Market figure – Plamo http://plamo.info/ Tue, 25 Jan 2022 03:18:45 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://plamo.info/wp-content/uploads/2021/06/icon-3-105x105.png Market figure – Plamo http://plamo.info/ 32 32 Average credit scores by gender https://plamo.info/average-credit-scores-by-gender/ Mon, 24 Jan 2022 23:27:17 +0000 https://plamo.info/average-credit-scores-by-gender/ The average credit scores of men and women in the United States were just one point apart when credit reporting agency Experian released a major analysis of the issue in 2020. And a year later, updated data from Experian shows essentially identical average ratings between the sexes. Additionally, research reveals that men’s and women’s credit […]]]>

The average credit scores of men and women in the United States were just one point apart when credit reporting agency Experian released a major analysis of the issue in 2020. And a year later, updated data from Experian shows essentially identical average ratings between the sexes. Additionally, research reveals that men’s and women’s credit card balances are so close that they are statistically the same. Here’s how the numbers break down, along with a history.

Key points to remember

  • The Equal Credit Opportunity Act of 1974 prohibited several common practices that served to restrict women’s access to credit and their ability to be financially independent.
  • Today, the average credit score of both genders is identical.
  • Men and women have essentially the same level of credit card debt.
  • Men have more debt than women overall, and in all categories except student loans.

How the Equal Credit Opportunity Act of 1974 changed things

It may be hard to believe that as recently as the 1970s, women were often not allowed to take out a loan or apply for credit without a male co-signer. And if they bought a house, they were generally required to put down a larger down payment than male applicants with similar credit histories.

The Equal Credit Opportunity Act 1974 was a major step in ending gender discrimination in access to credit. And although the United States still suffers from gender-based wage gaps, the availability and use of credit between women and men is largely aligned today.

That’s not to say there aren’t differences in how men and women use debt and credit. Indeed, men are generally more indebted than women, including in almost all categories of indebtedness. But women have more student debt and more credit cards.

Average debt and credit measures by gender
Debt/credit indicator Men Women Difference
for women
Average credit score 705 704* -1*
Total debt balances $337,957 $310,004 – $27,953
Mortgage debt $211,034 $192,368 – $18,666
HELOC debt $47,017 $42,746 – $4,271
Car loan debt $20,645 $17,747 – $2,898
Student loan debt $35,188 $36,131 +$943
Personal loan debt $17,716 $14,780 – $2,936
Credit card debt $6,357 $6,232 -$125
Number of credit cards 3.6 4.5 +0.9
Source: Experian, February 2020, Q2 2019 Data Report. * In Q2 2020, Experian updated the average female credit score to 705.

How Women’s Credit and Debt Compare to Men’s

The current parity between the average credit score of men and women is not entirely new. Six years ago, the numbers were just as close, and both averages have increased by 10 points since the second quarter of 2015. In modern credit scoring models, no gender consideration is taken into account in the scores.

The way men and women accumulate debt, however, shows some differences. Overall, men have about 9% more debt on average than women: about $338,000 in total debt balance versus $310,000 for women. This difference stems from the fact that they hold more debt than women in all but one debt category. Men carry about 10% more mortgage and HELOC debt, 16% more car loan debt and, most strikingly, 20% more personal loan debt.

For their part, women hold on average a little more student debt. But the increase over men’s student loan balances is less than 3%. Women also tend to have more credit cards, with an average of 4.5 cards compared to an average of 3.6 cards for men.

On credit card balances, the gender difference is only $125. At only 2%, this difference is not considered statistically significant.

The essential

The 1974 legislative changes provided greater access to credit for American women, allowing them to take out loans and credit cards without depending on male co-signers, or being unfairly penalized when taking out a home loan. In the years that followed, women gained wide access to credit and debt equity, achieving average credit scores identical to those of men.

The composition of debt differs between genders, with men taking on more debt for housing, cars and luxury items, while women as a group have taken on slightly more student debt. But although men’s average total debt balance is about 10% higher than women’s total debt, identical average credit scores imply equally responsible credit management for all genders.

Methodology

Experian is one of the top three credit reporting agencies in the United States, and its 2020 Analysis of Debt and Credit Metrics by Gender is based on aggregate data collected from the millions of credit reports at the consumption it tracks.

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Some teachers discouraged by the loss of the child tax credit | News, Sports, Jobs https://plamo.info/some-teachers-discouraged-by-the-loss-of-the-child-tax-credit-news-sports-jobs/ Sat, 22 Jan 2022 16:24:40 +0000 https://plamo.info/some-teachers-discouraged-by-the-loss-of-the-child-tax-credit-news-sports-jobs/ President Joe Biden arrives to speak at an event marking the start of the monthly child tax credit relief payments, in the South Court Auditorium of the White House complex, July 15 in Washington. Families across the country, including on Maui, have expressed disappointment at the end of the expanded child tax credit after Congress […]]]>

President Joe Biden arrives to speak at an event marking the start of the monthly child tax credit relief payments, in the South Court Auditorium of the White House complex, July 15 in Washington. Families across the country, including on Maui, have expressed disappointment at the end of the expanded child tax credit after Congress was unable to pass Biden’s Build Back Better program in December which would have renewed the advantage. Photo of the AP file

Some Maui teachers are expressing disappointment at the loss of the expanded federal child tax credit and the weakening of other benefits, saying it would help them and the families of the children they teach.

Sarah Shewmaker, a teacher at Makawao Elementary School, said she was “very disappointed” that the expanded child tax credit is now absent, the free community college proposal is gone, and the family leave enhancement is less than originally proposed by President Joe Biden.

“These are foundational initiatives that are needed to improve the lives of families on Maui, before and especially during COVID,” says Shewmaker.

She said the expanded credit check she received with other families helped her pay for groceries and clothes and also helped her because she “the salary is not incredibly high.”

“I wanted the (expanded) Child Tax Credit to become permanent for families in my school community. There are many people struggling with both parents working 24 hours a day; an extra $300 a month can add some relief and comfort if an unexpected expense arises,” she said.

Historically a bipartisan measure, the federal child tax credit was created in 1997 to allow eligible families to subtract the credit amount from the federal income tax they owed, according to the National Conference. state legislatures. The tax credit has grown over the years, and prior to 2021, it allowed eligible families to reduce their federal income tax by up to $2,000 per eligible child, according to the Congressional Research Service.

Last year, passage of the American Rescue Plan Act of 2021 expanded the child tax credit for American families by raising the eligibility age from 16 to 17, making the credit fully refundable. and increasing the maximum credit amount from $2,000 per child to $3,600. per child for children under 5 years old and $3,000 per child for 6 to 17 year olds.

Advance monthly payments were distributed from July to December with a maximum of $250 to $300 per child, according to the US Commerce Department’s Bureau of Economic Analysis.

However, the reforms expired at the end of 2021 after Congress was unable to pass Biden’s Build Back Better program which included a renewal of the expanded child tax credit.

The issue was still in limbo this week as Biden marked his first year in office with a press conference in which he expressed uncertainty about the child tax credit.

