Archive for the ‘Credit’ Category

You are deeply in love and planning your fairy tale wedding, but have you taken the time to understand how you will manage credit and finances after the wedding bells have rung? It is common knowledge that over 50% of marriages end in divorce; the number one reason for divorce is financial issues and bad credit.

Discuss with your significant other your credit and financial situation before you get married. You will be glad you did. You can avoid surprises by doing the following:

1. Gather your credit reports and check for credit report errors. Are there inaccurate items on your credit reports? There are three main credit bureaus that each generate their own credit report that you will want to check: Equifax, TransUnion, and Experian. If there are credit report errors, work on getting those removed. If you apply for any loan together, you aren’t just marrying your spouse, you are also marrying their credit. If you are planning on buying a house right after you get married, you will be better prepared to plan what you need to do to improve your credit to meet your financial goals as a couple.

2. Discuss money and credit goals. You might discover you have different credit scores with different expectations of what is reasonable. Do you both see a big house in the future? Fancy car or minivan? Discuss what is important for you in your financial future and credit history together; make sure that you set a plan in motion so that you can obtain these goals together.

3. Make a budget and stick to it. If you have bad credit, spending less than you earn is a good way to start improving your credit. Set up automated payments, pay down high credit card balances and do whatever it takes to fix your credit so that you can meet your financial goals.

Although credit may seem like a sensitive topic, you will be glad that you started to fix credit before the wedding, you may be able to meet your financial goals as a happily married couple with an equally bright credit future together

According to a recent ABC News article, some homeowners are discovering that their credit score is being impacted and even lowered due to their signing up for the Obama administration’s “Making Home Affordable” loan modification program. The concern over the decrease in the credit score is that this happens even when the homeowner is paying their mortgage on time vs. delinquent borrowers showing a decrease to their credit score after they have fallen behind on their loans.

Essentially, the request for the loan modification is reported to each of the credit bureaus. The impact is even greater for those who are not approved for the program, as this mark stays on their reports without a resolution. Those that are accepted have a notification sent to the credit bureaus acknowledging their acceptance and the modification. This does not hurt nor does it improve their credit score.

Click here for a free guide to understanding your credit score.

Most people realize their credit score affects their ability to get approved for credit. A lower than average credit score is a warning sign to lenders that you are more likely than most to be late on your payments or default on a loan altogether. Based on this assumption, lenders will either charge you a higher interest rate to account for your high credit risk, or elect to deny you credit outright.

Many of the people trying to clean up credit are looking for a way to improve their credit score for this reason. They are working to get into a new home, purchase a car, or refinance their existing loans, and they realize that by improving their credit score they will increase their chances of accomplishing these tasks and may end up saving thousands of dollars in interest payments.

The benefits of having a good credit score, however, don’t end once you leave the loan officer’s office. Below are 3 more reasons why it is important to keep your credit reports clean.

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The US Treasury Department along with the Ad Council recently launched a new credit education website, located at ControlYourCredit.gov, with the goal of helping young adults learn how to make good financial decisions and use credit responsibly.

The website invites visitors to “solve the great mysteries of credit” by checking them into room 250 of the dark and foreboding Bad Credit Hotel that conjures up images of a ’40s film noir mystery movie. In the process of making phone calls on a classic rotary phone, investigating a transforming Rorschach painting, and using clues found on scraps of paper to unlock a hidden safe, visitors find an interactive tool for calculating the cost of interest, information about their credit history, tips for dealing with debt collectors, and more.

While there is nothing revolutionary about the information contained within the ControlYourCredit.gov site, and the absence of any mention of credit reporting errors is unfortunate, the production value alone is worth a visit and only time will tell if this tactic will be effective in helping educate new credit users.

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