Archive for category: Credit Repair

Given that the majority of Americans are currently in debt, if you’re struggling with improving your credit score, you’re not alone. Student loans are one of the most commonly held types of debt and it can follow you for decades after graduation. The relationship between student loans and credit scores aren’t perfectly interlaced, lapses in payment will drag your score down.

Here are 5 tips for improving your credit score when you’ve got student loans on your back.

1. Stop Taking Out For Life Expenses

Whether you’re still in school or trying to make it through debt after, you need to start putting up some limits on what you’ll take out loans for. Even if we’re just talking about credit card expenses, you need to start paying for more of your everyday life expenses with cash on hand.

If you’re taking out more debt to pay for your day to day living, that cup of coffee or those groceries are going to cost you 20% more than the sticker price. Unless that sounds appealing to you, you need to take a break from taking out loans for things you can afford.

Going further into debt will only make your credit score even harder to up into a healthy place. Your first step is to change the behaviors that will get you further into debt.

If you’re unable to pay for your rent, bills, and living expenses, you need to make adjustments rather than taking out loans. Even small and steady payments can help to improve your credit score while small and steady increases to debt will have a much more damaging effect.

2. Budget

Your budget is your roadmap to getting yourself out of debt. Without a map, all of the resources in the world could be misspent, misallocated, and misdirected away from improving your financial health.

If you’re spending hundreds a month eating out or buying things you don’t need while your debt grows, you’re misdirecting your funds. You need to start by doing a triage of what you have versus what you need.

Track your spending carefully for an entire month. Every coffee, every movie night, every utility, and your monthly expenses should be accounted for. Add everything up for a month and repeat the pattern for two more months if you want to be sure about your figures.

Then track how much you make from week to week. If you have side gigs, add them to your total income until you get a monthly figure. Then subtract your total spending and cross your fingers that you get a positive number.

If you do, then it’s time to start paring back so you can increase how much you’re contributing to paying off debt. If you come up with a negative number or uncomfortably close to it, see where you could be cutting back on expenses.

3. Consolidate Your Debt

Consolidating your debt is the best thing you can do if paying off your debt immediately isn’t an option. If you’ve got a mix of different debts and loans from a variety of lenders and paying a variety of high-interest fees, juggling your payments can be a mess.

Trying to decide whether to pay off the smaller debt with the high-interest rate versus the slightly higher debt with the slightly lower interest rate is a struggle. Calculating which will cost you more, in the long run, doesn’t have to be a headache. You can find a financial services company to consolidate your debt so you can pay one monthly fee and one smaller interest rate.

While debt consolidation is available to most people with debt, not everyone takes advantage of it the way that they could be. When you’re in the soup of juggling repayment, earning income, and avoiding further debt, consolidation can take some of the weight off your shoulders.

4. Repayment Plan

Regardless of whether you took money out from a financial institution or you’re with the federal student loan program, there are lots of payment plans available.

If you’re simply not making enough money to pay your debt right now, you might qualify for a deferment. While you will likely accrue interest during this period, at least you won’t get into trouble for not paying enough on your loans.

You could also apply for an income-based repayment plan. Income-based repayment is catered to your financial situation and doesn’t demand that you pay back more than you can afford. Again, your interest growth might not change, at least you’ll be cutting down on your debt little by little, at a pace that suits your situation.

Every lending institution offers its own repayment plan, aimed at keeping you on track while ensuring the institution gets their money back.

5. Start Paying Off High-Interest Private Loans

Student loan interest rates vary based on the types of loans you get. Loans that go directly to your academic institution usually have lower interest rates than loans that you use for living expenses.

The ones that have the highest interest rates should be paid off first. They will cost you the most, the longer that they’re open. Choose low hanging fruit and take care of those. If you can’t consolidate your loans, pay them off in an order that will get them off your back fastest.

The sooner you pay off your loans, the more you can devote your extra money to saving for retirement and for the things you want the most in life.

The Relationship Between Your Student Loans and Credit Score is Complicated

Many people have student loans and a credit score that appears healthy. So long as you pay your student loans diligently and don’t take out more than you need, you can get access to good credit cards and mortgages. Management of your finances will take some effort but student loans aren’t a death sentence for your credit.

To ensure you stay on the path to repairing your credit, follow our guide for success.