“There are two really big components that I care about that I’m not sure I can fit into the package,” Biden said Wednesday. “One is the child care tax credit, and the other is community college cost assistance.”

A South Maui educator with four children ranging from third grade through college said she and her husband were doing “major restructuring” this month since the end of the extended credit.

“We live paycheck to paycheck” said Erin Hayden-Baldauf, who teaches Lokelani Intermediate in Kihei.

Her daughter in college has student loans and has to work more than 20 hours a week because the family has no “cushion in our budget” to pay for living expenses, Hayden-Baldauf said. Her daughter only attends university part-time so she can work.

“The Child Tax Credit has been a huge help in supporting her during this critical time in her development,” said Hayden-Baldauf.

The family also took out a loan for a “junker” a car so their 16-year-old son in high school can drive to work.

The child tax credit helped pay for the “flapping cars” for their children with the insurance, Hayden-Baldauf said.

Another Maui teacher, Justin Hughey, said the expanded credit will provide him and his wife, who is also a teacher, with $600 a month.

“It’s a blow for us economically,” said the Wailuku resident. “Teachers in Hawaii are the lowest paid teachers in the country.”

Hughey has a 2 year old and a 1 month old. Babysitting her eldest costs $697 a month, and once they start paying for babysitting the second child, they’ll be spending almost $1,400 a month.

“My wife and I will be able to cope, but I feel for the homeless families I see living in their cars as I drive from Wailuku to Lahaina,” said Hughey, a special education teacher at King Kamehameha III Elementary School in Lahaina. “It will also force teachers to relocate to the mainland where they receive competitive salaries in districts with the same cost of living.”

Hughey took his frustration to the Central Committee of the Hawaii Democratic Party, where he is the education caucus representative, author of a resolution “expressing disappointment with the actions of Congressman Ed Case” regarding the adoption of the Build Back Better agenda.

The resolution said Hawaii Congressman Case, co-chair of the Blue Dog Coalition in the U.S. House of Representatives, along with members of the coalition, delayed the bill’s passage in the House and also hurt the program. Build Back Better by supporting the removal of certain social safety net initiatives from the provisions financing infrastructure.

The deadline “contributed greatly to the weakening” off the bill’s agenda and left it with fewer benefits for Hawaii’s working families, according to the resolution.

Case represents Hawaii’s 1st congressional district, which covers the urban core of Honolulu.

Tyler Dos Santos-Tam, chairman of the Hawaii Democratic Party, said in a press release earlier this month that his “Core party leaders clearly wanted to see President Biden’s Build Back Better bill passed in its original form, and were clearly disappointed when critical agendas were not included in the final proposal that was passed by bedroom.”

The state Central Committee passed the resolution criticizing Case with 46 votes in favor, 19 against and one member abstaining. The resolution is not a motion of no confidence or a cause for hearing a complaint under the Hawaii Party Bylaws, but “expresses the strong sentiment of the members of the State Central Committee from across the state.”

Case said in an email that he was not told about the resolution in advance or given the opportunity to explain his actions or answer questions.

Case said Hughey was implying that he did not support expanding the child tax credit, which “is completely wrong.”

“I voted for and supported him on several occasions”, Case said.

He added that the resolution “omitting the fundamental fact” that on Nov. 19, he joined all but one of his fellow Democrats in voting for the House to pass the $2.1 trillion Build Back Better Act that Biden endorsed.

The version passed by the House would extend the expanded child tax credit and also includes several initiatives to improve education, Case said.

Case acknowledged that he supported efforts to decouple the Build Back Better Act from the $1 trillion bipartisan physical infrastructure package, but pointed out that Biden made the same judgment and urged that the package be infrastructure is adopted and enacted independently of the Build Back Better Act. .

Maui County is expected to receive millions of dollars from the package, including $9.4 million for Kahului Airport as well as millions more for county-run bridges, Case said.

* Melissa Tanji can be reached at mtanji@mauinews.com.

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Warren and Progressives step up pressure on Biden to cancel student loans https://plamo.info/warren-and-progressives-step-up-pressure-on-biden-to-cancel-student-loans/ Fri, 21 Jan 2022 13:05:47 +0000 https://plamo.info/warren-and-progressives-step-up-pressure-on-biden-to-cancel-student-loans/ A number of prominent Democrats are urging President Biden to cancel student debt by executive order. (iStock) Progressive lawmakers are increasing pressure on President Joe Biden to write off student debt for millions of federal borrowers using executive action. Among them is Sen. Elizabeth Warren, D-Mass., who openly called on the president to provide up […]]]>

A number of prominent Democrats are urging President Biden to cancel student debt by executive order. (iStock)

Progressive lawmakers are increasing pressure on President Joe Biden to write off student debt for millions of federal borrowers using executive action.

Among them is Sen. Elizabeth Warren, D-Mass., who openly called on the president to provide up to $50,000 in student loan relief per borrower. Warren serves on several Senate financial committees that focus on consumer protection and federal regulatory oversight.

“With the stroke of a pen, the President can #CancelStudentDebt and provide relief to 40 million Americans, continue our economic recovery, and close the racial wealth gap.”, Warren said in a Tweet Tuesday.

Warren isn’t the only prominent Senate Democrat who wants the Biden administration to take action on student loan debt. Senate Majority Leader Chuck Schumer, DN.Y., has called on the president to enact student loan forgiveness dozens of times on Twitter in recent months.

A number of House Democrats also urged President Biden to cancel student loans through an executive order on Twitter last week, including Reps. Ilhan Omar, D-Minn. ; Pramila Jayapal, D-Wash.; and Ayanna Pressley, D-Mass.

“It’s time to forgive at least $50,000 of student loan debt per borrower.”

– Rep. Pramila Jayapal, D-Wash.

Democrats argue the president should rely on his executive authority to deliver on his campaign promise to cancel federal student loan debt.

Biden himself has questioned his ability to forgive student debt using his presidential powers, and the White House recently indicated he is waiting for Congress to enact student loan forgiveness legislation. House Speaker Nancy Pelosi, D-California, agrees — she previously said canceling student debt “has to be an act of Congress.”

Keep reading to learn more about what the Biden administration is doing to provide student loan relief, as well as your alternative college debt repayment options like refinancing. You can compare free student loan refinance offers on Credible without affecting your credit score.

HOW TO CHECK YOUR STUDENT LOAN BALANCE

Will Biden Forgive Student Loans?

As a presidential candidate, Biden campaigned to forgive a minimum of $10,000 in federal student loan debt per borrower. But a year into his presidency, he has so far been unable to deliver on that promise.

One of the issues facing the Biden administration is how best to enact student loan forgiveness legislation. As progressives continue to urge the president to write off student debt using executive action, Biden himself indicated in a February 2021 town hall that he does not believe he has the legal authority to advance this cause.

The Higher Education Act of 1965 gives the Secretary of Education the power to “enforce, pay, impair, waive or discharge any right” to collect federal student loans, but legal experts are divided on whether whether this includes a general forgiveness of student loans.

