Four Personal Finance Tools You Need and Why

personal financial tools

Most high school educations do not require learning real-world skills like balancing a checkbook, keeping track of earnings, or paying bills on time — all cornerstones of building and maintaining credit.

Luckily, a perk of living in the age of technology is the fact that we have instantaneous access to an assortment of personal finance tools that are critical in managing finances and staying on top of our credit. Here are four of the best tools available today.

1. Online budgeting tools

Spending money you don’t have — and using credit cards to stay afloat — is one of the fastest routes to credit trouble. This is where an online budgeting tool like You Need a Budget comes in. YNAB is a basic tool used to strike the delicate balance between your income and costs of living. It will help you plan for expenses, cut entertainment or lifestyle costs when needed and most of all, stick to your financial goals. YNAB and other online budgeting tools can help keep some of your hard-earned money in your pocket.

2. Financial mobile apps

The iTunes and Android app stores are full of free financial mobile apps to help you stay on top of your money. They are a great way to be accountable while on the go and make personal finance part of your daily routine. For example, Pocket Guard gives users a snapshot of how much they can spend at any given moment. It crunches the numbers and spits out an estimate for how much can be spent in a given day, week or month. Taking a moment to find a financial mobile app that can help you stay on top of your money is well worth the time investment.

3. Bank resources

If you have an account with any reasonably sized bank, chances are there will be a mobile banking app for instant information and access to your money. Some bank apps allow you to take a photo to deposit a check, which certainly beats standing in line for a teller. Most banks also offer online banking, which may give you the ability to review account balances, transfer funds, pay bills and manage investments, loans, credit and more. Depending on your banking institution, many personal finance tools could already be right at your fingertips.

4. Personal finance subscription service

For a more thorough dive into personal finance you might consider a professional subscription service. Lexington Law Firm’s Premier Plus membership is the leading financial solution for credit repair, score coaching, identity theft protection and managing personal finances. The Personal Finance Manager included in the membership is all of the services mentioned above rolled into one — and then some. Features include:

  • Budgeting — A budget can be auto-generated based on previous spending patterns. Your budget is then graphically represented, making for an easy and intuitive guide for spending.
  • Account management — Monitor all your financial accounts from one spot by syncing to the central Accounts tab.
  • Goals and trends — Spending trends are automatically identified as you make purchases. From there you can set goals to improve your finances long term.
  • Credit insight — Review your credit reports and the items that are affecting it. Receive your FICO Score and an analysis on how to improve it.

If it’s time for you start the journey to better personal finance and credit repair, the Lexington Law approach is the most holistic option on the market. Users receive detailed understanding of every factor affecting their wallet and credit in order to improve their finances long term.

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How Will Student Loan Forgiveness Affect Your Credit?

Student loan forgiveness

If you’re struggling to repay your student loans, you might qualify for student loan forgiveness. The Federal Student Loan Forgiveness Program is an option for individuals who meet certain qualifications. Forgiveness may be possible if you are:

  • A full-time teacher
  • A public service or non-profit employee
  • A student or recent student of a school that has closed
  • Totally and permanently disabled

But if you’re trying to repair bad credit, you should be aware of the impact student loan forgiveness could have on your credit. Read on to find out how student loan forgiveness works, and how it could impact your credit score.

How Does Student Loan Forgiveness Work?

If you’re having difficulty repaying a Federal student loan, the Federal government may be willing to forgive some or all of your student loan debt. That means you will not be required to make any more payments on your student loans.

There are four basic types of student loan forgiveness, although there are several other less common types as well. The basic types include:

  • Teacher Loan Forgiveness—For people teaching full-time for five years in a low-income school district.
  • Public Service Loan Forgiveness—For non-profit or government employees who are repaying their Federal student loans based on income.
  • Closed School Discharge—For current students or recent students of a school that has closed. Most applicants were students at ITT or Corinthian College.
  • Total and Permanent Disability Discharge—For those with total and permanent disabilities.

How Does Student Loan Forgiveness Affect My Credit Score?

If your loan is in good standing, loan forgiveness won’t affect your credit at all. But if you’re working to repair bad credit, you should know that student loan forgiveness could negatively impact your credit score. If you fall behind in your payments, it will be reported to the credit bureaus. But when your loan is forgiven, the lender isn’t required to remove the previous negative credit history. So, even though your debt is canceled, your credit score is still impacted.

How Can I Fix My Credit Score if My Loan Is Forgiven?

If you receive forgiveness on a loan that isn’t in good standing, you can submit a credit dispute for anything in your credit report that is inaccurate. Disputing a credit report involves writing a letter to the credit bureaus that explains the error and requests the error be removed.