Did you know that money worries are the biggest reason for marriages ending in divorce?

Many financial-savvy people work hard to build up a great credit score.

There are many reasons to ensure that you have a great credit score, from taking out a mortgage to negotiating your interest rates with banks.

Despite the advantages of a great credit score, around 30 percent of people have a poor credit score.

It’s just themselves who are negatively affected by a poor credit rating. Marrying someone with bad credit can harm you financially too. It seems that for some people “love conquers all”. According to a survey, around 20 percent of people would marry someone with a poor credit score.

It’s important to know what you’re getting into by if you marry someone with bad credit. Keep reading to discover more about the implications for putting love before money.

Do Credit Scores Merge Together?

Many newly married couples believe that tying the knot means a brand new credit record is created that brings together both people’s credit score.

In other words, it is assumed that credit ratings average out between the poor and great credit score. Thus forming an okay credit score.

This is absolutely wrong! Your credit scores do not merge together when you marry.

This is because your credit score is always attached to your Social Security number, which doesn’t change when you get married.

Once you’re married, your credit score doesn’t change and remains separate to your partner’s record. In fact, there is absolutely no recognition of marriage as far as your personal credit score is concerned.

When Does Your Partner’s Bad Credit Impact You?

Even though your credit score rating doesn’t merge together, you could still be affected by your partner’s poor credit rating.

In the following cases, you could find that you are negatively impacted because of your partner’s bad credit.

Apply for a Loan

Married couples often choose to apply for a loan together.

This could be a mortgage or another bank loan. Most lenders request the credit score of both partners. Both people are responsible for the loan repayments and therefore your documents will be considered separately, as well as, together.

If one member of the couple has a poor credit score, you could find that your loan application is denied. However, even if it is approved by the lender, you’ll probably have to pay a higher interest rate as a result of the poor credit score.

Apply for Rental Contract

If you can’t afford to buy your own property yet, you might choose to take out a rental contract instead. The property owner will also want to see your documents and credit score.

You could find that your application is also rejected because the property owner does not trust you as reliable tenants.

Add Your Partner to Your Account

Many couples choose to add the individual with the poor credit score to the bank account to the individual with the great credit score. Your account details will be displayed on your partner’s credit record.

But this won’t necessarily impact the existing credit record of your partner. There are several factors that contribute to a poor credit rating. Simply including someone with a great record on your account is unlikely to be enough to alter the poor score.

An alternative approach is to include your partner as a joint account owner. This could also boost your partner’s credit score. However, you could also risk damaging your own credit record by doing this.

Co-Signing Risks

Many individuals with a great credit score choose to co-sign for their partner. If you do this, you are responsible for the payment of any unpaid debts that your partner owes.

It’s important that you’re in a financial position to pay for any of these payments. Otherwise, you could also incur harm to your credit score.

What to do When Marrying Someone With Bad Credit?

It’s not all doom and gloom if you’re marrying someone with bad credit. There are many things you can do to make the most of a bad situation.

Keep Your Finances Separate

It’s important to keep your finances separate from your partner’s until they’ve fixed their credit record and paid any debts.

Most importantly, don’t add your spouse to your accounts or create a joint account yet.

Talk About Money

While it’s not the most romantic topic to talk to your new husband or wife about, it’s really important to make sure you’re both clear about your financial circumstances.

You can create a household budget together to make sure neither of you overspends on your monthly expenses. Always make sure you’re on the same page with any joint financial decisions.

Marrying Someone with a Poor Credit Record

Marrying someone with bad credit can undo all the hard work you’ve put into making sure you have a great credit score.

You could struggle to get a mortgage together to buy a home. You might find that you have higher interest rates when you take out a bank loan.

But it doesn’t have to be this way. It’s important to know what you’re getting into by if you marry someone with bad credit. This way you can talk about your finances with your spouse to come to the best solution for both of you.

Do you want to find out more about credit repair game plans? Check out our blog on how to start the credit score repair process.

Finances are a confusing subject for most people, yet everyone knows what “Chapter 11” means. In 2016 alone, there were a total of 819,159 bankruptcies filed. That means it’s not a rare occurrence.

Of those 819,159 bankruptcies, only 25,046 were by businesses. Therefore, most bankruptcies are being filed by consumers and not businesses.