Since Biden took office, the Department of Education has written off $11.5 billion in student loan debt through existing federal student loan forgiveness programs, such as the Student Loan Forgiveness Program. of the public service (PSLF), the defense of the borrower until the refunding and the discharges of total and permanent disability (TPD). ). Additionally, the Biden administration recently extended the federal student loan payment pause until May 1, 2022.

However, millions of Americans who are not eligible for the remission still owe $1.75 trillion in student loan debt, according to the Federal Reserve. And it’s unclear whether President Biden will cancel student loans, though Education Secretary Miguel Cardona said the Department of Education will “continue conversations about…broad loan cancellation.”

In the absence of certainty about the widespread cancellation of student loans, some borrowers could research other debt repayment options, such as student loan refinancing. See if this strategy is right for your financial situation by using Credible’s student loan refinance calculator.

PUBLIC SERVICE LOAN FORGIVENESS (PSLF) IS JUST EASIER FOR 550,000 BORROWERS

How to decide if you should refinance your student debt

Student loan refinancing involves taking out a new student loan to pay off your college debt on better terms, such as a lower interest rate. Refinancing your student loans can help you lower your monthly payments, pay off debt faster, and save money on interest over the life of the loan.

That being said, student loan refinancing is not for everyone. Here are some things to consider if you’re considering refinancing:

  • Refinancing federal student loans into a private loan makes you ineligible for certain federal protections. This includes income-driven repayment plans, COVID-19 emergency relief, and some student loan forgiveness programs like the PSLF.
  • Private student loans are not eligible for federal government protections, so borrowers don’t have to risk as much when refinancing these types of student loans.
  • According to data from Credible, student loan refinance rates are currently near all-time lows, meaning borrowers have the option to lock in a lower interest rate on their college debt.
  • Private student loan refinance rates are determined by the borrower’s creditworthiness, such as credit score and debt-to-income ratio. Borrowers with fair or bad credit may consider refinancing student loans with a co-signer to get better terms.
  • Private student lenders do not charge a refinance fee, which means your interest rate is the only finance charge included in the loan.

Browse current student loan refinance rates from private lenders in the table below and visit Credible to see your estimated rate for free without affecting your credit score. This way you can decide if this debt repayment strategy is right for you.

A GUIDE TO TEACHER LOAN REPAYMENT PROGRAMS

Do you have a financial question, but you don’t know who to contact? Email the Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.

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When to apply for a credit card after bankruptcy https://plamo.info/when-to-apply-for-a-credit-card-after-bankruptcy/ Wed, 19 Jan 2022 12:00:42 +0000 https://plamo.info/when-to-apply-for-a-credit-card-after-bankruptcy/ After a bankruptcy filing, the task of repairing your credit begins. But how soon can you apply for new credit? It depends on the type of bankruptcy you filed, as your bankruptcy must first be discharged. It can take as little as six months or as long as five years. Types of bankruptcy There are […]]]>

After a bankruptcy filing, the task of repairing your credit begins. But how soon can you apply for new credit? It depends on the type of bankruptcy you filed, as your bankruptcy must first be discharged. It can take as little as six months or as long as five years.

Types of bankruptcy

There are two types of bankruptcy for most consumers: Chapter 7 and Chapter 13.

  • Chapter 7 will eliminate nearly all debt (with some exceptions including student loans, child support, and IRS debt) with no repayment required.
  • Chapter 13, sometimes referred to as an “employee” plan, is a debt reorganization. This type requires some repayment over time based on your disposable income (under strict IRS guidelines) and the amount of debt you have.

Most debt-crushing consumers would prefer a Chapter 7 bankruptcy to get a fresh start by liquidating all debts. However, to qualify for a Chapter 7, you must pass a means test that assesses your income to determine if it is above the median for your state and what your disposable income is.

Chapter 7 is the most effective and damaging form of personal bankruptcy. It stays on your credit report for 10 years. However, once Chapter 7 has been filed, it is usually discharged (completed) in four to six months. So while Chapter 7 has the longest period of damage to your credit report, it has the shortest time to start repairing your credit.

If you don’t qualify for Chapter 7, you may have to file for bankruptcy under Chapter 13. This chapter requires repayment of a portion of your debt over three to five years. Chapter 13 will remain on your credit report for seven years from the date of filing and is not released until your debt is repaid. Obtaining credit or conventional loans during this period is highly unlikely.

Applying for a credit card after bankruptcy

As noted, your bankruptcy must be discharged in federal bankruptcy court before you can apply for new credit; the bankruptcy notation does not have to be removed from your credit report, it just needs to be discharged. Your credit score will suffer severe damage from bankruptcy, no matter which chapter is filed.

To improve your credit score, you must start by repairing your credit report. The process is similar to starting to use credit for the first time. However, in addition to adding positive behaviors to your credit report, you also have to deal with the negatives that already exist.

Before you start applying for new credit, have a game plan for handling any new debt you take on. Don’t get trapped into letting uncontrollable debt overwhelm you again. The credit counseling required for filing and release can help you develop a credit management plan that’s right for you.

Check your credit score

Before applying for new credit, you should check your credit score to know exactly where you stand. You can access your score through your bank or other financial institution, but there are many free ways to check your credit score. Also, anyone can get their credit report for free at annualcreditreport.com. Although this site does not offer free scores, it is a valuable tool for checking the accuracy of your credit report, as this information defines your score.

Be vigilant and skeptical of any unsolicited offers of credit that are supposed to help you recover. Filings for bankruptcy can be a mailing list for expensive products or scams.

Evaluate your options

Knowing your score will help you target when the credit card comes in and find a card you can qualify for. This is important to remember because bankruptcy will likely prevent you from qualifying for the top tier cards, and each application will result in a credit inquiry, further reducing your damaged score.

So, aim for the best card you can get within the score range you’re in. Bankrate’s CardMatch tool is a good place to start. A secured card may be your best bet. Obtaining a top card will come with time, but for now, small steps are essential.

There are also cards with no credit condition. Many of these cards are designed for students and other credit beginners. All credit cards should have a Schumer box outlining their terms. Look carefully and avoid anything that is misleading or confusing.

Rebuilding your credit with a credit card

Once you have a credit card or a loan, the number one key to rebuilding your credit starts with paying all your bills, not just your credit card bills, on time, every time. Resist the temptation to ask for a line of credit increase once you have a card until you see your score turn around. Otherwise, the answer will most likely be no and you will damage your score with a difficult survey.

Keep your credit card balances low. Ideally, you should keep them as close to zero as possible. Keep in mind that this first card will not come with a great rate and may even be backed by your own money. So, keeping your balances low will go a long way toward building the credit utilization portion of your credit score (second only to one-time payments in importance). Plus, it will save you money in interest if you don’t have a balance.

Finally, if you are a tenant, make sure your landlord declares your rent payments. Otherwise, you could turn to a rent declaration service. Your rent can be your biggest monthly obligation, and reporting those payments on time can help. You can also check out the Experian Boost program which will report utilities and other monthly obligations.