You can find credit dispute letters online, or talk to one of our credit repair experts to get professional help to repair bad credit and dispute the error.

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Does Your Salary Affect Your Credit Score?

Salary and Credit Score

While your credit score and monthly income are both significant determining factors in whether you can get approved for a loan and repay it, the connection between salary and credit score is not as cut and dried. In short, how much money you make does not affect your actual credit score, but your salary can certainly impact your overall credit health.

First, let’s review how credit scores are determined.

Credit scores are based on past borrowing history–not the income you earn, since credit reports do not include your salary information. Credit score models take into account multiple factors, such as:

  • The ratio of available credit to the balances you owe
  • How long your credit accounts have existed
  • If you’ve made payments on time, or missed any payments
  • The type of credit you have–just credit cards, or a mortgage or car loan, too?
  • How much new credit you’ve applied for recently

Now, let’s talk about income.

Where salary does have an impact on your overall credit health is with your debt-to-income ratio. This ratio is calculated as the total monthly payments you make to cover your bills or debts (such as utilities, groceries, credit cards, car loan, mortgage, etc.) divided by your gross monthly income (the income you earn before taxes). For example, if you owe $600 per month in bills and debt payments, and your gross monthly income is $3,000, your debt-to-income ratio is 20%. A good debt-to-income ratio is considered to be 36% or under (and of course, the lower the better).

So if salary does not affect your credit score, then why does your debt-to-income ratio matter?

  • Lenders use this ratio to help them determine if you should qualify for a loan. The higher your debt-to-income ratio, the more likely it is that you may be overwhelmed by debt and risk defaulting on your loan. Even if your credit score is good, if your debt-to-income ratio is too high, your loan could be denied.
  • A high debt-to-income ratio could result in you having to pay higher interest rates.
  • Higher interest rates, too much debt, and earning too little every month can all have a detrimental effect on your overall credit health, as well as your ability to get approved for–and pay off—a loan.

Is your income affecting your loan approval?

If you are applying for a loan but your credit score is low or you are having trouble paying off your debts every month, you may be wondering how to fix your bad credit or if your debt-to-income ratio is limiting what you can borrow. There are a few things you can do right away to begin to improve your situation:

  • Pay off any debts, so that the payments you make each month will no longer be a factor in your debt-to-income ratio.
  • Consider taking on a second or temporary job to show more income, which will also improve your debt-to-income ratio.
  • Fixing your credit report is the key to uncover and repair any errors or omissions that may negatively affect your credit score.

Lexington Law’s credit repair services can help you review your credit score and repair your credit. You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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What Affects My Credit Score?

What Affects Credit Score

The question of what affects a person’s credit score (the most common being the FICO score) isn’t as straightforward as it may seem. Even those that know their credit score may not understand all of the reasons why it is what it is. There are certainly many factors that go into determining that “magic” number, which impacts our ability to reach our financial and life goals. Some of these factors can dramatically affect your credit score, while others affect it less than you might think. Additionally, some things you may not even realize can have an impact.

Let’s first take a brief look at the basic 5 factors of your credit score:

  1. Payment history – Whether or not you make your payments on time is the largest factor in determining your credit score, accounting for 35 percent of it. Lenders place the most weight on this because they view it as the most accurate measure of risk. That means that the way you manage your monthly payments will have the largest positive or negative impact on your credit score.
  2. Debt and credit utilization – The amount of credit you’re using compared to the total limits on credit accounts makes up 30 percent of your credit score. The lower your credit utilization, the more positively it will impact your score. Ideally, your total credit utilization should not exceed 30 percent.
  3. Length of credit history – How long you’ve had your credit accounts makes up 15 percent of your credit score. If most of your credit is relatively new, it can reflect negatively on your credit score, while accounts older than seven years will boost a credit score as long as they’re in good standing.
  4. Inquiries and new credit – Applying for new credit accounts comprises 10 percent of your credit score as credit bureaus track “soft” and “hard” inquiries. Too many hard inquiries can negatively affect your score. But similar inquiries within a short amount of time are generally less harmful because credit bureaus understand they’re typically a reflection of a particular event, such as shopping for a mortgage refinance or a car loan.
  5. Mix of credit accounts – The types of credit accounts you hold make up the final 10 percent of your score. The more diversified your credit report, the better your credit score will be. Having a number of different accounts with varying terms and uses demonstrates your ability to successfully manage your credit.

