worse.</p> <h2>Job History</h2> <p>Lenders prefer borrowers who have worked for the same employer, in the same position, for at least two years. Lenders believe that such workers are less likely to lose their jobs and, therefore, less likely to lose the income stream they need to pay their mortgage loan on time each month.</p> <p>But there's a lot of flexibility with this rule. For instance, if you took on a new job with your same employer in the last two years, this probably won't hurt you. Even if you moved onto a new job with a different employer in your same industry, lenders probably won't worry.</p> <p>But what if you've taken a new job in a new industry in the last two years? That might cause some concern. Lenders might worry that you'll be more likely to lose that new position. However, you can usually still qualify for a loan.</p> <p>If you've been unemployed for a significant amount of time in the last two years, that can cause more problems. Be prepared to explain to lenders why you have a gap in your work history. As long as you have a solid income now, the odds are still good that you'll be able to qualify for a home loan.</p> <h2>Savings</h2> <p>To qualify for the lowest interest rates, make sure you have enough money in savings. You'll need money to pay for your down payment, closing costs, and a certain number of months' worth of property taxes, of course.</p> <p>But lenders often require that you also have enough in savings to pay at least two months of your new mortgage payment, including whatever you're paying each month for property taxes and insurance. If your total monthly mortgage payment will be $2,000, you'll need at least $4,000 in savings in addition to whatever you'll be paying for closing costs and down payment.</p> <p>Lenders want to see that you have savings in case you suffer a temporary reduction in your monthly income. This way, you'll be able to use your savings to pay for at least a couple months of mortgage payments.</p> <h2>Down Payment</h2> <p>The size of your down payment plays a big role in the size of your mortgage interest rate. In general, the bigger your down payment, the smaller your interest rate.</p> <p>That's because lenders consider you less of a risk to default on your loan if you come up with a larger down payment. You've already invested more in your home, the theory goes, so you'll be less likely to walk away from it.</p> <p>You can qualify for mortgage loans today with a down payment of as little as 3% of your home's final purchase price, in many cases. But if you want to qualify for the lowest interest rates? Putting down 20% of your home's final purchase price &mdash; admittedly not an easy task &mdash; will increase your chances of nabbing that ultralow rate.</p> <p><em>If you're getting ready to buy a house, have you taken steps to improve these parts of your finances?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-personal-finance-calculators-everyone-should-use">15 Personal Finance Calculators Everyone Should Use</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-youre-too-old-or-too-young-for-a-mortgage-loan">4 Reasons Why You&#039;re Too Old — Or Too Young — For a Mortgage Loan</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-lenders-look-for-in-a-loan-application">5 Things Lenders Look For in a Loan Application</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-prepare-for-a-home-purchase-in-2010">How to Prepare for a Home Purchase in 2010</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world">Your Bad Credit Isn&#039;t the End of the World</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Real Estate and Housing closing costs credit history credit score debt down payment FICO score interest rates job history lenders loans mortgages savings Mon, 29 Aug 2016 10:00:09 +0000 Dan Rafter 1779806 at http://www.wisebread.com How to Build Credit Without Using Credit Cards http://www.wisebread.com/how-to-build-credit-without-using-credit-cards <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-build-credit-without-using-credit-cards" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_reading_letter_73633147.jpg" alt="Woman learning how to build credit without credit cards" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There are lots of reasons people avoid using credit cards. The <a href="http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">interest rates on credit cards</a> can be horrible &mdash; in some cases, 20% or higher. And walking around with a large amount of spending power in your pocket can lead to unintended purchases and being saddled with big credit card payments. So, you might be forgiven for thinking that your credit rating would be higher if you just didn't use credit cards. (See also: <a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps%20?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">How to Rebuild Your Credit in 8 Simple Steps</a>)</p> <p>Important <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">factors in calculating your credit score</a> include on-time payment history and available credit. If you don't use credit cards or make any loan payments, you may not have sufficient <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score%20?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">credit history to obtain a high credit score</a>. It seems illogical, but if you don't have any debt, you can end up with a poor credit rating due to lack of recent credit history!</p> <p>But let's say you're still not interested in using credit cards. How do you build your credit without them?</p> <h2>Be Added as an Authorized User</h2> <p>An easy and free way to boost your credit rating is to have a family member add you as an authorized user on one of their cards so you can get the available credit and payment history added to your credit report. Make sure that person has a good credit history and can be counted on to make on-time payments and to keep their balance low. Agree that you will not use the card (even better, let them hold onto your card). For a bigger boost, ask to be added to the card with the highest available credit and lowest debt.</p> <h2>Get a Secured Credit Card</h2> <p>Most consumer credit cards are unsecured. If you don't trust yourself with access to credit, a <a href="http://www.wisebread.com/a-secured-credit-card-can-repair-your-credit-score-heres-how-to-pick-the-best%20?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">secured credit card can improve your credit score</a>. To get a secured credit card, you have to put down a deposit, which would then be your available credit. You can't use more money than you've already put in. If you have some cash to make a security deposit, this can be a good way to establish a good credit history by making on-time payments to build your credit score, without the temptation to spend more than you have. The <a href="http://www.wisebread.com/the-5-best-secured-credit-cards%20?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">best secured cards</a> even come with valuable cardholder benefits such as extended warranty coverage and automobile rental insurance.</p> <h2>Take Out a Loan</h2> <p>Even if you don't need to borrow money, you can take out a loan, have the funds deposited in your account, and make payments on time to boost your credit rating. You can find lenders at <a href="https://www.prosper.com">Prosper</a>, <a href="http://track.flexlinks.com/a.ashx?foid=1029882.227343&amp;fot=1074&amp;foc=1">Lending Club</a>, or <a href="https://www.selflender.com">Self Lender</a>. You will pay a small amount of interest fees, but building your credit rating can save you lots of money in the long run.</p> <h2>Make Car Payments on Time</h2> <p>Car loans typically have much lower interest rates, and you can build your credit history with on-time car loan payments. A big problem with car loans is that people tend to buy much more expensive cars than they would if they had to pay cash. One strategy is to buy the same car you were going to buy with cash, but put down a large deposit, and get a car loan for the rest. Use your cash to make the loan payments on time for the life of the loan. You will pay a little more for the car due to interest and fees, but this is a relatively low-cost way to build your credit history.</p> <h2>Make Student Loan Payments on Time</h2> <p>If you have student loans, making your payments on time counts to build your credit history. Set up automatic payments to make sure you never have any late or missed payments reported.</p> <p><em>How do you maintain a good credit rating without using credit cards?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/how-to-build-credit-without-using-credit-cards">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/building-a-credit-history">Building a Credit History</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-your-credit-score-suffering-without-your-knowledge">Is your credit score suffering without your knowledge?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-secured-credit-card-facts-to-remember">6 Secured Credit Card Facts to Remember</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-expect-when-youre-expecting-a-huge-credit-card-bill">What to Expect When You&#039;re Expecting a Huge Credit Card Bill</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">How to Rebuild Your Credit in 8 Simple Steps</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards authorized user bills building credit credit history credit score loans payments Mon, 08 Aug 2016 09:30:29 +0000 Dr Penny Pincher 1767115 at http://www.wisebread.com Avoid These 5 Common Mistakes While Rebuilding Your Credit http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/avoid-these-5-common-mistakes-while-rebuilding-your-credit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/holding_credit_cards_79349747.jpg" alt="Learning to avoid common mistakes while rebuilding credit" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know your three-digit credit score is terrible. And this makes it difficult to qualify for auto loans, a mortgage, or credit cards. Even if you do qualify, you're hit with sky-high interest rates.</p> <p>Still, you <em>can&nbsp;</em><a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">rebuild your credit score</a>. It just takes time. Pay your bills on time every month. Pay off as much credit card debt as you can. Eventually, your score will rise.</p> <p>Just avoid these five common mistakes that consumers often make when rebuilding their credit.</p> <h2>1. Closing Paid-Off Credit Cards</h2> <p>Paying off a credit card is cause for celebration. Just don't cancel that card once you hit a zero balance. If you do, your credit score will take a hit. This is because of something called your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">credit-utilization ratio</a>. Basically, your credit score will fall if you use too much of your available credit.</p> <p>Here's an example. Say you have $10,000 worth of credit card debt and three open credit card accounts with a total available credit limit of $15,000. This gives you a credit utilization ratio of 67%. If you pay off one of the cards and bring your debt down to $7,000, your credit utilization ratio falls to 47%. This will boost your credit score. However, if you close that credit card account and lose that available credit (say it was $5,000), your total available credit will drop to $10,000, and your credit utilization ratio jumps to 70%, even higher than when you had $10k of debt but three open accounts.</p> <p>The better move? Keep that paid-off card open, just make sure to avoid running up its balance again.</p> <h2>2. Missing a Payment, Even Once</h2> <p>When rebuilding your credit score, your most important job is to make your monthly payments on time <em>every</em> month. Late or missed payments can send your credit score falling by 100 points. These financial missteps will stay on your credit report for seven years, too.</p> <p>So don't forget to send in that car or credit card payment on time. And if you do miss your due date? Send your payment as quickly as possible. Lenders won't report a payment as missed to the three national credit bureaus until it is 30 days or more past the due date. So even if you missed the official due date, you can still spare your credit score.