The bottom line

Your bankruptcy must be fully discharged before you can apply for a new credit card. If you file for Chapter 7 bankruptcy, your debt will likely be paid off in four to six months. If you file for Chapter 13 bankruptcy, it will be three to five years.

Applying for new credit is essential to rebuilding your score, but it’s important to have a plan for using your credit responsibly. With your new card, make sure you’re practicing healthy habits like paying on time each month and keeping your balances low.

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What credit cards allow co-signers? https://plamo.info/what-credit-cards-allow-co-signers/ Mon, 17 Jan 2022 12:00:24 +0000 https://plamo.info/what-credit-cards-allow-co-signers/ Applying for a credit card with a co-signer, that is, another person who agrees to share responsibility for charges made to the card, is a good way to build up a positive credit history. In the past, applying for a credit card with a co-signer was a common way to increase your chances of approval. […]]]>

Applying for a credit card with a co-signer, that is, another person who agrees to share responsibility for charges made to the card, is a good way to build up a positive credit history.

In the past, applying for a credit card with a co-signer was a common way to increase your chances of approval. Unfortunately, most major credit issuers have phased out this option. However, Bank of America allows you to add a co-applicant to your credit card after your application is approved – and some credit cards, including the Apple Card, allow you to create a joint credit account with another person. .

Here’s what you need to know about co-signers, co-applicants, and joint credit cards, as well as other options for people who want to build credit fast.

Credit card issuers that allow co-signers

As of January 2022, none of the major credit card issuers we contacted allow co-signers.

In the past, it may have been possible to apply for a credit card with a co-signer if you applied to Bank of America, USAA, or US Bank. However, we contacted these issuers in January 2022 and confirmed that Bank of America, USAA and US Bank no longer allow co-signers on credit cards.

That said, people applying for Bank of America credit cards have another option. Once you have been approved for a Bank of America credit card, you can request to add a co-applicant to your newly issued credit account. If the co-applicant is accepted, you will share legal responsibility for all charges to the card. It’s not the same as applying for a credit card with a co-signer, but it still allows you to share a line of credit with another person.

Issuers that do not allow credit card co-signers

None of the major credit card issuers we contacted allow credit card co-signers.

We contacted each of the following credit card issuers in January 2022 to confirm that they do not allow people to apply for credit cards with co-signers:

Alternatives to finding a co-signer

Since most credit issuers no longer allow people to apply for credit cards with co-signers, you’ll need to research other ways to access credit.

If you have bad credit or a limited credit history and are unlikely to qualify for one of the best credit cards, here are some ways to build credit without a co-signer.

Become an authorized user

One of the best ways to build credit fast is to become an authorized user on someone else’s credit card. When you become an authorized user, you receive authorization to make purchases on another person’s credit account. The account holder is responsible for all payments and any debt incurred.

Most credit card issuers report authorized user accounts to the three major credit bureaus (Experian, Equifax, and TransUnion). This means that every time the account holder makes a payment on time, for example, it appears as a positive record on your credit file, which increases your credit score.

Becoming an Authorized User is an easy way to take advantage of someone else’s good credit while building your credit score, especially if you’re a student or young person who isn’t old enough to open your own credit card. credit.

Apply for a joint credit card

In some cases, you may be able to apply for a joint credit card. Joint credit cards are exactly what they sound like: a credit card issued jointly to two people (spouses, for example), who are both legally responsible for any debt incurred on the card. All card activity is reported on both cardholders’ credit reports, which means that if you both use your card together responsibly, you could both receive a credit boost!

Only a few credit cards, like the Apple Card, allow joint accounts. If you’re considering becoming a joint cardholder, make sure you’re prepared to take full responsibility for all charges to the card. Also, make sure that every payment is made on time, regardless of who makes the payment.

Apply for a secure credit card

If you want to apply for your own line of credit, without becoming an authorized user or looking for a joint credit card, consider applying for a secured credit card. These credit cards require a small security deposit in exchange for a small credit limit, allowing you to prove that you can manage credit responsibly.

Once you’ve demonstrated your ability to make payments on time and manage your small line of credit, most credit card issuers will return your security deposit and assign you an unsecured credit card. Secured credit cards can be rewarding, especially if you choose a card that offers cash back, like the Discover it® Secured Credit Card.

Consider credit cards for people with bad credit

Want more options? You may want to check out our lists of credit cards for people with bad credit and credit cards for people with no credit history.

Many of these cards are secured credit cards, but these lists also include unsecured cards designed for people hoping to build or rebuild their credit, such as the Visa® Petal® 1 “no annual fee” credit card, which uses factors such as income and bill-paying history to determine eligibility, offers cash back on select purchases, and allows cardholders to get a credit limit increase after six months of ownership from the menu.

The bottom line

Even though most major credit card issuers no longer allow credit cards with co-signers, there are still ways to build credit, even if you have a low credit score or limited credit history.

Consider becoming an authorized user, applying for a secure credit card, or looking for a card designed to help people build credit. Once you have your own line of credit, be sure to practice responsible credit habits to build a positive credit history and build your credit score.

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What to know when applying for a personal loan with bad credit https://plamo.info/what-to-know-when-applying-for-a-personal-loan-with-bad-credit/ Fri, 14 Jan 2022 18:56:15 +0000 https://plamo.info/what-to-know-when-applying-for-a-personal-loan-with-bad-credit/ Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We may receive a commission when you click on links to our affiliate partners’ products. When it comes to paying for some of life’s biggest expenses – a home renovation, a big medical bill, an […]]]>

Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We may receive a commission when you click on links to our affiliate partners’ products.

When it comes to paying for some of life’s biggest expenses – a home renovation, a big medical bill, an emergency, a wedding or even a funeral – sometimes it can be easy to find yourself short of money. to cover these costs. And if your savings don’t match the amount of money you’ll need to cover those expenses, you may need to find a way to cover the difference.

This is where a personal loan can come in handy. Personal loans are actually one of the fastest growing categories of debt in the United States, in part because they offer flexibility that some credit cards don’t: higher interest rates down and the ability to receive a lump sum directly deposited into your bank account so that you can use it as needed.

When you take on debt of any form, it’s usually ideal to apply with good or excellent credit in order to get the best loan terms. But if you find yourself applying for a personal loan with poor credit, there are still options for you – you just need to keep a few things in mind before you start the application process.

Can you get approved for a personal loan with bad credit?

Your credit history and credit ratings are important because they provide lenders with clues to determine if they think you will be a responsible borrower who will repay the loan on time and in full. Keeping your credit score healthy can really be an asset when applying for loans for big purchases like buying a house or buying a car.

While it’s possible to get approved for a personal loan if you have poor credit, the final decision, for the most part, rests with the lender you apply to. Some lenders will tell you upfront what their minimum requirements are. The Payoff personal loan, for example, requires a FICO score of 640 (which is in the “fair” range) or higher for approval.