Considering these numbers, it’s likely that you know someone who’s been affected by bankruptcy. If not, you’ve probably seen the topic broached more than a few times in entertainment or other media.

Once the paperwork is filed, the next question is, “What happens to a credit score after bankruptcy?” Read this guide to find out more.

Types of Bankruptcy

Before you even file bankruptcy, you need to consider what type of bankruptcy best suits your situation. Not all bankruptcies are treated equally, and not all bankruptcies affect your credit equally.

The two main types of consumer bankruptcies are Chapter 7 and Chapter 13.

Chapter 7

A Chapter 7 bankruptcy is the quicker type of bankruptcy. It will only take about a few months after you file to complete it. Of course, that’s only if you qualify.

Many people prefer Chapter 7 bankruptcy for its speed. However, this type of bankruptcy requires the filer to liquidate all assets. The money from liquidation then goes to the creditors. Finally, at the end of the process, all debts are discharged.

For other people, liquidation is not an attractive option. Sometimes, however, it is necessary. Unfortunately, this type of bankruptcy will remain on your account for ten years.

Chapter 13

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy can take years to file. Some people prefer this method, however, because it allows them to retain all their assets.

Instead, the filer will be responsible for settling all their debts with their creditors. Usually, this is done through a payment plan that can last three to five years. At the end of the plan, the remaining debt is discharged.

With this method, the bankruptcy will only remain on your account for seven years if you complete everything properly.

The National Average

There’s no way to really know how bankruptcy will affect your credit score until you file, but looking at national averages can help you get a better picture.

Those with a higher credit score take a harder hit to their credit. On average, someone with an excellent score will drop a couple hundred points. For example, if your score is 780, it may drop to something under 550.

Those with a lower credit score have less to lose. It’s most likely that their credit will drop somewhere between one hundred and two hundred points. If you have a fair credit score, like 680, you may end up with something like 530.

Either way, the bankruptcy filer will end up with a score that is somewhere around or below a 550.

Past Due Accounts

Most people considering bankruptcy already have some bad accounts in their credit file. They may have missed some payments, gone delinquent or default on a loan, or may have even had a foreclosure. If you’re considering filing for bankruptcy, it’s likely because of your past due accounts.

Even if you include these accounts when you file for bankruptcy, they will still appear on your credit report. Once they are discharged, however, they will have zero balance. This means lenders can still see them when you apply for credit.

Despite this, these accounts will no longer be listed as “past due.” This can be very relieving for anyone facing a mountain of debt.

Impacts on Your Score

A collection of derogatory remarks is often more harmful to your credit score than a single episode of bankruptcy.

As previously stated, if you have an excellent credit rating, you will see the largest impact on your credit score. If you have more, you have more to lose. If your credit was already suffering, the impact won’t be as large.

This impact is not uniform. The amount of debt discharged and the ratio of positive to negative accounts on your report will be factored in. Those with more severe debt situations will end up with a lower score than those with less debt.

How Others See Your Score

A huge reason why people resist filing for bankruptcy is fear. They are afraid that life will be just as hard after bankruptcy as it was before.

Thankfully, no one goes through this process alone. Filing for bankruptcy is not uncommon, and creditors know this. That’s why immediately after filing, you’ll find your mailbox flooded with offers.

After filing for bankruptcy, people are ambushed with credit card and car loan offers. Those who file for bankruptcy are often afraid that they’ll never get credit again, but these offers clearly disprove that.

Additionally, it’s not as hard to rent an apartment as it may seem. You may be required to pay a larger deposit, but many landlords are willing to overlook bankruptcy. It’s only attaining a mortgage that becomes a bit more difficult.

Improving Your Score

The best thing about bankruptcy is that it allows people to rebuild their credit score. It’s something you can begin to do as soon as your debts are discharged.

If you make the right decisions, you can get your score back into the 700s in just a few years. Make sure to scrutinize every financial decision you make during this crucial time.

One of the best ways to do this is with a secured credit card. These credit lines are much easier to manage and control. The most important thing is to make timely and consistent payments.

After a few years of good credit behavior, it will be as if the bankruptcy never happened.

Your Credit Score After Bankruptcy

Bankruptcy may seem like a life-ending event, but it doesn’t have to be. As you can see, hundreds of thousands of Americans go through the same predicament every year. Knowing these steps, you know what to expect from your credit score after bankruptcy.