</p> <h2>3. Swearing Off Credit Cards Forever</h2> <p>It's tempting when you're trying to rebuild your credit to swear off credit cards completely. After all, it's often credit card debt that has gotten consumers into credit score problems. But using a credit card responsibly is actually one way to help improve a credit score. Your score will rise if you pay your credit card bill on time each month. Not using credit cards at all can actually hurt your score.</p> <p>The key, though, is to never charge more than you can afford to pay off in full each month. If you charge too much, you'll simply increase the amount of credit card debt you carry from month to month. This will increase your credit-utilization ratio, thus hurting your score. So do use your card. Just don't use it so much that you have to carry a balance.</p> <p>If you find that you're having trouble getting approved for a credit card because of your bad credit, look for <a href="http://www.wisebread.com/the-5-best-secured-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">secured credit cards</a> which often do not require a credit check.</p> <h2>4. Looking for a Quick Solution</h2> <p>Rebuilding a weak credit score takes time &mdash; lots of it. It might take a year or more of making on-time payments and whittling down your credit card debt to improve your score enough to make you a good risk in the eyes of lenders. Don't make the mistake of trying to rush this process. Many companies claim that they can instantly boost your credit score. Unless there are errors on your credit reports, they can't. There is no quick way to raise an ailing credit score. Any company that tells you otherwise is lying.</p> <h2>5. Not Ordering Your Three Credit Reports</h2> <p>The three national credit bureaus of TransUnion, Equifax, and Experian each maintain a credit report on you. These reports list all the open credit accounts in your name and any missed or late payments in the last seven years. They also list any negative judgments such as foreclosures and bankruptcies in the last seven to 10 years.</p> <p>You are entitled to one free copy of each these reports every year from AnnualCreditReport.com. When rebuilding your credit, it's important to order these reports and to study them. Look for errors. One report might say that you missed a car payment last year that you know you paid on time. Correcting that error could provide an <a href="http://www.wisebread.com/7-ways-to-increase-your-credit-score-quickly?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">immediate boost to your credit score</a>.</p> <p><em>Have you improved your credit? What steps did you take?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/building-a-credit-history">Building a Credit History</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">This One Ratio Is the Key to a Good Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world">Your Bad Credit Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-credit-card-truths-you-wish-you-could-tell-your-younger-self">10 Credit Card Truths You Wish You Could Tell Your Younger Self</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-expect-when-youre-expecting-a-huge-credit-card-bill">What to Expect When You&#039;re Expecting a Huge Credit Card Bill</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management credit history credit reports credit score credit utilization ratio debt paying bills rebuilding credit Fri, 08 Jul 2016 10:30:10 +0000 Dan Rafter 1747445 at http://www.wisebread.com Your Bad Credit Isn't the End of the World http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/your-bad-credit-isnt-the-end-of-the-world" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_stressed_finances_84649523.jpg" alt="Man learning his bad credit isn&#039;t the end of the world" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Worried about your low FICO credit score? Does your credit card debt keep you awake at night?</p> <p>You're not alone. Money worries plague millions of Americans. According to the <em>Stress in America</em> survey from the American Psychological Association, more than a quarter of U.S. adults say they feel stressed about money most or all of the time. Only 30% rated their financial security as high, while more than two-thirds said that having more money would make them happier.</p> <p>But here's some good news: Yes, bad credit and high credit card debt does add stress to your life. But neither of these financial missteps are unfixable. As long as you face your financial problems and take some simple steps to correct them, you can build a new financially secure future. (See also: <a href="http://www.wisebread.com/topic/5-day-debt-reduction-plan?ref=seealso">5-Day Debt Reduction Plan</a>)</p> <h2>Scary Numbers</h2> <p>Many Americans are struggling with their FICO credit score, that three-digit number that lenders use to determine who qualifies for loans and at what interest rate. According to a 2015 report from the Consumer Financial Protection Bureau, about 45 million U.S. adults had such a limited credit history, that they had no FICO scores.</p> <p>A 2015 report from credit bureau Experian said that nearly a third of U.S. consumers had a credit score under 601. Experian was basing its study on its own credit score, the VantageScore, but consumers who have a bad VantageScore typically have a bad FICO score, too.</p> <p>These numbers mean one thing: Plenty of us are struggling with bad credit and high credit card debt. If you are, too, it's important to realize that there are five easy steps you can take now to help improve your financial health.</p> <h2>Order Your Free Credit Reports</h2> <p>You can order one free copy of each of your credit reports &mdash; the credit bureaus of Experian, Equifax, and TransUnion each maintain a separate report on you &mdash; every year from AnnualCreditReport.com. These reports will list your credit cards and how much you owe on each. They will also list the money you owe on car loans, student loans, and mortgage loans.</p> <p>Credit reports also list any missed or late payments during the last seven years, and will also include any negative judgments, such as bankruptcies or foreclosures, that are up to seven to 10 years old.</p> <p>Be sure to order your reports and check them carefully. Make sure the information in your reports is accurate. If there are errors, such as a missed car payment that you are sure you paid on time, correct them. Doing this can quickly provide a boost to your score.</p> <h2>Pay All Your Bills on Time</h2> <p>Missed or late payments are the most common cause of a weak credit score. Resolve, then, to pay all of your bills on time. As you do this, you will gradually improve your credit score. Just don't expect immediate results. Depending on how low your score is today, it can take months or more than a year to raise it from the &quot;bad&quot; to the &quot;fair&quot; or &quot;good&quot; level.</p> <h2>Pay More Than the Minimum Each Month on Your Credit Cards</h2> <p>High amounts of credit card debt can also result in a bad credit score. Each month, pay off more than the required minimum payment on your cards. As you cut down on your credit card debt, you'll again slowly improve your credit score. You'll also get the bonus of cutting down on all that interest you pay each month. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=article">Fastest Way to Pay Off $10,000 in Credit Card Debt</a>)</p> <h2>Keep Your Credit Cards Open</h2> <p>If you do pay off a credit card in full, don't close the account. Your credit score is higher when you are using less of your available credit. In general, you never want to be using more than 30% of your available credit. If you close a credit card, you're immediately reducing the amount of credit available to you. If you do have credit card debt, you will then also be immediately using more of it, which could hurt your score. (See also: <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=article">This One Ratio Is the Key to A Good Credit Score</a>)</p> <h2>Don't Be Afraid to Use Credit Cards</h2> <p>Using credit cards wisely can actually help <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">boost your credit score</a>. If you regularly charge items through the month and then pay them off in full when your credit card bill is due, you are showing that you can maturely handle credit. So don't be afraid to charge that flat-screen TV. Just make sure that you have the cash to pay off the entire purchase when your credit card's due date rolls around.</p> <p><em>Are you struggling with poor credit and high credit card debt? What steps have you taken to correct it?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Here&#039;s Why You Shouldn&#039;t Freak Out If You Miss a Payment Due Date</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Avoid These 5 Common Mistakes While Rebuilding Your Credit</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-7-debt-payoffs-that-boost-your-credit-score-the-most">The 7 Debt Payoffs That Boost Your Credit Score the Most</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-credit-scores-and-reports-are-not-the-same">Here&#039;s Why Credit Scores and Reports Are Not the Same</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance available credit bills credit history credit reports credit score debt FICO score minimum payments Wed, 15 Jun 2016 10:00:12 +0000 Dan Rafter 1731281 at http://www.wisebread.com Never Borrow Money for These 5 Buys http://www.wisebread.com/never-borrow-money-for-these-5-buys <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/never-borrow-money-for-these-5-buys" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/friends_boat_ride_000021453043.jpg" alt="Friends talking about what they should never borrow money for" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>While there is a time and a place for credit &mdash; most of us won't ever be able to pay cash for a home, a college education, or even a car &mdash; there are also times when it should be avoided, at all costs.</p> <p>It's difficult to delay gratification. It doesn't help that there's always a credit card or personal loan application in the mail. Still, there are certain times when it absolutely does not make sense to borrow money to make a purchase. For these big ticket items, think hard before you swipe your card or apply for that credit line. (See also:&nbsp;<a href="http://www.wisebread.com/7-ways-pride-is-keeping-you-poor?ref=seealso" target="_blank">7 Ways Pride Is Keeping You Poor</a>)</p> <h2>1. A Boat</h2> <p>Depending on the boat purchased, a payment could equal the cost of a new car payment or &mdash; for a more luxurious option &mdash; the cost of a mortgage. At the same time, <a href="http://www.boatus.com/boatloans/">current boat loan rates</a> range from about 4.5% for a $350,000 boat to as high as 6.25% for a $25,000 boat. That means that over a 15-year term, a modest $25,000 boat could end up costing $38,584. That's $13,584 more than the original sticker price.</p> <p>When it comes to boating, though, the cost of the vessel is often the cheapest part of ownership. Additional costs to consider are state taxes, slip fees, winter storage, registration and licensing, fuel, insurance, and maintenance. Mint recently estimated the annual cost of a $20,000 boat upkeep at $4,300 per year or $358 per month.</p> <h2>2. Your Wedding</h2> <p>Getting married is one of the most exciting times in a young person's life, and yet&hellip; many don't fully realize all the costs that come after embarking on a new life together. Not everyone makes the same life choices, of course, but houses, children, college tuition, retirement accounts, and even new cars are expensive life items that many new couples choose to buy or fund as they build their lives together.</p> <p>Starting a journey together with a pricey loan with a high interest rate is an expensive way to handicap yourself as you work to build a financially stable life together. When planning a wedding, it can be helpful to remember that it's just a big party. You'll have the memories when it's over, but it's the foundation that the marriage is built upon that's really most important. And that doesn't cost a dime.</p> <h2>3. Jewelry</h2> <p>High-end jewelry like engagement rings or tennis bracelets are expensive enough without adding in the financing costs. It may seem like good news that many jewelry stores are willing to help defray the costs by offering zero interest if the purchase is paid off within six or 12 months (depending on the store) but beware, there's usually a catch.