Some lenders will actually cater to those with poor (or no) credit. Upstart Personal Loans, for example, will accept a FICO or Vantage score as low as 600, but they also accept applicants who have not yet built up a sufficient credit history. OneMain Financial also approves applicants who have poor or fair credit for their personal loan products. (See our roundup of the best personal lenders for bad credit for more options.)

Beginner personal loans

  • Annual Percentage Rate (APR)

  • Purpose of the loan

    Debt consolidation, credit card refinancing, marriage, moving or medical

  • Loan amounts

  • terms

  • Credit needed

    FICO or Vantage score of 600 (but will accept applicants whose credit history is so poor that they have no credit score)

  • Assembly costs

    0% to 8% of target amount

  • Prepayment penalty

  • Late charge

    Greater of 5% of monthly amount past due or $15

OneMain Financial Personal Loans

  • Annual Percentage Rate (APR)

  • Purpose of the loan

    Debt consolidation, big expenses, emergency expenses

  • Loan amounts

  • terms

  • Credit needed

  • Assembly costs

    Flat fee from $25 to $1,000 or percentage ranging from 1% to 10% (depending on your state)

  • Prepayment penalty

  • Late charge

    Up to $30 per late payment or up to 15% (depending on your state)

What interest rates are you eligible for?

When you apply for any form of credit, the better your credit, the more likely you are to get favorable terms, like lower interest rates. This is also the case with personal loans. If you have bad credit, you will likely receive a higher interest rate on your loan. This means that you will spend more money to repay the loan.

Of course, the exact interest rate you ultimately receive will depend on the range of the lender, but you can compare personal loans before submitting your application. This way you can be sure to get the loan with the best terms for you.

Compare offers to find the best loan

When looking for a personal loan, it can be helpful to compare several different offers to find the best interest rate and payment terms for your needs. With this comparison tool, all you need to do is answer a few questions and Even Financial will determine the best offers for you. The service is free, secure and does not affect your credit score.

Editorial note: The tool is provided and powered by Even Financial, a search and comparison engine that connects you with third-party lenders. Any information you provide is transmitted directly to Even Financial. Select does not have access to any data you provide. Select may earn an affiliate commission on partner offers in the Even Financial tool. The commission does not influence the selection in the order of the offers.

It’s also worth noting that in some cases it may make more sense to use a credit card with a 0% APR introductory period, as you can finance your purchase and make payments for the balance without being charged extra. interest for a fixed term. time. The Citi Simplicity® card, for example, gives you a 12-month 0% period (after, 14.74% to 24.74% variable APR). This option is only optimal if the credit limit is sufficient to cover your expenses and you are sure that you can pay off the entire balance before the end of the 0% APR period.

How long will you have to repay the loan?

The time you have to repay a personal loan is often referred to as the “term” of the loan. Like interest rates and credit score requirements, loan terms can vary from lender to lender. The good news is that this information is usually provided up front so you can immediately determine if the repayment schedule is right for you.

Loan terms can be as short as six months and as long as seven years. When you take out a loan that gives you more time to pay off the balance, you’ll likely have smaller monthly payments — though be aware that a longer term means you’ll end up paying more interest over time. . Shorter terms, on the other hand, could result in a higher monthly payment, but less accrued interest over the term of the loan.

How will a personal loan affect your credit score?

Applying for and taking out a personal loan can affect your credit in several ways.

As with any other loan, mortgage, or credit card application, applying for a personal loan can cause your credit score to drop slightly. This is because lenders will need to do a thorough investigation of your credit, and each time a thorough investigation is done, it shows up on your credit report and your score drops a little. Keep in mind, however, that this drop is only temporary, and maintaining good credit habits can raise your score again over time.

That being said, it pays to be as strategic as possible about when you decide to apply for a personal loan. Applying for a personal loan soon after applying for a new credit card could result in an even bigger drop in your credit score because a thorough investigation would be done for both applications.

On the plus side, taking out a personal loan can actually improve your credit score because you build a track record for making payments on time. This is especially true if you have been approved by a lender that accepts applicants with poor credit records. Payment history is the most important factor in calculating your credit score, accounting for 35% of it. Making your monthly payments on time and in full can provide clues to a lender that you are very likely to repay the money you borrow in the future. By making regular, on-time payments, your credit score is likely to increase.

A personal loan can also help you improve your credit mix. Your credit mix refers to the different types of credit accounts you have, including credit cards, student loans, mortgages, etc., and represents 10% of your credit score.

That’s not to say you should go out of your way to take on different types of debt, but having a variety of accounts can show lenders that you have the ability to handle multiple types of credit. This can make you look more like a creditworthy borrower (just make sure you don’t go into too much debt).

At the end of the line

Personal loans – and the thought of taking on more debt – can seem daunting, especially if you already have a poor credit score or no credit history. But when used responsibly, they can help you cover an important and necessary expense and improve your credit score when you make payments on time. If you’re applying for a personal loan with poor credit, you’ll just need to keep the above things in mind so you don’t feel caught out during the process.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff alone and have not been reviewed, endorsed or otherwise endorsed by any third party.

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7 Best Ways To Pay Off Credit Card Debt https://plamo.info/7-best-ways-to-pay-off-credit-card-debt/ Wed, 12 Jan 2022 19:30:54 +0000 https://plamo.info/7-best-ways-to-pay-off-credit-card-debt/ Editorial credit: Onchira Wongsiri Do you know the percentage of people who have credit card debt? A study shows that up to 30% have $ 5,000 or less in debt. 21% have more than this amount. We are talking about more than 40 million people who find themselves in such situations. You may very well […]]]>
Editorial credit: Onchira Wongsiri

Do you know the percentage of people who have credit card debt? A study shows that up to 30% have $ 5,000 or less in debt. 21% have more than this amount. We are talking about more than 40 million people who find themselves in such situations.

You may very well be one of those contributing to the shocking statistics. Debt can be devastating on a personal level. And, it could impact your credit score, causing many repercussions.

It can be difficult to get financing with bad credit scores. Some jobs may be inaccessible, and even getting an apartment may be impossible. The good news is that there are ways to pay off credit card debt. We’ll show you how below.

1. Keep a close eye on your finances

It is possible to get into debt because of your expenses. The first step is to honestly consider how to manage your finances. Are your expenses more than what you bring back?

There are ways you can be successful in spending by paying off debt. You can, for example, reduce your expenses. Give up eating in expensive restaurants. How about cooking a bit more at home.

Subscribe to platforms like Chuck finance can give you a little more control over your finances. You have access to financial information. The platform allows you to track your credit usage, thus ensuring a good credit score.

You receive notifications about things like overdraft fees, spending thresholds, and balance updates. Reports are accompanied by charts and other visualizations. This helps you to have an overview of your expenses.

Experts will also identify and recommend methods of minimizing interest rates. And that’s not all. Analytics provide insight into spending and help you build healthier financial habits.

Chuck finance
Editorial credit: xstock

2. Get rid of expensive sales first

Sit down with a notebook and pen and write down all your debts. Rank them from highest to lowest interest rate.

