Month: June 2017

The Price of Not Managing Your Credit

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Credit reports. Credit scores. Depending on the state of yours, these words may be enough to strike fear in your heart. If your credit score has become less than stellar, taking up the task of repairing your credit can seem scary and overwhelming.

But your credit — particularly bad credit — is something you quite literally cannot afford to ignore. The effects of poor credit are far-reaching and can end up costing you a lot more down the road the longer you avoid repairing it.

You probably know some of the implications of a poor credit rating, particularly if you’ve recently been denied credit. Even if you haven’t been denied credit, you are certainly paying for your lower credit score in the form of higher interest rates on the cards and loans you do have.

And higher interest rates significantly impact what you end up paying for credit in the long run. Even average card interest rates result in consumers paying much more for the credit than they would have paid with cash transactions or zero-percent interest cards that are paid in full each month. Until they crunch the numbers, most consumers don’t really consider how much their bad credit is costing them.

By the Numbers

To calculate what you’ll pay in credit card or loan interest with your current amount of debt, use the following formula:

(Take your credit card or loan APR and divide it by 365 days per year > Multiply that by 30 days per month > Multiply that amount by your balance)

A person with an average daily balance of $3,000 in credit card debt, at an interest rate of 15%, will pay and additional $400 or more per year on that debt. Consider that interest rates on cards for consumers whose credit scores fall in the fair to poor range can be upwards of 20 percent and it’s easy to see how quickly these interest charges can add up.

When it comes to mortgage interest rates, the implications of a one- or two-percent hike in interest can literally be the difference in tens of thousands of dollars over the life of a loan. A recent article from MoneyTalks News paints a sobering picture. The article uses an example based on a $200,000, 30-year mortgage loan for a borrower with a credit score of 760 or higher vs. a borrower with a credit score of less than 640.

With a poor credit score and an interest rate of 5.34 percent, a borrower would pay $201,610 in interest over the life of the mortgage loan. Contrast that with the borrower with a higher credit score, who at an interest rate of 3.751 percent, would pay $133,484 in interest. That’s a difference of more than $68,000, or $5,600 per year in mortgage interest costs, dictated entirely by credit score.

More to the Story

When it comes to low credit scores, there’s more to the story than high interest on loans , however. For example, credit checks have become a standard part of the application process when renting an apartment or house, and applicants with poor credit can expect to pay significantly higher deposits and fees.

It is not uncommon for landlords and rental companies to collect two or three months’ rent upfront, as well as impose higher security deposits from renters with low credit scores. It’s also becoming more common for rental companies to asses what is referred to as a “risk fee.” While these fees vary in amount, they are typically non-refundable.

At an average monthly rental rate of $1,234.43 for a one-bedroom apartment in cities across the U.S., those extra deposits and fees add up fast. When it comes to renting a place to live, your poor credit score could cost you up to $3,000 or more than you’d pay with a good or excellent score.

Why Do Consumers Shy Away from Credit Repair?

Despite the well-documented costs of poor credit, many consumers continue to view repairing their credit as an overwhelming or insurmountable challenge.

But when it comes to credit repair, you don’t have to go it alone. Obtaining the free copy of your credit report to which you’re entitled each year is the first step. By reviewing your credit report you can begin to determine what items are negatively affecting your score as well as determine if your report currently contains any inaccuracies.

The next step is determining whether or not you want to take a DIY approach, or work with a credit professional. Many take the DIY approach based simply on cost.

While it is understandable — particularly in times of financial hardship — that you may not want to incur the costs associated with quality credit repair services, it’s important to understand that effective and efficient credit repair almost always requires professional assistance. Attempting to repair your credit on your own on can turn into a long, arduous, and frustrating process. Working with a professional eliminates those obstacles that cost you time and cause you frustration.

When you recruit the help of a professional you’ll get:

  • An in-depth audit of all of your credit accounts
  • A thorough explanation of different credit bureau scores and which creditors use which scores to evaluate creditworthiness
  • Faster action in correcting any inaccuracies on your credit report
  • Credit education and credit report monitoring services to help you maintain a better credit score for the long term

Working with a legal expert to repair your credit can pay even larger dividends in terms of rewards. Legal expertise can help you understand credit laws and how you can leverage them. It will also provide a higher level of service than many other credit repair agencies, including regular FICO scores and personal financial management tools.