</p> <p>Miss one payment or fail to pay off the balance before the due date and, for most of the stores, interest will become due for the <em>entire </em>original balance &mdash; and it's usually at a rate that's somewhere between 23% and 29%. That means that a $5,200 ring (the average wedding ring cost) could end up costing an additional $1,461 in interest payments alone, assuming a 25% interest rate and a two-year term.</p> <h2>4. Furniture and Consumer Electronics</h2> <p>Store issued credit cards are common upsells at the cash register and, if you're buying a big ticket item like a new sofa or flat screen TV, it's easy to be tempted by the seemingly attractive financing terms. What many credit consumers don't realize is that store cards typically work in a similar way as jewelry financing, as described above.</p> <p>The offer may state 12-months, zero APR (or 12-months, same as cash), but miss a payment and you'll reset the clock, finding yourself responsible for interest payments from the date of purchase, not from the date when the payment was missed. For a $4,000 furniture purchase, a missed payment could add $1,400 in interest to the bill, assuming a 24.99% interest rate and a 24-month term. In other words, that financed furniture (or computer or refrigerator or&hellip; well, you get the idea) could end up costing you a lot more than you expected.</p> <h2>5. Vacation</h2> <p>Most vacations last a week or less but, if you take out a personal loan or swipe a credit card to fund the getaway, it won't just be the memories that last a lifetime. Earlier this year, MarketWatch determined that you could <a href="http://www.marketwatch.com/story/how-long-does-it-take-to-clear-a-2000-credit-card-with-minimum-payments-2015-07-07">raise a child from infancy</a> to adulthood before you could repay a $2,000 credit card balance with a 18% annual rate, if you're making just the monthly minimum payment. That's 30 years in repayment, based on their analysis, and an extra $4,931 in interest payments.</p> <p>For many purchases, buying on credit can cause a lot of financial strain. Before you buy, it's important to understand the full cost of the purchase, including the cost of credit. Most times, you'd be much better served by saving up, instead of swiping your card. Think before you borrow. Your wallet will thank you.</p> <p><em>What purchases do you refuse to make on credit?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/alaina-tweddale">Alaina Tweddale</a> of <a href="http://www.wisebread.com/never-borrow-money-for-these-5-buys">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-times-its-okay-to-delay-retirement-savings">5 Times It&#039;s Okay to Delay Retirement Savings</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you">15 Surprising Ways Bad Credit Can Hurt You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/insights-from-the-worlds-9-most-frugal-cultures">Insights From the World&#039;s 9 Most Frugal Cultures</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-purchases-with-financing-options-that-depreciate-fast">4 Purchases With Financing Options That Depreciate Fast</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/i-am-doing-well-financially-now-what">I Am Doing Well Financially. Now What?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Budgeting bad money moves boats borrowing money credit history debt furniture interest jewelry loans travel weddings Tue, 24 May 2016 10:00:10 +0000 Alaina Tweddale 1711683 at http://www.wisebread.com What to Expect When You're Expecting a Huge Credit Card Bill http://www.wisebread.com/what-to-expect-when-youre-expecting-a-huge-credit-card-bill <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-expect-when-youre-expecting-a-huge-credit-card-bill" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_writing_bills_000083882473.jpg" alt="Woman learning what to expect with a huge credit card bill" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've been splurging the last few months &mdash; dining out, ordering online gifts, and booking a vacation you sorely need. And you put all of these purchases on your credit card.</p> <p>You know you won't be able to pay off this debt within a few months, but you've justified it by reasoning you <em>can </em>pay it off <em>very soon</em>. But these purchases you've made &mdash; well they couldn't wait until you could actually afford them.</p> <p>Maybe that's true. Maybe an unexpected but critical expense came up. Maybe everyone was booking flights for your family vacation and you had to commit. A little debt isn't going to kill your finances, right? Okay, so you'll just pay a little in interest.</p> <p>Unfortunately, it's likely to be more than a little interest &mdash; and there's a lot more at stake than paying more interest.</p> <p>Consider these financial challenges that you might not be expecting with a big credit card bill. You'll struggle with each of them until you <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt">eliminate your credit card debt</a>.</p> <h2>Tons of Interest</h2> <p>The biggest problem with credit cards? All that interest you'll pay if you carry a balance each month. Say you owe $5,000 on your credit card at an interest rate of 16.5%. If you make a payment of $100 every month on that debt, it will take you 86 months, or more than seven years, to pay off that $5,000.</p> <p>Why so long? Because of interest. By paying just $100 a month, you'll pay an additional $3,517 in interest alone before you erase your debt. This means you'll pay a total of more than $8,500 to pay off $5,000 worth of charges.</p> <p>The lesson here is simple: The interest you'll pay is never worth the instant gratification of getting something when you can't afford it. It'll just start a never-ending cycle of not being able to afford the <em>next</em> thing you want because you're still trying to pay off that other thing you bought. If you must carry a balance for a period of time, pay as much as you can (not just the minimum) to avoid more interest piling on (interest gets calculated based on your daily balance so get it down as much as possible, as quickly as possible).</p> <p>Even better &mdash; if you know you'll have to make a large purchase but can't pay it off right away, get a credit card with a <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases">0% promotional APR for purchases</a>. That will buy you some time, but you still have to pay it off before the promotional period ends. If you already have a balance you're paying interest on, try a credit card with a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">0% APR for balance transfers</a>.</p> <h2>No More Grace Period</h2> <p>Most credit cards offer a grace period to pay off your purchases before they charge interest. Pay off your balance during this grace period and you're golden &mdash; you've borrowed money for free, and perhaps even made a little if you used a <a href="http://www.wisebread.com/5-best-cash-back-credit-cards">cash back credit card</a>. But when you leave a balance, you'll not only get hit with interest for those purchases, you lose your grace period on all future purchases. Meaning, the minute a charge gets through, interest can start accruing.</p> <p>It'll take several billing cycles before your grace period is reinstated, so make sure you don't lose it in the first place.</p> <h2>A Lower Credit Score</h2> <p>If you have too much credit card debt, your credit score will suffer. That's because lenders consider you more of a risk to not pay back your debts when you are saddled with high amounts of credit card debt.</p> <p>Something called your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">credit-utilization ratio is a key factor</a> here. If you use too much of your available credit, your credit score will drop. For instance, if you have $20,000 worth of credit available to you and you owe a total of $17,000 on your credit card accounts, you have a credit utilization ratio that is far too high. A high ratio will drop your credit score.</p> <p>You may not think much about your credit score until you need it. If you're hoping to buy a house, a car, or even a new job, your credit score may determine whether you get it or not.</p> <p>(See also: <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=seealso">15 Surprising Ways a Bad Credit Score Can Hurt You</a>)</p> <p>No matter how much credit available you have, it's never a good idea to use it all up at any one time. Spread out your purchases and pay them down quickly.</p> <h2>A High Debt-to-Income Ratio</h2> <p>In addition to your credit score, lenders rely on your debt-to-income ratio. This ratio examines the relationship between your monthly debts and your gross monthly income. Lenders factor in your minimum required monthly credit card payments as part of your debt obligations. If these minimum payments are high, it could throw your debt-to-income ratio out of whack.</p> <p>For instance, if you're applying for a mortgage loan, lenders want your monthly debts &mdash; including your estimated new mortgage payments &mdash; to equal no more than 43% of your gross monthly income. If your credit card payments push that ratio up past 43%, you might not qualify for that home loan.</p> <h2>Sky-High Interest Rates</h2> <p>With a large credit card debt and a low credit score, you can expect to pay higher interest rates on whatever loans &mdash; including auto and mortgage &mdash; for which you do qualify. Lenders charge higher rates to borrowers whom they deem higher risks. If your score is low &mdash; in part because of your huge credit card bill &mdash; get ready to be hit with interest rates higher than the market average.</p> <p>That's too bad. Higher rates can make a significant difference in the amount you pay each month on loans. Say you take out a 30-year fixed-rate mortgage loan of $200,000 to finance a new home. If your interest rate is 3.95%, you'll pay about $949 each month, not counting whatever you'll need to pay for homeowners insurance and property taxes.</p> <p>If you have a lower score your interest rate on the same loan could be more like 5.5%, which means you'll pay about $1,135 each month, again not including insurance and taxes.</p> <p>That's a difference of $186 each month or $2,232 a year, simply because you owe too much on your credit cards.</p> <h2>More Hurdles to Renting</h2> <p>Even if you don't want to finance a home or a new car, high credit card debt can cause problems. Say you want to rent an apartment, your possible landlord will run your credit. If this search turns up high credit card debt, a landlord might hesitate before leasing you an apartment. The landlord might worry that with all the debt you're already facing, you won't be able to pay your monthly rent on time.</p> <h2>Contain the Pain</h2> <p>The first step is to curtail spending, but if the horse is out of the barn, here are a few steps to take to minimize the sting.</p> <h3>1. Stop Digging</h3> <p>Stop spending more than you can pay off every month! You can't begin to chip away at your debt balance if you keep adding to it.</p> <h3>2. Pay More Than the Minimum</h3> <p>Paying the minimum maximizes the amount you pay in interest over time. Whittle away at your debt overhang by paying more of it off, whenever you can. Changes to the law a few years ago mean that any extra you pay will go toward the highest interest debt on the account.</p> <h3>3. Make Multiple Payments Per Month</h3> <p>You can ease the burn of bill paying day by breaking up your payments as your paychecks or income arrive. Since your interest charge is based on your daily balance, cutting down your balance whenever you have funds available, rather than waiting until the bill is due, can help reduce the interest you pay, too.</p> <p><em>Have you ever dreaded the arrival of a credit card bill? Did it change your behavior?