Credit Score Help

FICO scores were developed by Fair Isaac & Co. in the 1960s and have become the most widely used credit scoring measure. In fact, 90 percent of the top lenders use the scores in determining creditworthiness. FICO scores can range from 300 to 850. A FICO score range between 720 and 850 is generally considered “excellent,” with good, fair and poor credit ratings going down from there.

Regardless of the scoring parameter used, it’s important to note that all of the factors going into your credit score are as clear cut as the five listed above. Even those with higher scores need credit score help sometimes. While you may already understand the significance of these basic components, there are a number of additional factors that can affect your credit report, and ultimately your credit score. Whether your score is where you want it to be, or you’re looking to repair your credit score, it’s important to understand which factors might be impacting your credit report and overall scores, and which do not.

Here are some lesser-known factors that can impact your credit, both positively and negatively:

Social security numbers – In a perfect world, the social security number that’s issued to you at birth is the one you’ll keep for life. If you are the unfortunate victim of identity theft, however, you may need to be issued a new number. If you are issued a new social security number, it’s important to understand how it will affect your credit score and your ability to borrow. Essentially starting over means an unestablished credit history. Not all of the negatives associated with the past number are automatically erased either, however, which can make a new social security number one of the more challenging scenarios when it comes to credit and credit repair.

New credit reporting standards – The three credit bureaus launched the National Consumer Assistance Plan in March 2015 to make consumers’ credit reports more accurate and to make it easier for them to correct errors on their reports. As part of this initiative, the bureaus changed the way they collect and report civil judgments and tax lien information in July 2017. These changes affect what appears on your credit reports, potentially giving your score a boost.

Evictions – If you rent your home it’s important to understand how an eviction can affect your credit. Evictions can be the result of several factors and, depending on how the issue is resolved, it may not necessarily end up on your credit report. The fact that you received a an eviction notice doesn’t mean it will end up on your credit report. Provided you heed the notice, or pay any deficiency or fine that caused the eviction, you can avoid court and a judgment potentially ending up on your report.

Medical bills – If you’ve dealt with any medical issues and been faced with numerous medical bills, you know how quickly they can mount. Unfortunately, if left unsettled, medical bills can drag your credit score down. In fact, medical bills account for 42 percent of the collection accounts on Americans’ credit reports. The kicker is that once they’ve been charged off to a collection agency, it can be increasingly difficult to erase them from your credit report, even after they’ve been paid.

Behaviors That Impact Your Credit Score

There are many behaviors and decisions that can either positively or negatively impact your credit as well — from your diligence in monitoring your credit accounts, to the methods you use to pay your bills on those accounts.

Monitoring your credit report regularly is one of the most important behaviors impacting your credit score. Research suggests that 80 percent of credit reports contain errors, which, once identified, can be successfully removed. The more frequently you check your credit report, the more likely you will be to identify an error.

If you are attempting to clean up your credit, it’s crucial to keep tabs on your report to make sure things are being reported correctly, and there are no duplicate or erroneous accounts bringing down your score. Working with a reputable credit repair services company is the best way to get faster and more effective action disputing and removing negative items from your credit.

Paying your bills on time is the most important behavior that will drastically affect your credit score. The negative impact of a late or missed payment grows in proportion to the size of the debt and how late it is paid. Establishing some “best practices” in managing your bills can help. By paying your bills on the same date each month, and setting up automatic bill payments on accounts, you can avoid overlooking or missing a payment. Consistent, timely payments will greatly benefit your score.

Thinking back to credit utilization as one of the five factors that comprise your credit score, it’s crucial that you never max out a credit card. Of course, emergencies and situations sometimes occur that require us to use more of our credit than usual. If this happens to you, it is imperative to pay down the balances on your credit cards as soon as possible to get them back to that under-30-percent ratio.

Opening and Closing Accounts

Closing credit accounts is often viewed as a positive by consumers, but doing this can actually have a negative impact on your credit score. When an account is closed, all of the good credit history that may have been established along with it is lost, therefore dragging your score down.

Opening a new account, on the other hand, can benefit your score. You should not open several new accounts at once, however. New accounts are a good way to establish credit, but opening too many in a short period of time can be an indication that you are in need of credit, and you may consequently be viewed as a higher credit risk.

How Do I Fix My Credit?

If you’ve fallen short on some of these behaviors and your credit score has slipped as a result, then you’ve probably begun considering options to begin to fix your credit score. There is a lot of mixed information out there when it comes to credit repair and the best ways to approach it. Complicating matters is the fact that many consumers automatically reject the notion of working with a specialist for fear that credit repair is a scam.