Now set aside a minimum amount on each. Add the extra cash you have to high interest debt. What you will do is the debt repayment avalanche method.

3. Try the snowball method of debt repayment

The snowball method of debt repayment is the reverse of the avalanche method. It forces you to pay the lowest balances first. But, that doesn’t mean that you forget to make minimum payments on other debts.

The advantage of this method is that you check off your debts as you write them off. It can be motivating to see the sales decrease. As you write off debts, allocate the money you would otherwise pay to the minimum balance of the largest debts.

4. Use balance transfer credit cards

Some lenders have the option of transferring the balance by credit card. They give a window of up to 20 months, without interest. It provides an efficient way to manage high interest credit cards.

Read the credit card terms and conditions carefully. After the zero interest term, they will apply interest rates. It helps to know what this is to avoid any unpleasant surprises in the future. A high interest rate could bring you back to credit card debt.

Take note of the transfer fees and the credit limit on the card. There is also a qualifying criterion, which often ranges from good to excellent credit scores.

5. Pay off student loans

If you are a student, take the time to research the best credit card for students. There are tons of resources online that can give you the information you need. Just make sure you can meet the payment requirements to avoid getting into debt.

So what if you have student loans? Well, paying off student loans has the benefit of giving you more flexibility and more freedom with your finances. Try to allocate more than the minimum monthly amount for compensation.

Note that some student loans have higher interest rates. Combine that with the credit card rates, and it can be pretty overwhelming. In this case, we recommend the avalanche method of debt repayment.

Take care of the high interest rates on student loans while making minimum payments on credit card debt.

6. Debt consolidation

Let’s say you have multiple credit cards. You can erase these debts by consolidating them into a personal loan. A good credit score can entitle you to amounts large enough to cover the entire balance.

Shop around for loans at favorable interest rates. It should ideally be less than what you pay on credit cards.

7. Borrow from family and friends

Another option available to you is to borrow money from family or friends. The bad news is that you will always be in debt. But, depending on the relationship, they may not charge interest. You have access to cash that will help you settle some of the balances.

A word of warning though. Money and friendships don’t mix. It is of the utmost importance that you pay what you owe at the agreed time. There could be irreparable damage to your relationships if you don’t keep your word.

As appealing as this avenue of debt payment may sound, consider it only as a last option.

Final thoughts

Financial prudence can prevent you from incurring credit card debt. But, the reality is, life doesn’t always turn out the way we expect it to too. You could find yourself in debt and need a solution.

We have shared some ideas on how to get out of credit card debt.

Certain spending habits can put you in hot water. If the expenses are greater than the income, there is a problem. Keep an eye on your finances by signing up to platforms like Chuckfinance.

Use the avalanche or snowball methods to erase high or low interest rate debt.

Manage your expenses when paying off debt by cutting unnecessary expenses. A good idea is to find a budget and stick to it.

Consolidate your credit card balances by taking out a personal loan and paying them off immediately. You can also borrow from your loved ones, including your family and friends. The only caveat is to make sure you pay them back at the agreed time.

Good luck with erasing your credit card debt.

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For Young Adults, Credit Building Begins Now https://plamo.info/for-young-adults-credit-building-begins-now/ Sat, 08 Jan 2022 13:34:00 +0000 https://plamo.info/for-young-adults-credit-building-begins-now/ Sooner than you think, your credit score will start to count. A good credit score can be the difference between qualifying for or missing out on a low-interest apartment or car loan. So, to get credit ready when you need it, now is the time to start building a good, long credit history. There is […]]]>

Sooner than you think, your credit score will start to count.

A good credit score can be the difference between qualifying for or missing out on a low-interest apartment or car loan. So, to get credit ready when you need it, now is the time to start building a good, long credit history.

There is more than one way to get credit, and it can be as simple as reporting your current bill payments to the major credit bureaus. But keep in mind: building credit takes diligence, especially since missing payments can hurt your score for years to come.

What is credit and why is it important?

Your credit score is a number that typically ranges from 300 to 850 and is calculated based on how reliably you have paid off your past debts, such as credit card bills. Lenders use your credit score to predict the likelihood of you paying off your debt.

Your credit score helps determine what loans you can receive, what interest you will be charged, what credit cards you can qualify for, and what properties you can rent. An employer can even check your credit history. Having a good credit rating can save you money down the road, mainly through lower interest rates when you get a loan.

If you are starting out with no credit history, you are not alone. In the United States, nearly 40% of people aged 20 to 24 have little or no credit history to generate a score, according to the Consumer Finance and Protection Bureau. Unfortunately, the same is true for around 20% of the population.

Building up your credit can seem overwhelming if you haven’t thought about it before, but there are plenty of strategies you can employ even if you’re just getting started. Start by establishing good debt management habits, such as not taking on more debt than you can afford, says Brittany Mollica, a certified financial planner based in Chapel Hill, North Carolina. Missed payments will damage your score and can become a burden when you need to borrow money in the future.

“It’s really important to have good habits to always pay your bills,” says Mollica. “You don’t want to have to come out of a hole with all kinds of credit card debt you’ve racked up, especially by starting early.”

Credit cards – and alternative cards

Credit cards can be a great tool for building credit, but they can also hurt your score if you take on more debt than you can handle.

If a parent or other trusted person in your life has a high credit limit and a long history of timely payments, you could become an authorized user on their account and benefit from their good credit. It’s one of the easiest ways to lengthen your credit history, says Blaine Thiederman, a certified financial planner in Arvada, Colorado.

Becoming an authorized user will also affect your credit utilization rate, or the amount of money you owe lenders divided by the total credit you have, which can improve your credit score.

If you have your own income, you can apply for a credit card at the age of 18; otherwise, you have to wait until you are 21. A secured credit card is usually the best credit card to start with. A cash deposit secures these cards, and because the credit card company may accept this deposit if you miss payments, people with short or poor credit histories may be eligible.

The deposit you need to make for a secured credit card could be a burden, and if so, another card could be better for you. These cards use income and bank account information to determine your creditworthiness rather than your credit score.

Monthly invoices

If you live independently, payments for rent, utilities, and phone bills can all be reported to the credit bureaus. So paying those bills can boost your credit if they’re on time and you’ve reported them.

Unlike credit card payments, these payments are not flagged automatically and may require a third-party service, such as Experian Boost, to notify the credit bureaus of your payments.

Keep in mind that these services sometimes require a fee and reporting your bill payments may not always affect your credit score; instead, they may just show up on your credit report.

Loans

Making regular loan payments can also help build your credit. And even if you don’t have a credit history, some loans are available.

Loans to credit builders rely on income rather than credit for approval. If you are approved, the loan is in a bank account and becomes available after you have paid it off. Your monthly payments are reported to the major credit bureaus.

Student loans are another loan that you can use to build your credit when you are starting out. Federal student loans do not require credit to qualify, unlike most private student loans. Paying off your loans will help boost your credit history, and you can get started while you’re still in school by making interest-only payments.

This article was written by NerdWallet and was originally published by The Associated Press.