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/what-to-expect-when-youre-expecting-a-huge-credit-card-bill">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-build-credit-without-using-credit-cards">How to Build Credit Without Using Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Avoid These 5 Common Mistakes While Rebuilding Your Credit</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world">Your Bad Credit Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-moves-to-make-before-cutting-up-your-credit-card">6 Moves to Make Before Cutting Up Your Credit Card</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards bills credit history credit score debt debt to income ratio interest Wed, 27 Apr 2016 09:30:22 +0000 Dan Rafter 1696224 at http://www.wisebread.com Is It Ever Okay to Cosign a Loan? http://www.wisebread.com/is-it-ever-okay-to-cosign-a-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-it-ever-okay-to-cosign-a-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_signing_documents_000029589200.jpg" alt="Man learning if it&#039;s ever okay to cosign a loan" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Cosigning a loan is, generally speaking, a bad idea. That's because you place your own credit at risk and could be responsible for the entire amount of the loan if the other party fails to pay. There are horror stories aplenty of people who cosigned loans for friends or family members &mdash; or even just acquaintances &mdash; and found themselves in debt and with their credit ruined.</p> <p>But there may be cases where placing your name on another person's loan is acceptable, provided that you're clear on the risks. It's not uncommon for parents to cosign loans for children as they look to get established, for instance. Ultimately, cosigning a loan is a personal choice, but it's important to be aware of the downsides.</p> <p>With those words of warning out of the way, here are some times when cosigning a loan may be okay:</p> <h2>1. If You Think of the Loan as a Gift</h2> <p>It's often said that if you lend a friend or relative $500, just treat the $500 as simply a gift. If you're comfortable giving the money away, then lending it is okay, because you won't worry about getting the cash back. Similarly, when cosigning a loan, operate under the assumption that you will be the one paying whatever is owed &mdash; because you might very well end up the person on the hook. If you're comfortable with this, then go ahead and cosign.</p> <h2>2. If It's for a Child's Education</h2> <p>Student loans can be hugely beneficial to a young person, and parents may feel compelled to help children obtain the necessary financing for higher education. You may feel it's worth the risk to help your child in this way, and you may not even mind helping your <a href="http://www.wisebread.com/how-to-financially-educate-your-children">child pay the loans back</a> later. (It may be better, however, to simply help them pay through a 529 plan or similar savings if you can.) If you feel strongly about a child's educational funding needs, cosigning a student loan can be wise &mdash; provided you believe the child understands the responsibility of repayment.</p> <h2>3. If You're Helping a Family Member Build Credit</h2> <p>When you're young, building credit can be a bit of a chicken or egg problem. You can't build credit until you show you're able to pay back loans, but it's hard to get a loan without a credit history. Cosigning a loan for a young person can help them gain financial independence over time.</p> <h2>4. If You're Helping a Loved One Buy a Car So They Can Work</h2> <p>It's often hard for young people to land a good job if they don't have reliable transportation. But they may not have the means or credit history to purchase a car. Cosigning a car loan for this person could make it easier to land that job and earn income of their own. Just make sure the car they buy is affordable; borrowers shouldn't assume monthly payments disproportionate to their income. And frankly, you shouldn't cosign a loan you can't afford, either.</p> <h2>5. To Help a Family Member Secure Safe Housing</h2> <p>I once had a friend who graduated from college and moved to a new city, but wasn't earning a lot of money right away. It was hard for her to secure an apartment in a safe neighborhood because she didn't have much income, credit history, or savings. Ultimately, her father was willing to cosign an apartment lease to ensure she could live in a nicer building. Her dad took a risk, but he rested easier knowing his daughter was comfortable in her new city.</p> <h2>6. If You Know You Won't Need a Loan for Yourself Anytime Soon</h2> <p>When you cosign a loan, you put your own credit score at risk. But this only matters if you plan to borrow money in the future. If you have plenty of money in the bank and own your home and car free and clear, a ding on your credit may not impact you very much. Just be sure you have an emergency fund in place to protect against job loss, disability, and other unexpected problems.</p> <h2>7. If You've Agreed With the Lender to Certain Protections</h2> <p>It is sometimes possible to negotiate certain conditions with a lender when cosigning. For instance, you can insist that you be notified immediately if there are any late payments. This gives you a chance to intervene before the tardiness shows up on your credit history. You may also be able to get the lender to agree that you will only be responsible for the principal of the loan.</p> <h2>8. If It's for a Short Term</h2> <p>There may be ways to remove yourself as a cosigner after a time. For instance, you could ask to have your name taken off when a borrower chooses to refinance a home loan. If you are a cosigner on a credit card, you could have the borrower apply for new credit cards under his or her name only, then close the old accounts. If you can, it makes sense to try and remove yourself as a cosigner after 12 months or so, when a borrower presumably has the credit to stand on their own.</p> <p><em>Have you ever cosigned a loan? How'd it go?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/is-it-ever-okay-to-cosign-a-loan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-paying-off-student-loans-early-can-boost-your-finances">7 Ways Paying Off Student Loans Early Can Boost Your Finances</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-loan-options-for-those-with-good-credit">5 Loan Options for Those With Good Credit</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/prioritize-these-5-bills-when-youre-short-on-cash">Prioritize These 5 Bills When You&#039;re Short on Cash</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-is-that-loan-too-big-for-your-wallet">Stop! Is That Loan Too Big For Your Wallet?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-youve-crossed-from-healthy-debt-to-problem-debt">8 Signs You&#039;ve Crossed From &quot;Healthy&quot; Debt to &quot;Problem&quot; Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management borrowing cosigning credit history giving money loans student loans Mon, 23 Nov 2015 18:00:03 +0000 Tim Lemke 1615573 at http://www.wisebread.com Here's Why You Shouldn't Freak Out If You Miss a Payment Due Date http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_financially_stressed_000027261501.jpg" alt="Woman trying to stay calm after missing payment due date" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The due date for your mortgage loan payment slipped past without you sending a check to your lender. Or maybe you didn't have enough money in your checking account to send an on-time payment to your credit card provider.</p> <p>Don't panic. Your financial misstep might not hurt your credit score just yet.</p> <p>Missed payments are a sure way to send your three-digit credit score plummeting by as many as 100 points. This financial mistake will remain on your credit report for seven years.</p> <p>But late payments aren't immediately reported to the three national credit bureaus of Experian, Equifax, and TransUnion. Often, lenders and credit providers won't report missed payments until they are at least 30 days late. This means that even if you miss your initial due date, you can still avoid a hit to your credit score by paying before 30 days pass. But first consider these variables.</p> <h2>Late Isn't Always &quot;Officially&quot; Late</h2> <p>Whitney Fite, president of Angel Oak Home Loans in Atlanta, said that most mortgage loans today come with a 15-day grace period. Your mortgage might be due on the first of the month, but lenders won't assess a late fee unless you fail to pay by the 15th of the month. This late fee will vary by the size of your loan, but could be about $100.</p> <p>Credit card companies will also charge <a href="http://www.wisebread.com/zooey-deschanel-never-pays-late-fees-and-5-other-smart-money-lessons-from-celebrities">late fees</a> if you miss your payment. Those fees vary, but what might hurt more is when your card provider increases your interest rate to the penalty rate. Under rules spelled out in the Credit CARD Act of 2009, your card provider can impose a penalty interest rate if you become more than 60 days late on your payment. These penalty rates are a true punishment, often running as high as 29%.</p> <p>But as long as you pay your mortgage, auto loan, or credit card payment within 30 days of its due date, most lenders won't report a missed payment to the credit bureaus. This means that your credit score itself will not be harmed.</p> <p>Fite warns that you need to be careful when paying after the official due date on auto loans, mortgages, or credit card payments. If you wait too long to send in your check, you might be tempting fate, and you might find yourself facing a late fee or credit hit after all.</p> <p>&quot;It can be a dangerous game to squeeze out a few extra days with the grace period,&quot; Fite said. &quot;Any delay by the mail carrier could result in the lender receiving the payment after the 15th and late fees being assessed.&quot;</p> <h2>Actually Late Can Hurt, However</h2> <p>If you can, be sure to send in that payment before the 30-day grace period ends. A single reported missed payment can lower your score by 100 points or more, especially if you had a relatively unblemished credit history before your missed payment.</p> <p>You don't want a low credit score. Lenders today rely on these three-digit scores to determine how much interest you'll pay on loans and credit cards. If your score is too low, you won't even qualify for loans or credit.</p> <p>Lenders consider a FICO credit score of 740 or higher to be a strong one. If your FICO score is under 640, you might struggle to qualify for loans or credit cards, and when you do qualify, you can expect to pay high interest rates on the money you borrow.</p> <p>Some missed payments are more damaging to your score than others.</p> <p>&quot;Recent late payments on mortgages are more damaging than late payments on other consumer loans,&quot; Fite said.</p> <h2>Unwanted Calls</h2> <p>You might not have to be 30 days late to begin receiving unwanted collection calls, too. Fite said that some lenders will begin making collection calls shortly after the first of the month. He said that almost all mortgage lenders will begin calling about missed payments on the 10th or 12th of the month.</p> <p>So if you don't want to hear from collection agencies? Make those payments on or before your due date. And it goes without saying that paying your bills on time &mdash; every time &mdash; is always the best policy.</p> <p><em>How do you stay on top of your bills &mdash; and on time?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-things-you-dont-know-about-your-credit-report-but-should">13 Things You Don&#039;t Know About Your Credit Report — But Should</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world">Your Bad Credit Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-late-payments-affect-your-credit">How Late Payments Affect Your Credit</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-credit-report-mistakes-that-could-be-costing-you-big">4 Credit Report Mistakes That Could Be Costing You Big</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-credit-scores-and-reports-are-not-the-same">Here&#039;s Why Credit Scores and Reports Are Not the Same</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bills collections credit history credit report credit score grace periods late payments Mon, 05 Oct 2015 13:00:39 +0000 Dan Rafter 1576207 at http://www.wisebread.com Here's Why Credit Scores and Reports Are Not the Same http://www.wisebread.com/heres-why-credit-scores-and-reports-are-not-the-same <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-why-credit-scores-and-reports-are-not-the-same" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_thinking_questions_000038564992.jpg" alt="Woman learning how credit reports and credit scores are not the same" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do you know the difference between your credit score and credit report? A surprisingly high number of consumers don't. They use the terms &quot;credit score&quot; and &quot;credit report&quot; interchangeably, not knowing that there's a big difference between the two.