When considering your options and what it may potentially cost you to repair your credit, it’s important to take a hard look at how much a poor credit score is costing you on a monthly — even daily — basis, considering the factors outlined above.

You’ll achieve better, faster results by partnering with a professional that can navigate credit repair and quickly and effectively help you address the factors that are dragging your score down. You’ll also benefit from the additional services and education provided to ensure your credit report and score remain accurate and fair for the long term. Your future self with thank you!

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4 Credit Cards That Can Help You Save on Your Summer Road Trip

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Road trips offer distinct advantages over other means of travel. You can change your itinerary at a moment’s notice, you can take in unexpected sights on the way to your destination and you don’t have to deal with airline security.

But while a road trip might seem like a budget vacation, gas purchases can make your costs skyrocket. With a credit card that rewards gas purchases, you can recoup some of that cost, making your trip more affordable.

The best cards for road trips earn rewards as you fill up at the pump, lessening the burden on your wallet. As a bonus, they may provide other road-centric perks. And because you can’t guarantee your gas station of choice will always be within reach, the best road trip cards we highlight here aren’t tied to specific gas stations.

1. Blue Cash Preferred Card from American Express

Rewards: 6% cash back on up to $6,000 in spending at supermarkets, 3% cash back on gas and select department store purchases and 1% cash back on everything else
Signup Bonus: $150 bonus cash back when you spend $1,000 in the first three months
Annual Fee: $95
Annual Percentage Rate (APR): 0% intro APR for 12 months, then variable 13.74% to 24.74%
Why We Picked It: The 3% cash back rate on gas is solid, there are plenty of other ways to earn cash back rewards and as a bonus, the card provides protection policies to keep you safe on the road.
Benefits: Cardholders have a wide range of ways to earn cash back, with 3% cash back on gas. The $150 signup bonus is a nice perk. The card also includes emergency roadside assistance, additional car rental insurance and a global assistance hotline to help when you need medical, legal or financial assistance.
Drawbacks: Cardholders pay an annual fee of $95.

2. Bank Americard Cash Rewards Credit Card

Rewards: 3% cash back on gas, 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases, on up to $2,500 per quarter
Signup Bonus: $100 bonus cash back when you spend $500 in the first 90 days
Annual Fee: None
APR: 0% intro APR for 12 months, then variable 13.74% to 23.74%
Why We Picked It: Cardholders earn 3% cash back on gas and Bank of America customers get extra cash-back redemption value.
Benefits: There’s a nice mix of ways to earn cash back, with 3% earnings on gas purchases. Bank of America customers get an additional 10% value when they deposit their cash back into a Bank of America account. There’s also a $100 signup bonus, and no annual fee.
Drawbacks: If you aren’t a Bank of America customer, you won’t earn the full cash back potential.

3. PenFed Platinum Rewards Visa Signature Card

Rewards: Five points for every dollar spent on gas purchases, three points for every dollar spent at supermarkets, and one point on all other purchases
Signup Bonus: $100 in statement credits when you spend $1,500 in the first 90 days
Annual Fee: None
APR: Variable 9.49% to 17.99% on purchases, 0% intro APR for 12 months for balance transfers made through June 30, then variable 9.49% to 17.99%
Why We Picked It: As you spend, your card earns points that can be redeemed toward travel purchases. Gas purchases earn five points per dollar.
Benefits: Points can be redeemed for your road trip expenses, including lodging and car rentals, and gas purchases earn the highest number of points. If you can qualify for the lower APR, you’ll get a fantastic interest rate. You’ll also get special savings and discount offers from select retailers.
Drawbacks: The card is only available to PenFed members, who include active duty military, educators, government employees and the families of members. If you can’t qualify for PenFed membership, you can’t get this card.