More from NerdWallet

Colin Beresford writes for NerdWallet. Email: cberesford@nerdwallet.com.

The article For Young Adults, Building Credit Starts Now originally appeared on NerdWallet.

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Should you co-sign on a credit card? https://plamo.info/should-you-co-sign-on-a-credit-card/ Fri, 07 Jan 2022 11:30:00 +0000 https://plamo.info/should-you-co-sign-on-a-credit-card/ Editorial independence We want to help you make better informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and allow us to earn a referral commission. For more information see How we make money. Co-signing a credit card with someone is a bit like jumping out […]]]>

We want to help you make better informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and allow us to earn a referral commission. For more information see How we make money.

Co-signing a credit card with someone is a bit like jumping out of a plane with them. If all goes well, you will both get back on your feet with a boost to both of your credit scores.

But it’s also risky: If one person derails the deal by making late payments or accumulating a large balance, it could hurt both people’s finances as well as their relationship.

And it happens more often than you might think – about one in five co-signers experience a drop in their credit rating, and one in five end up paying debt they don’t own, according to a Bankrate survey. This is why personal finance experts generally caution against co-signing if there are other options available.

Here’s what you need to know before agreeing to co-sign someone else’s credit card – and other alternatives that may work better for both parties.

What is a credit card co-signer?

A credit card co-signer is someone who signs a credit card agreement with another person, usually to help the other person qualify for a card they would not otherwise qualify for. All charges on the credit card become the responsibility of the card account holder and the co-signer. Unlike a joint cardholder, a co-signer does not have access to the account or their funds, only the liability for the debt.

If you co-sign for someone and they don’t pay their bills, you will be contractually obligated to pay that debt. Therefore, co-signing is a decision that should not be taken lightly. It can hurt both your finances and your credit score if it doesn’t go as planned.

“There is also a potential risk to your personal relationships,” says Rod Griffin, senior director of public education and advocacy for the Experian credit bureau. “If you cosign for a friend and that friend doesn’t pay that debt, you’re going to lose confidence in them, you’re going to be angry with them, and you might lose that friendship.” If it is a family member, it can be even worse in some ways.

Before co-signing for someone, discuss their budget, how they intend to use the card, and their plan to pay it off on time and in full each month. “It’s very important to have some kind of written agreement, even if it’s your own child,” suggests Beverly Harzog, credit card expert and consumer credit analyst for US News and World Report. .

Why would someone need a co-signer?

Typically, a person may need a co-signer because they may not qualify for a credit card or loan on their own.

If someone is accumulating credit for the first time, or if they’ve had payment issues in the past, they may need a co-signer to qualify for a new card, Griffin says.

Every time someone uses a credit card, they borrow money and pay it back when the bill is due. Banks and credit card companies want to make sure they get paid off, which is why they will look at a borrower’s credit rating – which shows the likelihood that the borrower will pay off their debts – at the time of payment. decide whether or not to approve a credit card. . Having a co-signer with a good credit rating gives the lender more confidence that the debt will be paid off, Griffin explains. This is why it may be easier for a person with bad credit to qualify for a card if they have a co-signer with good credit.

Someone might need a co-signer if:

However, keep in mind that not all credit card issuers allow co-signers, Harzog says. In fact, most of the major emitters don’t.

Does co-signing have an impact on your credit?

Co-signing can have a positive or negative impact on your credit. “When you co-sign for a card or someone co-signs for you, that credit card account will show up in both your credit history and the other person’s credit history,” says Griffin.

This means that if the account holder carries a month-to-month balance, your debt-to-income ratio will increase along with your credit utilization ratio. This could lead to a drop in your credit score and affect your ability to qualify for new credit. If the account holder misses a payment, it will show up on your credit report and affect your score. And if the account holder accumulates a balance that they cannot afford and defaults altogether, “it’s going to hurt your credit score and your bank account because you’re going to have to pay those debts under it.” ‘a contract, “Griffin said.

On the positive side of things, if the account holder maintains a low balance over the credit limit, it could actually lower your credit usage rate and increase your score. Each on-time payment also has the potential to improve the scores of both people involved.

If you co-sign a card, you must let the cardholder know that you expect them to use the card responsibly and ask them to agree in writing to make payments on time and in full. But financial challenges can disrupt even the best-laid plans. That’s why Harzog offers the following advice: “Don’t co-sign on a credit card unless you can afford to pay off a balance, just in case things don’t go well.” ”

Alternatives to co-signing on a credit card

If you want to help a friend or family member build credit, but don’t want to take the risks associated with becoming a co-signer, here are a few other options to consider:

  • Adding an authorized user: If you have a good credit score and want to help a loved one, adding them as an authorized user to your credit card account is much easier and safer than co-signing their card. “An authorized user benefits from your credit history, but is not responsible for the debt,” says Griffin. If you add an authorized user, you will still have control of the account, and you can even prevent the authorized user from making charges on the account by not giving them access to a credit card. Just keep making payments on time to this card, and it will positively affect your authorized user’s credit score. However, be aware that not all credit card issuers will report authorized user activity, according to Harzog. Make sure your card offers this benefit before continuing.
  • Student cards and secure cards: If someone cannot qualify for a regular credit card, they may have better luck with a student credit card or a secured credit card. Student credit cards are for young people who are building a credit history and generally have more flexible credit standards than traditional cards. Some student credit cards may require proof of enrollment at an educational institution to be eligible. Secured cards require an initial deposit which acts like the card’s line of credit. Since the deposit serves as collateral, reducing the risk of the card issuer, it is generally easier to qualify for traditional cards. These beginner’s credit cards are a great way to get your foot in the door, and making consistent, on-time payments can help someone improve their credit score even further.
  • Manufacturer credit: A credit loan from a local bank or credit union is another way for someone to independently build credit, suggests Harzog. Like a secured credit card, these loans require a deposit. The borrower does not get their down payment until they have fully paid off the loan, but their on-time payments will be reported to the three credit bureaus to help them build or improve their credit rating. Credit cards are generally a more efficient way to accumulate credit, says Harzog. But a home equity loan can be a good alternative or supplement to a credit card.

Final result

Co-signing a credit card for a friend or family member may seem like an easy way to help them build credit, but the risks to your finances and your relationship with that person are significant. Experts recommend against co-signing a credit card with someone – there are almost always better alternatives available.

Pro tip

If you want to help someone build their credit without risking harm to yours, you can add them as an authorized user to your account without giving them access to a credit card. This will allow them to benefit from your credit history but will not be able to make purchases on your account.

If you do decide to co-sign despite the risks, be sure to sit down with that person and write an agreement that outlines how the card can be used and how and when it will be paid for. If possible, apply for the credit card with them as the joint account holder rather than as a co-signer. This way, you will have access to the account and can track their spending. This will allow you to put things right before the debt balance gets out of hand.