</p> <p>&quot;You can look at a credit report as your report card in school,&quot; said Jason van den Brand, chief executive officer of San Francisco-based Lenda, an online mortgage-refinance platform. &quot;You have all this information on it, sort of like the grades you get from all your different teachers. Your credit score is more like your combined grade-point average from all that information.&quot;</p> <p>Your credit report &mdash; you actually have three important ones &mdash; lists key financial information such as your open credit card accounts, how much you owe on your auto loan, and whether you've made any late payments or suffered any foreclosures. Your credit score, meanwhile, is the three-digit number that lenders use to determine how likely you are to pay back your debts on time.</p> <p>Here's a look at the differences between credit reports and credit scores.</p> <h2>Understanding Your Credit Report</h2> <p>Three national credit bureaus each maintain their own reports on your financial activity: Equifax, Experian, and TransUnion. You can order one copy of each of your three reports every year for free. Do this at <a href="https://www.annualcreditreport.com/">AnnualCreditReport.com</a>. Do not order these reports from other sites that might try to charge you.</p> <p>Once you get your reports, it's important to know how to read them. Each of your reports will start with the most basic of your personal information: your name, birthdate, address, past addresses, Social Security number, and employment information. Don't be surprised, though, if not all of your past jobs are listed. Not all employers report information on their employees to the credit bureaus.</p> <h3>Public Records</h3> <p>Ideally, the public records section of your credit report will be empty. This section lists the financial missteps such as foreclosures, bankruptcies, and court judgments that can cause your credit score to plummet.</p> <p>If a foreclosure or bankruptcy is listed here, you'll also see information on when a creditor filed the judgment against you. TransUnion will also list a date on which each of your negative judgments will disappear from your report. These dates, of course, vary. Foreclosures remain on your credit report for seven years. Chapter 7 bankruptcy filings stay on them for 10 years, while Chapter 13 bankruptcy filings also fall off your report after seven years.</p> <h3>Accounts</h3> <p>Your credit reports have two sections devoted to your credit accounts. The bad one is labeled &quot;Adverse Accounts.&quot; This section lists credit accounts &mdash; such as open credit cards &mdash; on which you have either missed a payment or been late. These financial blunders will stay on your credit report for seven years. This section will also list how much you owe on these accounts.</p> <p>There is also the &quot;Accounts in Good Standing&quot; section. This part of your report lists open credit accounts that you have paid on time for a specific period, usually the past 53 months. Again, this part of the report will also list how much you owe on these accounts.</p> <h3>Credit History</h3> <p>The last major part of your credit report is devoted to &quot;Credit History Requests.&quot; If a mortgage lender requested your credit reports &mdash; to make sure that you haven't paid your bills late &mdash; it will be listed here. You might see, too, that a potential landlord requested your credit reports. Many will do this before leasing their apartment units to renters.</p> <p>What's most interesting about this part of your report is that every creditor that requests your reports is required to list a reason why. You'll see these reasons listed here, too.</p> <h2>Understanding Your Credit Score</h2> <p>Credit scores generally get more press than do credit reports. That's because lenders use these three-digit numbers when deciding who gets loans and at what interest rates.</p> <p>The most important of your credit scores is the FICO score. Other companies offer credit scores &mdash; the VantageScore is a popular example &mdash; but none of them have the same impact on your ability to qualify for a loan.</p> <p>FICO credit scores run from a low of 300 to a high of 850. The higher your score, the better. Lenders generally consider FICO scores of 740 or higher to be excellent ones. If your score is lower than 640, though, you might struggle to qualify for a conventional mortgage loan or other loans or forms of credit.</p> <p>Your FICO credit score is only made up of the information contained in your credit reports. Not all bill payments, for instance, show up on your credit reports. You might pay your monthly utility and cell phone bills on time, but they don't show up on your credit reports and, therefore, don't have any positive impact on your FICO score.</p> <p>According to FICO, your FICO score is made up of five parts. The most important, consisting of 35% of your score, is your payment history. If you make your credit card, auto loan, mortgage loan, and other payments on time, this part of your score will be strong.</p> <p>An additional 30% of your score is made up of the amount you owe on credit card accounts and revolving loans. The length of your credit history makes up 15% of your score. In general, longer credit histories will provide a boost to your credit score. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso2">How to Use Credit Cards to Raise Your Credit Score</a>)</p> <p>An additional 10% of your score is determined by the type of credit you use. FICO will look at your mix of credit cards, mortgage loans, and installment loans when determining whether your credit mix is a healthy one.</p> <p>New credit influences the final 10% of your score. FICO says that consumers who open several new credit accounts in a short period of time represent a greater risk for lenders. Because of this, opening five new credit card accounts in two months could cause your credit score to drop.</p> <p>Both your credit reports and score are key to managing and understanding your financial health. Keep tabs on both to stay in top financial health.</p> <p><em>Do you track both your credit report and your credit score?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/heres-why-credit-scores-and-reports-are-not-the-same">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-things-you-dont-know-about-your-credit-report-but-should">13 Things You Don&#039;t Know About Your Credit Report — But Should</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world">Your Bad Credit Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Here&#039;s Why You Shouldn&#039;t Freak Out If You Miss a Payment Due Date</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-credit-report-mistakes-that-could-be-costing-you-big">4 Credit Report Mistakes That Could Be Costing You Big</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance credit bureaus credit history credit report credit score FICO score loans Tue, 22 Sep 2015 13:00:30 +0000 Dan Rafter 1567348 at http://www.wisebread.com Stop Making These 5 Costly Credit Card Mistakes http://www.wisebread.com/stop-making-these-5-costly-credit-card-mistakes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/stop-making-these-5-costly-credit-card-mistakes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000020354979.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Credit cards are useful tools for building and maintaining a strong credit score. If you charge items and pay them off on time every month, your credit score will rise. That's important; a strong credit score can help you earn lower interest rates on mortgage and auto loans, and qualify for credit cards that come with rewards programs and other perks.</p> <p>See also: <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=seealso">Best Travel Rewards Credit Cards</a></p> <p>But it's also easy to misuse your credit cards. And if you do, you might find yourself facing a mountain of debt that keeps growing each month because of high interest rates. You might also find yourself with a credit score that is falling instead of rising.</p> <p>Here are the five biggest mistakes that you don't ever want to make with your credit cards, lest your credit score and your finances suffer.</p> <h2>1. Late or Missed Payments</h2> <p>Never pay your credit card bill late. If you do, the consequences are quick and severe. First, your credit card company will charge you a late fee. These vary, but usually run from $25 to $35. But that late fee is actually the least of your worries.</p> <p>If you pay your bill late, your credit card company can boost your card's interest rate. Penalty rates can rise to as high as 29.99%. This is a big financial drain. If you carry a balance on your card each month, penalty interest rates that high can make your existing debt soar every 30 to 31 days.</p> <p>If your payment is more than 30 days late, your credit card company will report the late payment to the three national credit bureaus (TransUnion, Equifax, and Experian), which means the late payment will show up in the three credit reports that these bureaus maintain. Mortgage, auto, and other lenders will see the late payment whenever you apply for a loan. This will make it harder to get a loan, and if you do qualify, your interest rate will be higher. The late payment will remain on your credit report for seven years.</p> <p>A late payment can also cause your credit score to drop. By how much depends on how high your credit score already is and how many other dings you have on your credit report. Payment history accounts for 35% of your credit score. If you have missed credit-card payments, then, your score can tumble.</p> <h2>2. Carrying a Balance Each Month</h2> <p>You should always pay off your credit card's balance in full each month. If you don't, you'll be charged interest on what you owe. That can make your existing debt grow quickly. That's because credit cards come with such high interest rates. If your interest rate is 17%, even a balance of $1,000 that you don't pay off can grow rapidly.</p> <p>See also: <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=seealso">Best 0% Balance Transfer Credit Cards</a></p> <h2>3. Paying Only the Required Minimum</h2> <p>When you get your credit card bill, it will list the minimum payment you must make that month to avoid a late fee. But paying only the minimum is a big mistake; you'll pay loads in interest over the lifetime of your debt if you only make the minimum payment each month.</p> <p>Here's an example: Say you owe $3,000 on a credit card with an interest rate of 18%. If you make the minimum payment of just $75 each month, it will take you 222 months &mdash; or more than 18 years &mdash; to pay off your debt, if you never make another charge on your credit card. You will also pay more than $3,932 in interest on that $3,000 debt.</p> <h2>4. Closing Unused Cards</h2> <p>You might think that closing a credit card that you never use is a good move. But doing so can actually cause your credit score to drop. That's because a portion of your credit score is made up of how much of your available credit you are actually using. If you close a credit card that you no longer use and has no balance on it, you'll immediately be using more of your available credit, which will cause your credit score to fall.</p> <p>Here's how this works: Say you have four credit cards, each with a credit limit of $3,000. This gives you a total of $12,000 of available credit. Say you also have $3,000 worth of credit card debt spread out among your four cards. If one of your cards has no balance and you close it, you now have just $9,000 worth of available credit. If you still have that $3,000 of credit card debt, you are immediately using a higher percentage of your available credit. Put simply, $3,000 of credit card debt looks better when you have $12,000 of available credit than it does when you have just $9,000.</p> <p>See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso">How to Use Credit Cards to Raise Your Credit Score</a></p> <h2>5. Taking Out a Cash Advance</h2> <p>Your credit card might allow you to take out a cash advance. Even if you are short of cash, don't do this. It's barely better than taking out a payday loan.</p> <p>First, you'll usually be charged a fee for taking out a cash advance, usually ranging from 2% to 4% of whatever advance you take. That's not the worst part, though. Your credit card company might charge a higher interest rate on the money you take out through a cash advance. The interest will start accruing immediately. There is no grace period as with other credit card purchases.