4. Costco Anywhere Visa Card by Citi

Rewards: 4% cash back on eligible gas (up to $7,000 annually, then 1% thereafter), 3% cash back on restaurants and travel purchases, 2% cash back on Costco purchases and 1% cash back on other purchases
Signup Bonus: None
Annual Fee: None (you will need a paid Costco membership)
APR: 0% intro APR for seven months, then 15.99%
Why We Picked It: The year-round 4% cash back on gas purchases with this card is fantastic, and you can also get 3% back at car rental agencies and the diners or greasy spoons you hit on your road trip.
Benefits: The range of ways to earn cash back make this a well-rounded card. Plus, you get car rental insurance, travel accident insurance and 24/7 emergency assistance.
Drawbacks: You need a paid Costco membership to get this card.

Choosing a Card for Your Road Trip

There’s one of two ways you can use a credit card to make your road trip more affordable. You can select a points rewards card that earns points that can be redeemed for travel purchases, such as lodging and car rentals. Or, you can choose a card that earns you cash back as you spend on gas and other purchases. Either way, you’ll want a card that drives down the cost of your road trip.

If you plan to use your card outside of your road trip, you’ll probably want to pick a card that fits your spending the rest of the year. You can look at the rewards and purchase categories for each card, and choose one that will best reward your overall lifestyle outside of your road trip.

Finally, examine the additional travel benefits. Gas rewards are great, but emergency roadside assistance or additional car rental insurance can provide additional peace of mind while you’re on the road.

What Is Required to Get a Gas Rewards Card?

Cards that reward gas purchases often require good to excellent credit. If your credit doesn’t measure up, you may be better off hunting down a card with lower credit requirements. If you aren’t sure where your credit stands, you can check two of your credit scores for free at

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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How to Turn Credit Repair Into Cash (And Where to Spend It)

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Consumers don’t like hypotheticals. For better or worse, we rely on tangible results to motivate us into making changes. If you’ve been contemplating credit repair, you’re probably wondering, “What’s in it for me?” Read on and you’ll be glad you asked.

The truth is simple and easy to overlook: Credit score points equal cash gained or lost in interest. Let’s look at financing a new car as an example. Suppose you need a $25,000 auto loan. You’ve struggled with late medical bills and a home foreclosure in the past, and your current FICO credit score is 582. According to MyFICO, you can expect these interest rates based on your score:

Image Source: MyFICO

A low credit score means you’ll qualify for a loan with a whopping 15.22% interest rate attached, whereas raising your score to 720 or higher would reduce your rate to 3.597% and save you thousands of dollars over the life of the loan. So, what could you do with an extra $7,596?

Pay Off Debt

Perhaps the best thing about credit repair is the snowball effect; the better your credit score, the more you’ll save in revolving and fixed interest rates and insurance premiums. If you don’t see automatic changes, you can refinance fixed loans and contact your revolving credit lenders to lower your rates. If you live in a state that allows employers to run credit checks on job applicants, good credit could even help you secure a well-paying position. The sum of these benefits is an opportunity to pay off existing balances on your credit cards, medical bills, and other debts that affect your credit utilization ratio, or the amount you owe vs. your total credit limit. Utilization accounts for 30% of your FICO credit score, and the lower your ratio, the better your credit score.

Save for Retirement

The average cost of retirement today is $738,400 according to a 2017 Merrill Lynch survey. While three quarters of $1 million may seem like plenty of savings, it averages out to $24,613 in income per year for 30 years of retirement. Ouch.

Time is a huge benefit in retirement savings. Suppose you put your $7,596 in savings in a retirement account that earns a 7% annual return. Even if you contribute nothing else, your initial investment will grow to $81,099 after 35 years. If you contribute just $100 per month during that time, your savings will increase to $258,595.

It doesn’t take a large investment to produce a worthwhile reward. Saving money with good credit makes your day-to-day life easier, and it could fund your retirement down the road. Consider funneling your savings into long-term investments. You can’t afford to waste time.

Pay for College

Whether it’s for you or your little one, investing in a 529 savings plan will help you finance a college education without the burden of taxes. Like retirement funds, 529 funds are invested in stocks, bonds, and mutual funds to grow your investment—and there are no limits. You’ll also pay no taxes as long as you use your funds for qualified education expenses (more on that here).