Credit repair has gotten a bad rap in recent years, thanks to disreputable individuals and organizations. Many consumers fear that companies might use their lack of credit repair knowledge against them to scam them out of money with promises of an overnight credit fix. While scammers exist in every industry, it’s important to understand that legitimate, quality credit repair ultimately comes down to the firm you choose to partner with.

Taking a legal approach to credit repair is one of the most effective methods to help you successfully repair your credit score and maintain a good credit score in the future. Working with legal experts is the best way to ensure that the information contained within your credit report is fair and accurate. When you opt to fix credit legally, you will get faster action and better overall results.

Benefits of a Relationship with the Credit Bureaus

When it comes to choosing a credit repair partner, you can also benefit greatly by choosing a firm that has relationships with all three of the credit bureaus. Credit bureaus are private companies that collect information about consumers from banks, creditors, and legal records in order to create a consumer credit report for use by lenders and other financial institutions.

Today, there are three primary credit bureaus: Equifax, Experian, and TransUnion. These bureaus collect information about the approximately 2 million adults who use credit in the United States. The process for doing so, however, is not a perfect one. Factors including human error, identity theft, or the rigid nature of the credit reporting system, often results in the bureaus storing and reporting information that is inaccurate, misleading, or biased.

Much like credit repair, the three credit bureaus often get a bad rap. Consumers think these organizations are out to get them, or that they’re unapproachable when it comes to a credit dispute and removing negative items on a credit report. In reality, the credit bureaus want to provide information that is fair, accurate and complete.

Working with a legal credit repair expert that has direct relationships with these bureaus is the best way to ensure this happens.

If you are seeking credit repair assistance, Lexington Law can help. With our stable of legal experts, we can help you get the quick action you need when it comes to removing unfair and inaccurate items from your credit report. Lexington Law also has established direct relationships with each of the three credit bureaus and understands how to get results during credit bureau disputes and resolution.

When you partner with Lexington Law, you will see how our process for credit repair sets us apart from other credit repair agencies. We will evaluate your specific case and work with you on a tailored plan to quickly and effectively repair your credit and restore your credit score to good standing. Contact us today.

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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Does Getting Married Merge Your Credit Scores?

Marriage and Credit Scores

When a couple decides to tie the knot, there are many immediate positives for both parties. Working as a team can open up new opportunities and make it easier to afford major purchases, like a home or a new car.

As newlyweds contemplate blending their financial resources, however, many immediately discover that a spouse’s credit – or the lack thereof – can be an unforeseen factor in achieving those post-honeymoon dreams.

Despite what some people may believe, getting married neither immediately merges your finances, nor does merge your credit scores.

Some Important Decisions Ahead

Each individual’s credit history is their own and consists of many factors, such as the amount of credit in use, payment history, and the longevity of their credit accounts.

A newly married couple needs to make some important and sometimes difficult decisions about how to handle their financial affairs. This planning is crucial for those who want to maximize one spouse’s more positive credit score and rebuild another spouse’s credit history at the same time. For example, a spouse with a 690 credit score will definitely have more financial pull than a spouse with a lower score.

Some of that tough talk will also involve the notion of being collectively responsible for new debts and open to shared banking resources, which can have a serious impact on each spouse’s credit.

Joint bank accounts or joint credit cards are the most common examples of such shared financial resources. By signing up for shared accounts and being equally responsible for spending and repayment, a married couple must realize that any late payments, missed deadlines, or financial mishaps such as NSF checks can wreak havoc on both spouses’ credit scores.

Some couples choose to provide access but not direct responsibility when it comes to credit cards. One method of providing access is to add a spouse as an authorized user rather than a joint account holder. The good news about this arrangement is that it can help boost the authorized user’s credit score. Unfortunately, any negatives on the part of the financially irresponsible spouse can also be shared.

Whose Credit to Use?

Other major purchases, including a mortgage or a new automobile, are other opportunities for joint signing and joint responsibility. Lenders, however, will still base their final interest rate decision on just one spouse’s credit score – there is no merging or averaging involved.

In some instances, married couples can apply for what are known as “couple loans,” especially if they have decided to try to refinance their student loan debt and pool their resources. Those loans both pool a family’s financial capabilities and use the higher of a couple’s two credit scores as the basis for the rate.

Consider, however, the responsibility involved when either taking on new debt with a spouse or working to erase outstanding debt obligations. In some states, both spouses can be held fully responsible for new but existing debts – creating some tricky issues in case of divorce or the early death of a spouse.

Whatever your decision, remember that the best strategy is open communication. Financial surprises are not a foundation for a great and long-lasting marriage; however, working as a team can be an excellent way to build a long and healthy future.

If you are looking for some help in repairing credit scores, we can help. You can carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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