</p> <p>Some credit card companies won't even allow you to pay off your cash advance dollars until you first pay off your more traditional credit card debt. If you carry a balance each month, it might take you a long time to pay off the higher-interest-rate debt from a cash advance.</p> <p>Credit cards can be terrific financial tools when used wisely. Avoid the five traps above and make the most of your credit.</p> <p><em>Have you ever made any of these common credit card mistakes?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/stop-making-these-5-costly-credit-card-mistakes">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-when-your-credit-card-debt-is-charged-off">What Happens When Your Credit Card Debt Is Charged Off?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Here&#039;s Why You Shouldn&#039;t Freak Out If You Miss a Payment Due Date</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Avoid These 5 Common Mistakes While Rebuilding Your Credit</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-expect-when-youre-expecting-a-huge-credit-card-bill">What to Expect When You&#039;re Expecting a Huge Credit Card Bill</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards credit bureaus credit history credit score interest rates late payments Tue, 08 Sep 2015 21:02:17 +0000 Dan Rafter 1548194 at http://www.wisebread.com 7 Ways to Rent An Apartment With Bad Credit http://www.wisebread.com/7-ways-to-rent-an-apartment-with-bad-credit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-ways-to-rent-an-apartment-with-bad-credit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000062152642_1.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've found the ideal apartment in the middle of the big city. But there's one problem: <a href="http://www.wisebread.com/6-financial-mistakes-to-stop-making-by-age-40">Financial mistakes in the past</a> have left you with a low credit score. Now you're worried that landlords will reject your application because of those times you paid your credit card bill late or forgot to make your auto loan payment.</p> <p>There is hope, though. It's possible to rent an apartment even if your credit score is weak. But you might need a little help from a family member, or be willing to pay a bit more rent each month.</p> <h2>Credit Matters</h2> <p>It's not surprising that most landlords today check your credit. Your three-digit credit score tells landlords how well you've managed your finances in the past. If you've paid bills late, missed payments, or suffered a negative financial judgment &mdash; bankruptcy or foreclosure &mdash; your score will be low. A FICO credit score of 740 or higher today is considered an excellent score. Scores of 620 or lower raise red flags.</p> <p>Don't give up hope if one landlord rejects your application. It helps to shop around with different landlords, said Brent Cotterman, owner and chief executive officer of Financial Rehab in Phoenix.</p> <p>&quot;Just because you're rejected from one place doesn't mean you will be from all of them,&quot; Cotterman says. &quot;Different landlords have different tolerances for risk. It doesn't hurt to apply at four or five different apartments.&quot;</p> <p>If your score is weak, here are some steps you can take to convince landlords that you're still a good risk.</p> <h2>1. Get a Cosigner</h2> <p>The easiest solution is to convince someone &mdash; usually a family member &mdash; to co-sign the rental application with you. In such an agreement, your cosigner is agreeing to make your monthly rental payments if you fail to do so. This provides protection to landlords wary of renting to someone with bad credit; your landlord will still receive rent, even if you aren't the one making the payment.</p> <p>Your cosigner will need good credit. But, be sure that you can actually afford your rent. You don't want to put your cosigner in the position of having to pay your rent for you. That's a good way of ruining a relationship!</p> <h2>2. Check Your Credit Reports</h2> <p>Before seeking an apartment, order copies of your free credit reports from <a href="https://www.annualcreditreport.com/">AnnualCreditReport.com</a>. You're entitled to order one free copy of each of your reports &mdash; the national credit bureaus TransUnion, Experian, and Equifax each maintain a credit report on you &mdash; every year.</p> <p>Once you receive your report, study it carefully. It will list the money you owe on your credit cards, auto loans, and student loans. It will also list missed or late payments. If you spot any errors, correct them. You can do this online with the three credit bureaus. Don't skip this step: Fixing an error on your credit report can quickly boost your credit score.</p> <h2>3. Be Honest</h2> <p>Don't try to hide financial mistakes from landlords; once they pull your credit, they'll find them. Instead, prepare a written note explaining why you missed credit card or student loan payments. Maybe you briefly lost your job. Maybe you were injured and faced staggering medical bills.</p> <p>Whatever the reason, explain it in your letter and give it to potential landlords. Make sure to include an explanation for why you won't be missing payments again in the future.</p> <p>Your landlord might be willing to overlook a weaker credit score if you have an explanation for your past financial missteps.</p> <h2>4. Point to Solid Income</h2> <p>If you have a solid monthly income stream today, you'll be more likely to convince your landlord that you are no longer a risk to miss rental payments. Maybe those missed auto loan payments came when you were working a lower-paying job. Now you have a job that pays you a good salary. Point this out to your potential landlord. Show landlords copies of your most recent paycheck stubs stating how much you are now earning. A solid income might help ease any concerns your landlord has about a lower credit score.</p> <h2>5. Pay a Little More</h2> <p>Some landlords might charge you additional fees &mdash; often called risk fees &mdash; if your credit score is low. If you agree to pay these higher fees, landlords might be more willing to overlook a low score.</p> <p>You might also offer a bit more in rent each month to landlords who are wary of renting to you. An extra $50 a month might convince a property owner to overlook your weaker credit.</p> <p>Before agreeing to pay extra, though, make sure that you can afford the higher monthly payments.</p> <h2>6. Offer a Larger Security Deposit</h2> <p>Landlords might consider you a more attractive renter if you offer a larger security deposit. This makes sense: If you do fail to make your rent payments, your lender will keep your security deposit. If you provide a larger one, your lender is taking on less risk by renting to you and might be more likely to overlook that bad credit score.</p> <h2>7. Start Building Credit</h2> <p>If you do land an apartment even with weak credit, here is some good news: You can now build a stronger credit score by paying your rent on time every month.</p> <p>Traditionally, landlords have not reported monthly rent payments to the three national credit bureaus. This meant that renters didn't help their credit scores by paying rent on time. That is changing. Experian and TransUnion are now collecting data on rental payments. Renters who pay through online services such as RentTrack and RentReporters can have their payment data sent to TransUnion and Experian. As renters pay on time, their credit scores with these bureaus will steadily rise.</p> <p>&quot;The one thing that will improve your credit score the most is paying your bills on time,&quot; Cotterman says. &quot;So make sure to not pay your bills late. You won't get marked as late on your credit report until you are 30 days past your due date. Every time you hit that 30-day mark, you get a 30-day marker on your report. That will lower your report significantly. So pay your bills on time.&quot;</p> <p><em>What other techniques have you used for renting an apartment with weak credit?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/7-ways-to-rent-an-apartment-with-bad-credit">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-questions-landlords-cant-ask">10 Questions Landlords Can&#039;t Ask</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-smart-ways-to-get-your-apartment-deposit-back">7 Smart Ways to Get Your Apartment Deposit Back</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-moves-to-make-if-you-need-to-break-your-lease">8 Moves to Make If You Need to Break Your Lease</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-11-best-websites-for-renting-your-extra-space">The 11 Best Websites for Renting Your Extra Space</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing apartments credit history credit score landlords renting Thu, 27 Aug 2015 15:00:25 +0000 Dan Rafter 1533280 at http://www.wisebread.com 3 Ways Your Dog Is Ruining Your Credit Score http://www.wisebread.com/3-ways-your-dog-is-ruining-your-credit-score <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-ways-your-dog-is-ruining-your-credit-score" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/girl_and_her_dog_000017761090.jpg" alt="Woman realizing how her dog ruins her credit score" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>That puppy looks so cute. But be careful: Pets are also a big financial responsibility that can take a bite out of your credit score. According to data from the ASPCA, you can <a href="http://www.aspca.org/adopt/pet-care-costs">expect to pay</a> $580 every year to own a small dog, $695 annually for a medium dog, and $875 each year for a large dog. And the first year of <a href="http://www.wisebread.com/the-6-least-expensive-dog-breeds-to-own">owning a pet</a> comes with additional costs.</p> <p>&quot;It sounds harsh, but if you can't afford to support yourself you have no business getting a pet,&quot; says Bruce McClary, vice president of public relations and external affairs for the Washington, D.C.-based National Foundation for Credit Counseling. &quot;If you don't have room in your budget for caring for a pet, you are not just hurting yourself, you are hurting that pet. If you can't afford medical treatment or to properly care for and feed that pet, getting a pet is not the best decision to make.&quot;</p> <p>Here are three ways your new dog could send your credit score plummeting.</p> <h2>Big Medical Bills</h2> <p>Bringing your dog to the vet is a necessity. But it's not cheap. PetCareRx says that a <a href="http://www.petcarerx.com/article/the-annual-vet-visit-cost-what-to-expect/1276">basic office visit</a> can cost $45 to $55, while other basic services such as booster shots (an average of $18 to $25) and heartworm tests ($45 to $50) can add up.</p> <p>But it's the rarer type of medical treatments that are truly costly. PetCareRx says that it can cost up to $110 for the geriatric screenings that older dogs &mdash; typically seven years and up &mdash; require, while dental cleaning can run up to $400 for dogs.</p> <p>It's when it comes to more complicated procedures such as surgeries or cancer treatments that your dog's medical bills can soar. PetCareRx estimates that it can cost up to $10,000 to <a href="http://www.petcarerx.com/article/managing-costs-of-cancer-treatment-for-dogs/1232">treat your dog's cancer</a> through chemotherapy and the ASPCA estimates that it can cost up to $15,000 to give your dog a <a href="https://www.aspca.org/pet-care/cutting-pet-care-costs">kidney transplant</a>.</p> <p>You can usually work out payment plans for these costs. Missing these payments won't show up on your credit report&hellip; initially. But if your vet sends a collection agency after you, that will be reported. McClary says that a negative judgment on your credit report &mdash; such as a bill being sent to collections &mdash; could cause your credit score to instantly drop by 150 points or more.</p> <h2>Pet Insurance</h2> <p>Because there are more treatment options available for dogs today, many pet owners are opting to purchase pet insurance to help cover the costs of cancer treatments and surgeries. These policies aren't free, with the ASPCA estimating that a <a href="https://www.aspca.org/pet-care/cutting-pet-care-costs">typical pet insurance</a> policy costs from $300 to $400 a year.