Buy a House

Credit and cash go hand-in-hand when it comes to buying a house. Not only do you need excellent credit to secure the best mortgage interest rate, you’ll need a down-payment to qualify for a mortgage.

For instance, suppose you want to buy a house for $135,000. Unless you qualify for an FHA or VA loan, most lenders require a minimum of 10% down—$13,500 in this case—to qualify for a mortgage. Use a few years of credit score-related savings to secure a long-term investment. 

Plan a Vacation

Wouldn’t it be nice to take a vacation without worry? If you’re simply long overdue for a break, transform your FICO credit score improvements into rest and relaxation. Consider using a portion of your savings to plan a getaway based on affordability (with no credit card required). A much-deserved break will motivate you to keep the cash rolling in by maintaining the best credit possible.

If your your credit is affecting your ability to get the things you want, learn how you can start repairing your credit here

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The Best Apps on the Market to Learn About Your Credit

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Smartphones have become an absolutely critical part of our lives, allowing us to keep in touch with our friends and family and stay on top of important information such as our finances, virtually 24 hours a day.

If you’re someone who likes to keep an eye on your credit situation while you’re out shopping, traveling, or conducting business, it’s especially convenient to be able to get an instantaneous glimpse of your credit score or other pertinent credit-related data. Here’s an overview of some of the most popular apps available to allow you to be a mobile master of your credit situation. These can be useful to have on hand while working on the paperwork for a car loan or another major purchase.

Credit Karma

Acclaimed by Apple as one of the 10 best apps of 2016, Credit Karma’s redesigned mobile tool offers much of the versatility of the company’s popular credit monitoring website. Like the online service itself, the app is free to use, though its resources will only provide data from TransUnion credit reports — users of the full website are also able to compare their Equifax reports, one of the other three commercial credit bureaus. Information is updated on a weekly basis, and users are allowed as many inquiries as they wish.

Credit Karma’s app offers the ability to monitor those scores and recent activity reports, and allows users to receive alerts about changes to their report, as well as use a built-in feature to immediately submit any disputes to TransUnion. The Credit Karma app also includes educational tips and tools, as well as “approval odds” to suggest loans or credit cards users might access more easily, based on their scores.

For those interested in taking a more proactive approach to their credit rating, Lexington Law provides a mobile version of its acclaimed credit monitoring and credit repair services, designed to allow clients to monitor the progress of their credit repair case, in real time.

As part of Lexington Law’s monthly package, clients have the ability to instantly access their FICO score and check for any changes, as well as getting immediate feedback on current challenges to incorrect credit data with all three credit bureaus — and see what items have been removed, and when. Lexington Law’s app also provides a comprehensive overview of current credit reports, including recent purchases and any new inquiries from creditors or lenders.

myFICO mobile

While most free-to-use credit monitoring services rely on variants of the major credit bureau’s scores, only’s mobile app can provide instant access to a sophisticated blending of all three plus a user’s genuine FICO scores — including the recently released FICO Score 9. The app is part of’s paid services, which start at $29.95 per month for quarterly updates of up to 28 different FICO scores used by major retailers and lenders.

The app allows the ability to historically track Score 8 data from all three bureaus and monitor credit reports, as well as get updates and even spot identity theft threats.

Learn more about our credit repair company, and carry on the conversation to our social media platforms. Like and follow us on Facebook and Twitter.

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How Income Based Repayment and Student Loans Affect Credit Score of Seniors

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Today’s seniors are the Baby Boomers of yesterday – those born between 1945 and 1964 who were part of the post-World War II baby boom. In 2017, this group of people are between 53 to 72 years old and are either in the midst of their golden years or just approaching them. A staggering statistic affecting this group is soaring student loan debt. According to a report from the Government Accountability Office (GAO), over the last 10 years student loan debt in this age group has gone from $43 billion to $183 billion.

The Baby Boomers were a group who seemed to take out their student loans while in their 30s and 40s to go back to school during their mid-career years – to get a Master’s Degree or to switch careers and get a different degree, for instance. These student loans are now decades old and with the borrower juggling a family, house payment, and car payments, a lot of these student loans are going into default.