At Credit Repair Answers, we can point you in the right direction to improve your credit after bankruptcy. Just make sure to check out our blog posts here.

Have you been told by the bank that you have a bad credit score?

Your credit score will affect how much money you can take out for car loans, home mortgages, and personal loans.

Credit scores range from 300 to 850, and a score of 700 or above is generally regarded as a good credit score. Many people have credit scores between 500 and 650 and wonder what they can do to improve that number.

If this sounds like you, you’ve come to the right place. In this post, we’ll take you through a few reasons that you might have a low credit score–and how to improve it.

1. Payment History

Are you paying all your bills on time?

Late payments and skipped payments have a negative effect on your credit score. Payment history is significant–it makes up about 35% of your credit score.

If you are trying to repair broken credit, one of the best things that you can do is sign up for automatic bill pay.

Also, review your credit report and see if you can pay off accounts that are in default. Defaults weigh heavily against your credit score and could remain on your record for up to six years.

2. Amount Owed

You might be surprised to learn that the amount of money you owe can count against you on your credit score.

If you have several credit cards that are maxed out, it can seem like you’re having financial problems. You should always keep your debt at about half your overall credit limit. The amount you owe makes up 30% of your entire credit score.

On the other hand, not having any credit history can count against you as well. If you’re just starting out, it’s probably a good idea to use a credit-building card to establish the fact that you can pay on time and in full.

3. Credit History

Lenders want to lend money to customers who have been at their address for at least several years.

If you want to improve your credit, you should register to vote at your home address. It may sound funny, but it shows that you intend to remain at your address for a long time.

Credit history makes up 15% of your credit score and takes into account the average age of your accounts. The longer you maintain accounts like your electric, gas, cable, and phone, the better it looks on your report.

If you have a bad credit score, it might be due to the age of your accounts. Experts report that people with credit scores of 800 or more have accounts that are at least 25 years old.

4. New Credit and Credit Mix

Every time you apply for a credit card, it affects your credit. Even if you do not get approved for that card, the application still counts as a “hard search” on your credit.

If you’re wondering, “Why is my credit score dropping?” it could be that you’ve got too many hard searches on your account.

Instead of applying for a wide variety of credit, try to apply only to credit cards that you know you’re qualified for. New credit applications only make up 10% of your credit score, but lenders want to see that you’re making good use of your existing credit.

Lenders also want to see that you are responsible for several different types of accounts. Keeping a low balance on your credit cards and paying your home mortgage and car loans on time will affect another 10% of your credit score.

5. Mistakes

When you’re checking out your credit report and starting to repair your credit, make sure you check all your accounts for errors.

Identity theft affects more than 15 million people each year. If you notice a misspelled name or incorrect address, it’s important to raise a dispute with the credit reporting agency.

Also, if you have used more than one name in the past decade, it’s important to make sure that your credit report is free of errors.

To improve a bad credit score, make sure that your longstanding accounts are listed on your credit report. It may take a little while to remove any mistakes, but the benefits to your credit report are worth the effort.

How Can I Repair a Bad Credit Score?

The first step toward repairing low credit scores is to thoroughly assess your report. You might want to contact a professional credit repair team in order to get you started.

Pay off any debt that you can, especially on accounts that have defaulted. Often, companies will settle for a lower payment just to have the account cleared from their books.

Make sure that your credit report has the correct address, name, and social security number. Take the time to correct any mistakes that you find.

Don’t apply for too many credit cards or loans all at once, and pay down your existing credit cards. You shouldn’t be using more than about half of your available credit.

If you’re in the market for a home or auto loan, you may want to take it out at a higher interest rate. If you can, pay more than the minimum amount each month and see if you can refinance after a few years.

Should I Contact a Credit Repair Website?

If you’re serious about repairing your credit, finding a good credit repair website is a good step to take.

The average American household owes more than $15,000 in credit card debt. Once you add in car loans and home mortgages, you could be carrying hundreds of thousands of dollars in debt.

The higher your credit score, the better the rate that you’ll get on new loans. If you invest some time into repairing your bad credit score before you go in for a loan, you could save thousands in interest.

Take the time and see how much you can improve your credit in six months. Make sure that you report any inaccuracies and that you’re paying off as many accounts as possible.