</p> <p>If you fall behind on these payments, your credit score won't initially take a hit. But if you fall behind enough, the provider of your insurance policy will send your account to a collection agency. Once that negative judgment is listed on your credit report, expect your three-digit credit score to tumble by 150 points or more.</p> <p>&quot;You'd be surprised at how quickly medical and insurance providers are sending accounts to collection today,&quot; McClary said. &quot;If you miss two payments, you might find yourself dealing with a third-party collection agency. And that will show up on your credit report.&quot;</p> <h2>Ouch! Dog Bites</h2> <p>Your beloved poodle doesn't like the mailman, and shows his displeasure by taking a chunk out of his leg. This simple bite can cost you a lot of money.</p> <p>The Insurance Information Institute found that while the number of <a href="http://www.iii.org/issue-update/dog-bite-liability">dog bite claims</a> across the United States fell 4.7% in 2014, the average cost of these claims jumped 15%. The institute found that the average cost dog owners paid out for dog bite claims stood at $32,072 last year, up from $27,862 in 2013.</p> <p>A dog bite can easily take a big chunk out of your household budget. If your finances are already tight, the added burden of paying out &mdash; or defending &mdash; a dog bite claim could cause you to fall behind on other monthly bills such as mortgage payments or credit cards. These late or missed payments will cause your credit score to fall.</p> <p>A pet can be a wonderful addition to your family &mdash; but it can also be a costly one. Make sure your finances are healthy enough to withstand the extra expenses.</p> <p><em>What unexpected costs has your pooch racked up?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/3-ways-your-dog-is-ruining-your-credit-score">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-you-are-more-than-your-credit-score">7 Reasons You Are More Than Your Credit Score</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-things-you-dont-know-about-your-credit-report-but-should">13 Things You Don&#039;t Know About Your Credit Report — But Should</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world">Your Bad Credit Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Here&#039;s Why You Shouldn&#039;t Freak Out If You Miss a Payment Due Date</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-credit-scores-and-reports-are-not-the-same">Here&#039;s Why Credit Scores and Reports Are Not the Same</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Lifestyle credit history credit score dogs lawsuits pets vet bills Wed, 12 Aug 2015 13:00:22 +0000 Dan Rafter 1517122 at http://www.wisebread.com 7 Ways to Increase Your Credit Score Quickly http://www.wisebread.com/7-ways-to-increase-your-credit-score-quickly <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-ways-to-increase-your-credit-score-quickly" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_using_credit_card_000060969640.jpg" alt="Woman finding ways to increase her credit score quickly" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your credit score will determine whether you will get approved for credit cards, auto loans, mortgages, or other loans, as well as impact the interest rate you'll pay. If you aren't happy with where your credit score is today, take heart: There are some simple ways to improve it quickly. Once your credit score improves, you'll be able to enjoy <a href="http://www.wisebread.com/5-ways-life-is-amazing-with-an-800-credit-score?ref=internal">perks like lower interest and insurance rates</a>.</p> <p>Note that while these tips will help you raise your credit score quickly, be patient and remember that it can still take 30&ndash;60 days to see any noticeable improvement.</p> <h2>Credit Utilization Ratio</h2> <p>Your credit utilization ratio makes up 30% of your credit score. It's the number that shows how much debt you have compared to your total available credit. The more unused credit you have available, the lower your ratio. For example, if the credit limit on all your cards total $10,000, but you owe $8,000, your credit utilization ratio is 80%. You're using 80% of your credit. That's pretty high &mdash; a ratio of 30% or less is ideal. There are three main ways to lower your credit utilization ratio.</p> <h3>1. Pay Down Your Debt</h3> <p>Using the above scenario, if you can pay down your debt from $8,000 to $5,000, then your ratio goes down to 50%. Once you lower your debt, your score will see a significant boost quickly.</p> <h3>2. Ask for a Credit Limit Increase</h3> <p>If you aren't able to come up with some cash to pay down your debt quickly, try to get your credit card issuer to raise your limit. If instead of having $10,000 in available credit, you have $15,000, your ratio would go down to 53% with a $8,000 debt. Keep in mind, however, that they'll usually only grant this if you've had a good record with them over the last year. If you've missed payments, you may not be able to get the increase.</p> <h3>3. Sign Up for a New Credit Card</h3> <p>If you've got a lot of credit card debt, getting another credit card may not be the wisest thing to do. But if you need to raise your credit score quickly, this may be your only option. If you can, try to get a card with a 0% intro <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=internal">balance transfer option</a>, which will allow you to transfer your existing debt over and at least get a break from paying interest each month. (See also: <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=seealso">Credits Cards With the Best 0% Balance Transfer Offer</a>)</p> <p>If you can't get approved for credit cards because of your low score, get a <a href="http://www.wisebread.com/a-secured-credit-card-can-repair-your-credit-score-heres-how-to-pick-the-best?ref=internal">secured credit card</a>, which even those with bad credit can get approved for. (See also: <a href="http://www.wisebread.com/the-5-best-secured-credit-cards?ref=seealso">Best 5 Secured Credit Cards</a>)</p> <h2>Credit History</h2> <p>The length of your credit history makes up 15% of your score. If your score is low because you are new to credit, then you will just have to be patient. But you can build up your credit by opening up accounts now and keeping them in good standing in the future.</p> <h3>4. Keep Cards Open</h3> <p>You should not close any existing accounts, as each one continues to contribute to your credit history. In fact, many people hold the mistaken belief that closing credit card accounts will help their credit score, when it will likely have the opposite effect. The longer you've had your accounts, the more it adds your score. Even if you're no longer using your old credit cards, you can cut up the cards or lock them away, but don't cancel them.</p> <h3>5. Become an Authorized User</h3> <p>If you're having trouble getting approved for new accounts, see if you can become an authorized user on someone else's card. But make sure you sign on with someone who is a responsible user. Your score can tank if that person misses payments or has too much debt on that card, too.</p> <h2>Types of Credit</h2> <p>The types of credit in use also makes up 10% of your credit score. These formulas favor those who have several types of loans including home loans, auto loans, student loans, credit cards, and store charge cards.</p> <h3>6. Mix up Your Forms of Credit</h3> <p>While you shouldn't borrow money for a home or car just to try to improve your score, it's worth keeping in mind that even opening a store charge card and using it for a few small purchases may help to improve your credit score slightly.</p> <p>You can also consider opening a specialized card like a branded gas card (that only works for gas station payments). This will help you resist the urge to spend on other things and you'll rack up rewards in no time, such as free gas. Pay the balance off immediately after every use and your credit score will reflect your good credit history, payment history, and increased available credit.</p> <h2>Payment History</h2> <p>Your payment history makes up the biggest percentage of your score &mdash; 35%. There is no getting around the importance of paying your bills on time.</p> <h3>7. Set up Alerts and Auto-Pay</h3> <p>Sometimes payments are missed simply because you forgot or misplaced the bill. These small mistakes add up on your credit score. If you have trouble remembering to pay your bills, then set up automatic payments or set up reminder alerts on your calendar. No excuses!</p> <h2>Credit Monitoring</h2> <p>To maintain a good score, you should be diligent about monitoring your credit, as well. Check your credit report every year at <a href="http://annualcreditreport.com">AnnualCreditReport.com</a> to ensure there are no errors. If you notice a discrepancy, act on it quickly. Your credit score may be unjustifiably low and you may simply need to make a call to correct any issues. In fact, studies have shown that up to 80% of consumer credit reports have an error, which may be costing you up to 50 credit points. Take advantage of services like <a target="_blank" rel="nofollow" href="http://www.tkqlhce.com/click-2822544-12336153-1455123184000?sid=cannon-1500837">CreditSesame.com</a><img border="0" alt="" src="http://track.flexlinks.com/i.ashx?foid=1029882.163454&amp;fot=9999&amp;foc=1&amp;foc2=585847" /> to monitor your credit score for free throughout the year. (See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores?ref=seealso">Credit Cards That Offer Free Credit Scores</a>)</p> <p><em>These are our recommendations for increasing your credit score quickly. Do you have any suggestions to add? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/7-ways-to-increase-your-credit-score-quickly">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-unexpected-benefits-of-secured-credit-cards">5 Unexpected Benefits of Secured Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score">How to Use Credit Cards to Improve Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easy-ways-to-raise-your-credit-score-this-year">7 Easy Ways to Raise Your Credit Score This Year</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-build-credit-without-using-credit-cards">How to Build Credit Without Using Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-reasons-your-credit-card-application-was-denied-and-what-you-can-do-about-it">11 Reasons Your Credit Card Application Was Denied — And What You Can Do About It</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Insurance bad credit building credit credit history credit report credit score rebuild credit Tue, 28 Jul 2015 13:00:16 +0000 Andrea Cannon 1500837 at http://www.wisebread.com 4 Reasons Why You're Too Old — Or Too Young — For a Mortgage Loan http://www.wisebread.com/4-reasons-why-youre-too-old-or-too-young-for-a-mortgage-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-reasons-why-youre-too-old-or-too-young-for-a-mortgage-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_jenga_000057875522.jpg" alt="Man learning why he is too old or too young for mortgage loan" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You're never too old for a mortgage loan &mdash; and if you're at least 18, you're not too young to take out a <a href="http://www.wisebread.com/the-55-arm-loan-just-might-be-the-best-mortgage-loan">mortgage loan</a>, either. Mortgage lenders are not allowed to use age as a factor for denying borrowers a mortgage loan. Thank the Equal Credit Opportunity Act for this; the federal law prohibits discrimination based on everything from a borrower's age to that person's race, color, or national origin. But just because you can qualify for a mortgage loan at 19 or 90, doesn't mean that you always should.</p> <p>&quot;To me, the age isn't the main factor, ever,&quot; says Kyle Winkfield, owner of The Winkfield Group, a retirement planning firm in Rockville, Maryland. &quot;Everything has to do with your own personal situation. Can you afford what you are biting off, what you are signing up for with a mortgage? A lot of financial tragedies could be avoided if people would ask whether they can really afford a mortgage loan, no matter what age they are.&quot;</p> <p>Here are four reasons why you might be too young or too old for a mortgage loan.