So not only is this group defaulting on their student loans, they could be falling behind on other loans which can negatively affect their FICO Score. FICO Score takes two different loan types into consideration when calculating your score – installment and revolving. According to myFICO, student loans are categorized as “installment loans” and credit cards are examples of “revolving loans.” Even though FICO Score weighs installment loan debt less heavily than revolving loan debt, making on-time student loan payments is still very important.

That’s because payment history is the biggest part of your FICO Score – 35 percent to be exact. What does that mean to seniors with student loan debt? Not making on-time payments may cause your credit score to decline and quite possibly force this loan into default. Almost 4 of 10 borrowers over the age of 65 are in default on their student loans – the largest of any age group.

The government’s response in trying to collect student loan debt is to garnish the borrowers Social Security benefits. As cited in the GAO report, 114,000 Americans have had their Social Security benefits reduced via garnishment for failure to pay off their student loan debt. This number is expected to rise as more baby boomers enter retirement with student loan debt. That means these people have less money each month to cover their bills – putting them at risk of late payments or missed payments on current debt. It is a domino effect when talking about how all of this will negatively affect one’s credit score and credit reports.

To address this grievous epidemic, Senator Elizabeth Warren (D-MA) and Senator Claire McCaskill (D-MO) have co-sponsored a bill to end Social Security garnishment for student loans. But until that happens, there is something you can do if you are approaching retirement and you still have outstanding student loans and you don’t want to hurt your 3 bureau credit reports.

Apply for a Federal Income Based Repayment Plan (IBR)

To help seniors get their credit back on track, there are government sponsored repayment plans they can apply for to help them rebuild their payment history and lower their student loan debt.

The Income Based Repayment Plan (IBR) is just one of four types of Income-Driven repayment plans offered by the U.S. Department of Education. To see all the plans, go to this document on the website. Income Based Repayment is a plan based on your income and caps your required monthly payment at an amount found to be affordable based on your income and family size. Generally, for seniors, the family size is either one or two people. Here are a few more details.

  • Your income must be low compared to your federal student loan debt
  • Your monthly payment cannot exceed 10 percent of your discretionary income
  • If you file a joint tax return, payment is based on combined income and loan debt
  • Outstanding balance is forgiven after 20 years of repayment
  • Go here to use the Repayment Estimator to estimate your monthly payment

After you have determined this plan may be the one for you, here are some steps to follow to apply for the Income Based Repayment plan.

  • Fill out the information on the repayment estimator to verify you qualify and how much your payment is likely to be.
  • Contact your lender or loan servicer and tell them you are on Social Security and you want to apply for an Income-Driven repayment plan.
  • If your Social Security payment is currently being garnished, you will need to tell them.
  • Obtain an application for the Income Based Repayment plan from your loan servicer – fill it out and send it in.
  • Review this Q & A document which addresses all the Income-Driven Repayment Plans.

If your Social Security is currently being garnished, it may take 30 to 60 days for the loan servicer to stop them. That is why is it best to file your application for Income Based Repayment before your Social Security is garnished.

In Summary

Staggering student loan debt is not just affecting younger Americans, it is also affecting our senior citizens. And, student loan debt can play a factor in determining your FICO Score. Late payments and loan default can cause the biggest credit score drop. Add to that a Social Security garnishment of up to 15 percent of a senior’s monthly check, and now you have less income to cover your monthly expenses. These garnishments will force those hovering just above the poverty line to fall below it, severely affecting their lifestyle and their credit.

While fixing this problem will require lawmakers to adjust Social Security’s garnishment provisions, that may take some time. In the interim, people who find themselves approaching retirement age, or those already retired, who have outstanding student loan debt, should see if an Income-Based Repayment Plan can help them arrange payments before garnishment begins. This will not only improve their credit score but it will help the person with a fixed income be able to adjust their monthly spending so they don’t fall behind on any other payments that could hurt their credit score.

If you are not where you’d like to be credit-wise, it may be time to consult with a professional and learn how to start repairing your credit here.   You can also ask us questions on our social media platforms like Facebook or leave us a tweet on Twitter.

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