We have helped thousands of people with their credit repair. Drop us a line with any questions you have!

With over 1 trillion dollars of debt shared between millions of Americans, student loan debt is among the most common type of borrowed money you’ll find in the country.

This isn’t particularly surprising. After all, many student loans are taken on by people who just turned 18 on the promise of it being positive debt that will pay for itself in the future.

That may end up being true for some. But what if you have difficulty paying back that debt?

Will it affect your credit? Your opportunities?

And what about if you make payments on time? How would that affect your credit?

Our team at Credit Repair Answers has put together this article to educate consumers more on student debt, credit, and student loans credit score implications.

What are Student Loans?

Just to nail some definitions down, let’s quickly go over student loans. Student loans are money students would borrow either from the government or a private lender to attend a higher learning institution.

Student loans can be acquired for any degree type including an Associates, Bachelors, Masters, Doctorate, and Juris Doctorate.

Student loans can also be acquired for trade school certifications for those interested in jobs like an electrician or plumber.

How Does Paying Back a Student Loan Work?

Once approved for a student loan amount through your lending institution, paying back can work in a number of ways depending on the loan type. For example, some loans offered through the government are deferred interest loans.

With these loans, interest doesn’t start being charged to the principal loan value until after you graduate and have to start making payments. These are typically offered to students pursuing their first degree who represent a certain level of financial need.

Another loan type offered by the government as well as private lending institutions are standard loans. These loans begin to charge interest on the borrowed amount the moment the money is lent.

Some will still let you defer payments until after you graduate but that does not stop the interest from accruing. Depending on the amount borrowed and how long you’re in school, the amount of extra money you’ll need to pay as interest compounds on your loan can be immense.

A Little Bit About Credit

Credit is virtual commodity lenders use to judge how likely you are to act responsibly with money in the future. Credit is integral to your getting approved for quality future loan products such as a car loan, mortgage, and more.

Credit may also be a factor in deducing your eligibility for things like a particular apartment.

Typically, credit scores fluctuate based on a variety of factors. The most important two being the duration of your credit history (how long you’ve been actively borrowing money in some way, shape, or form) and your history with paying back your debt in a timely fashion.

Student Loans Credit Score Implications: How Do Student Loans Affect Your Credit?

Student loans are considered installment loans which get treated a little differently by FICA (the organization responsible for coming up with your primary credit score). This is in contrast to the way credit cards get treated, as they’re categorized as revolving debt.

With installment loans, you can carry a high loan amount and not get penalized for borrowing large amounts in the same way you would be if say, you borrowed a massive amount from your credit card.

Will Student Loans Hurt Your Credit?

Student loans are only likely to harm your credit if you’re not making payments on time and in full. FICA says that borrower’s on-time payment history accounts for over 1/3 of their credit score.

That means something as small as a single missed payment can cause big-time problems with your credit.

On a side note, given the amount of money borrowed on your student loan, having one could prevent you from getting other loan products. Some lenders look at your debt to income ratio to determine if they can lend you more. With $50,000 or so in student debt on your books, getting more money might be hard to get approved.

Will Student Loans Help Your Credit?

Carrying loans responsibly can significantly improve your credit. For starters, the longer you have a loan, the longer your credit history. The longer your credit history, the more your credit score goes up.

Also, every payment you make on time for your student loans gives lenders more confidence that you’re responsible with your money. So the more you pay back, the more lenders and your credit score will love you.

How to Repair Your Credit

If your credit has suffered as a result of not being able to handle your student loans, there are ways to bounce back.

For starters, if your monthly payment is too high, contact your lender and see if they will restructure your debt. It’s possible that they can make your monthly payments lower and extend the life of the loan.

Also, know that as you do catch up with payments and start paying on time, your credit will start trending in a positive direction. Credit is a very fluid rating so the second you start proving you can pay back what you borrowed is when you’ll start to notice your credit recovering.

Wrapping Up Student Loans and Credit

Student loans credit score implications can be scary for those who don’t know much about finances. Taking the time to educate yourself by reading articles like this will help you better understand how credit ratings and student loans relate to one another and will set you up for success in your financial future!

If you’re interested in learning more about all things credit, dig deeper into Credit Repair Answers. We offer a slew of free financial advice which works to answer all of the money questions plaguing your life!