</p> <h2>1. Your Income Isn't High Enough</h2> <p>When determining whether you can afford a mortgage, your lender will consider any source of regular monthly income. When you're younger, the majority of your income usually comes from your steady job. When you're past retirement age, your monthly income might be made up of Social Security benefits, a pension, legal settlements, income from real estate that you own, or several other sources.</p> <p>Lenders usually want your total monthly debts &mdash; including the cost of a new mortgage payment &mdash; to be no more than 43% of your gross monthly income. But just because a lender approves you for a mortgage of $200,000 doesn't mean that you can really afford the monthly payments that come with such a loan. Take a close look at your income. Will the addition of a mortgage payment, whether you're 20 or 70, bust your monthly budget? Owning a home is nice, until making those monthly mortgage payments becomes a real struggle.</p> <p>&quot;You might qualify for a mortgage with a $3,200 monthly payment,&quot; Winkfield says. &quot;But in reality, with all the other things that come up with owning a home &mdash; the electric bill, maintenance, surprise repairs &mdash; can you really afford it? You have to take a long look at your finances, no matter how old or young you are.&quot;</p> <h2>2. Your Credit Score Is Low</h2> <p>Lenders rely on your three-digit credit score to determine if you are a good lending risk. If your score is low, you'll pay a higher interest rate on your mortgage loan, and that might make your monthly payment so high that taking on a mortgage loan doesn't make sense.</p> <p>Erin Ellis, financial educator at Philadelphia Credit Union, says that a low credit score is often a challenge for younger borrowers. Some young borrowers might not have enough of a credit history to even have a score. If these borrowers can even find a lender to loan them mortgage dollars, they'll have to pay dearly for them in the form of higher interest.</p> <p>Older buyers, too, can have credit score issues, too. Older borrowers who have recent bankruptcies, missed payments, or foreclosures on their records will struggle to get a mortgage loan with a reasonable interest rate.</p> <p>&quot;If your credit score is low, it often doesn't make sense to apply for a mortgage loan,&quot; Ellis says. &quot;The low interest rates make mortgages appealing today. But if your credit score is low, you won't get those low rates.&quot;</p> <h2>3. You Won't Be Settling Down</h2> <p>Buying a house and taking on a mortgage loan is a better investment when you're able to hold onto the property for a long enough period of time &mdash; usually at least seven years. Historically, homes have tended to experience solid appreciation when owners hold onto them for at least this length of time, though appreciation is never guaranteed.</p> <p>If you're young and just getting started in your career, renting might make more sense. You don't know how long you're going to remain in one neighborhood or city. Job changes might take you to new communities or even countries before your home has a chance to appreciate in value significantly.</p> <p>And if you're older? There are again no guarantees that you'll hold onto your new home for a long enough period of time. You might suffer ill health and have to move to an assisted-living facility. You might decide to move to a new part of the country so that you can spend more time with your grandchildren.</p> <p>If you aren't sure how settled you are into your current community, taking on a mortgage loan might not be a wise choice.</p> <h2>4. You Can't Clear the Down Payment Hurdle</h2> <p>The down payment on a home can be a struggle for both younger and older borrowers. Even if you qualify for a mortgage loan backed by the Federal Housing Administration, you'll have to come up with a down payment of 3.5% of your home's purchase price, if your credit score is high enough. For a home costing $200,000, that 3.5% comes out to a down payment of $7,000. For conventional financing, you might have to come up with a down payment of 10%, or $20,000.</p> <p>That's a lot of money for a young person just getting started on a career. Yes, borrowers can use financial gifts &mdash; as long as they are true gifts and not a loan that they have to pay back &mdash; to cover all or part of a down payment. But young people whose parents don't have $7,000, $10,000 or $20,000 sitting around might struggle to come up with a down payment.</p> <p>Older buyers have their own issues with down payments. They have to make sure that their combination of monthly income and savings will last them through their retirement years. Spending a chunk of their savings on a down payment could put them at financial risk, especially if they don't have much money from another home sale to help cover down payment costs.</p> <p>If your down payment will wipe out all of your savings, it might make sense to wait until you've saved more money for a down payment. After all, you'll need money to furnish and maintain your home after you've purchased it.</p> <p>But if none of these factors are an issue for you? Taking on a mortgage loan might make financial sense.</p> <p>&quot;If you can qualify for a mortgage loan &mdash; and that's a fairly big 'if' &mdash; then I think a mortgage makes sense for most people,&quot; says Matthew Tuttle, chief executive officer and chief information officer of Tuttle Tactical Management in Greenwich, Connecticut. &quot;I know this can be controversial, but I'm a big fan of never paying your mortgage off. The only time when a mortgage doesn't make financial sense is when interest rates are extremely high. At these low interest rates, why wouldn't you want to take out a mortgage loan?&quot;</p> <p><em>Has your age impacted your search for a mortgage loan? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-reasons-why-youre-too-old-or-too-young-for-a-mortgage-loan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-lenders-look-for-in-a-loan-application">5 Things Lenders Look For in a Loan Application</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-prepare-for-a-home-purchase-in-2010">How to Prepare for a Home Purchase in 2010</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">What&#039;s Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-rent-an-apartment-with-bad-credit">7 Ways to Rent An Apartment With Bad Credit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing age credit history credit score loans mortgages Wed, 24 Jun 2015 13:00:26 +0000 Dan Rafter 1462787 at http://www.wisebread.com Are You a Credit Invisible? Get Seen by Building Your Score http://www.wisebread.com/are-you-a-credit-invisible-get-seen-by-building-your-score <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/are-you-a-credit-invisible-get-seen-by-building-your-score" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/credit_score_tablet_000027514776.jpg" alt="How to build a credit score if you don&#039;t have one" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you a &quot;credit invisible?&quot; The Consumer Financial Protection Bureau defines credit invisibles as those adults whose credit histories are so limited that they don't have three-digit credit scores. According to the bureau, 26 million U.S. adults <a href="http://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf">have no credit histories</a> with national reporting agencies TransUnion, Experian, and Equifax and, because of this, no FICO credit score.</p> <p>That's a huge problem. Lenders today rely heavily on three-digit <a href="http://www.wisebread.com/4-reasons-your-credit-score-may-improve-soon">credit scores</a> to determine which consumers are good lending risks. They also use these scores to determine the interest rates they charge on auto and mortgage loans. Consumers without credit scores, then, will struggle to <a href="http://www.wisebread.com/what-are-secured-credit-cards?ref=internal">qualify for credit cards</a>, home loans, auto loans, and personal loans. And even if they do qualify for credit, they'll pay far higher interest rates.</p> <h2>Why Credit Matters</h2> <p>Having a high credit score can even have an impact on what job you land and where you live. A growing number of employers are analyzing the credit of job applicants. And many apartment landlords do the same before deciding whether to rent to prospective tenants.</p> <p>&quot;Not having a credit score absolutely impacts your qualify of life,&quot; said Steve Joung, founder and chief executive officer of Chicago-based apartment rental agency Pangea Properties. &quot;If you have better credit, you can rent a nicer apartment. You can get in a neighborhood that is closer to transportation and to your job. Your apartment building might have more amenities that bring you happiness. The quality, condition, and location of where you live is a big factor in your overall happiness and satisfaction.&quot;</p> <p>Consumers build credit histories by paying bills such as mortgage, auto, or student loan payments on time. They also <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=internal">build a credit history</a> by making regular credit card payments. Those consumers who don't have student loans, auto loans, home loans, or credit cards? They might not generate any credit history.</p> <p>Many consumers are surprised to learn that several payments they make are not reported to the credit bureaus. Payments to medical providers, utilities, and cell-phone companies are not reported, and don't help consumers build a credit history. Up until recently, none of the three credit bureaus tracked on-time rent payments, either. That is starting to change, with Experian and TransUnion now giving landlords and renters the chance to report their monthly payments.</p> <p>Consumers who don't have enough credit history won't have credit reports that are full enough to generate a three-digit credit score. They will struggle to qualify for any loan or credit program.</p> <h2>How to Build Credit</h2> <p>There is hope, though. Rod Griffin, director of public education with Experian, says that consumers can start building their credit in small ways. One such way is to <a href="http://www.wisebread.com/a-secured-credit-card-can-repair-your-credit-score-heres-how-to-pick-the-best?ref=internal">apply for a secured credit card</a> at their bank or credit union. (<a href="http://www.wisebread.com/the-5-best-secured-credit-cards?ref=seealso">See our favorite secured credit cards</a>)</p> <p>A secured card operates like a traditional credit card except for one big difference: The credit limit is tied to the amount of money the card's holder has in a savings account. But card holders can't spend more than their limit.</p> <p>Secured accounts are a way for financial institutions to offer credit to consumers who lack a credit history while also protecting themselves: Consumers can't charge more than they can afford. These credit cards are limited. But those who make their payments on time each month will steadily begin to build a credit history.</p> <p>Consumers can also ask a family member who has a high credit score to co-sign for them on an auto or personal loan. This gives consumers without credit histories the chance to show that they can make loan payments on time.</p> <p>Griffin said that to earn a FICO score &mdash; the most important of the credit scores &mdash; people must typically have a credit history that is at least six months old. There are other scores, such as the VantageScore from Experian, that take less time. Experian can issue consumers VantageScores as soon as three months after they first build a credit history.</p> <p><em>How did you build up your credit history?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/are-you-a-credit-invisible-get-seen-by-building-your-score">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you">15 Surprising Ways Bad Credit Can Hurt You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-your-credit-score-may-improve-soon">4 Reasons Your Credit Score May Improve Soon</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-build-credit-without-using-credit-cards">How to Build Credit Without Using Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-you-need-to-know-about-credit-scores">5 Things You Need to Know About Credit Scores</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-improve-your-credit-score">How to Improve Your Credit Score</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance building credit credit history credit scores loans Fri, 12 Jun 2015 13:00:11 +0000 Dan Rafter 1451204 at http://www.wisebread.com