“Sometimes saying no, my friend, is the right answer,” Griffin said. If so, you can let the person know that you are not suspicious of them – you are just taking conventional advice on what is a tough decision. Suggest another way to help, such as offering budgeting tips or debt repayment strategies. And suggest a few alternatives for the person to build their credit score independently. Most likely, your loved one will understand – and refusing to co-sign will put less strain on your relationship than a potential financial fiasco with a co-signed credit card down the road.

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How To Improve Your Credit Score Without A Credit History https://plamo.info/how-to-improve-your-credit-score-without-a-credit-history/ Tue, 04 Jan 2022 14:05:22 +0000 https://plamo.info/how-to-improve-your-credit-score-without-a-credit-history/ Credit scores are three-digit numbers that measure your degree of responsibility in managing your money and paying off your debt. These scores are generated by the information in your credit report, so it follows that in order to have a credit score you must first have a credit history. Can you improve your credit score […]]]>

Credit scores are three-digit numbers that measure your degree of responsibility in managing your money and paying off your debt. These scores are generated by the information in your credit report, so it follows that in order to have a credit score you must first have a credit history.

Can you improve your credit score if you have a limited or no credit history? Yes you can, but first it’s important to understand a little bit about how credit scoring works.

  • A credit score is a three-digit number that measures the responsibility with which you manage your money and pay off your debts.
  • Credit scores are calculated using information from your credit report, and different credit score models may apply.
  • Everyone’s credit score starts out differently, although the lowest credit score you can have is 300.
  • Some of the best ways to quickly improve your credit score when you don’t have a credit history include becoming an authorized user, opening secured credit cards, or getting a small loan in your name.

How credit scoring works

Credit scores don’t just magically appear; instead, they are calculated using different credit scoring formulas. The FICO credit score model is the one used by 90% of major lenders in credit decisions. VantageScore is another credit scoring model.

Both models use the information in your credit report to calculate credit scores. A credit report contains details about your financial history, including:

  • Number of credit accounts you have in your name
  • Balances and payment history for these accounts
  • New credit requests
  • Public documents, including judgments, bankruptcies and foreclosure proceedings

If you don’t have a credit history, there may not be a lot of information on your credit report. This, in turn, can make it difficult to calculate a credit score. According to the Consumer Financial Protection Bureau, approximately 45 million Americans are “credit invisible,” which means they don’t have enough credit history to generate a score.

Having no credit history is not the same as having bad credit, which means you have a low credit rating due to past financial mistakes.

Where Does Your Credit Score Begin?

Having no credit history doesn’t necessarily mean your credit score starts at zero. This is because the FICO and VantageScore credit models don’t go that low. Instead, the lowest possible credit score you can have with either model is 300. A score of 850 is the highest score you can get.

If you don’t have a credit history, you probably don’t have a credit score. Once you start building and improving your credit, your score can start to 300 and go up from there. So what affects your credit scores?

The short answer is that it depends on the credit scoring model. As FICO scores are the most widely used by lenders, here is a breakdown of how these scores are calculated:

  • Payment History-Thirty-five percent of your FICO score is based on payment history, on-time payments helping your score, and late payments hurting your score.
  • Use of credit—Thirty percent of your FICO score is based on credit usage, which is the amount of your available credit limit that you are using at any given time.
  • Credit age—Fifteen percent of your FICO score is based on your credit age, which is how long you use credit.
  • Credit mix—Ten percent of your FICO score is based on the types of credit you use, such as revolving lines of credit or installment loans.
  • Credit inquiries—Ten percent of your FICO score is based on how often you apply for new credit, resulting in a rigorous credit check.

You can visit AnnualCreditReport.com to get a free copy of your credit report, which can tell you if there is enough information to generate a credit score.

The fastest ways to accumulate credit

Improving your credit score when you don’t have a credit history can be difficult. Nonetheless, there are ways to create credit from scratch, some of which can generate profits faster than others. If you want to build credit fast, here are some of the best ways to do it.

Become an authorized user

Authorized users have debit privileges on someone else’s credit card, but they are not responsible for the debt. Becoming an authorized user can allow you to build on someone else’s good credit history and start building credit immediately.

The account will appear on your credit report as well as that of the original account holder. As long as they practice good credit habits like paying on time and keeping their card balances low, their positive account history is reflected on your credit report.

Becoming an authorized user is not the same as sharing a common credit card account, for which you would both be equally responsible for the card balance.

Apply for a secure card or credit card

Secured credit cards are designed for people with bad credit or no credit at all. These cards usually require a cash deposit to open, which doubles as a line of credit. As you make purchases, your credit limit is reduced. As you pay your bill each month, you can free up available credit.

If you want to create credit quickly with a secured card, the easiest way to do that is to pay on time. Remember that with FICO credit scoring, the payment history carries the most weight. You might start to see a positive movement in your credit score after just a few months if you pay regularly on time.

Try a store credit card

Most store credit cards offer billing privileges only at the issuing store and its brands or partners and work the same as other credit cards, although they may be easier to approve compared to cards. traditional credit. Some may even offer rewards on purchases.

However, you should be careful with the Annual Percentage Rate (APR) and the credit limit. Since store credit cards may have lower credit requirements for approval, they may charge a higher APR, which means carrying a balance on one of these cards for a month to the other could cost you more money. And a low credit limit means you can max out your card quickly, resulting in a higher credit utilization rate, which can lower your credit score.

Get credit for rent and utility payments

Rent and utility payments don’t automatically factor into your credit score calculations, but there are services that can help you include them, so you can build credit faster. Experian Boost, for example, is a free service that can help you increase your credit score by reporting payments for utilities, phones, and streaming services. According to Experian, the average user saw their FICO 8 credit score increase by 13 points as a result.

Experian Boost also includes free credit score monitoring, which can help you track credit score changes over time.

This service may be worth considering if you don’t have a credit card or loan in your name yet. Just keep in mind that any credit score change associated with Experian Boost would only be reflected in the FICO 8 version of your score. Since there are several versions of FICO that lenders can use to assess credit, if a lender checks something other than FICO 8 when you apply for a loan, you might not see much benefit from having these payments reported. on your credit history.

What is a good credit score?

A good credit score is defined differently, depending on the model you use. A good FICO credit score is between 670 and 739. Anything below this point would be fair or poor credit, while anything above is either very good or exceptional credit.

What is a credit report?

A credit report is a collection of information about your financial history. Creditors pass information to credit bureaus, including when new accounts are opened, what requests you submit for new credit, payment history, and balances. This information is used to produce your credit report and your credit scores.

What’s the fastest way to increase your credit score?

The fastest ways to increase your credit score include paying bills on time, becoming an authorized user, increasing credit limits without increasing your balances, and paying off debt. Keep in mind, however, that it may take several months to see significant improvements in your score.

The bottom line

Improving your credit score when you don’t have a credit history might not be an easy task, but it can be worth the effort. The higher your credit scores, the easier it may be to get approved for new loans or lines of credit. Higher credit scores can also translate into lower interest rates, saving you money when you borrow. Taking steps to open a secure or retail card, as well as becoming an authorized user, are just a few of the ways you can start building credit fast.

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