Should I Use a Personal Loan to Improve My Credit Score?

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Obtaining a personal loan can be a great way to improve your credit score in certain situations, but it is not always the right choice. Taking on any debt always brings with it a substantial amount of risk, and the decision should never be made lightly.

How a personal loan can improve your credit score

Before you decide whether a personal loan makes sense for you, you need to understand the way it works. A personal loan is a way of consolidating your credit card debt. In general, a personal loan has far lower interest rates than credit cards have, so when you roll your debt into a personal loan and use it to pay off the debt on your cards, you save money. LendingClub reported that its borrowers of personal loans pay 35 percent lower rates on their loans than they were paying on outstanding debts or credit cards. 

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Why You Should Maintain Good Credit During Retirement

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It is a common misconception that those who are retired no longer have to worry about their credit scores. While this may have been the case a long time ago, these days’ seniors are retiring with large amounts of debt. As a result, their credit scores can matter well into their retirement days. Debt, however, is only one of many reasons seniors should continue to maintain good credit after they have retired.

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Best Options for Saving for Retirement

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Saving money for retirement seems like an obvious necessity, but actually planning for retirement and implementing that plan can be difficult. Current expenses can easily seem more important than planning for your financial future 40 years from now. However, saving a little bit now can go a long way in preparing you for financial independence later.

Once you make the decision to save, where do you save? What kind of accounts are best? The answers will vary based on what your goals are, the amount of money you have to save, and what kind of financial options your employer is willing to offer you.

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Medical Debt and Your Credit Score

x_0_0_0_14090067_800Medical debt has always been a huge burden to the American consumer, and for a long time it has been able to substantially weaken your credit score. A 2014 study by the Consumer Financial Protection Bureau found 43 million Americans had medical debt on their credit reports. For 15 million of them, medical debt was their only issue. Unfortunately, it was an issue capable of severely hurting their ability to get a good loan.

After the study, however, CFPB decided it was time for a change. In March 2015, the Chicago Tribune reported a slew of reforms the CFPB decided to implement. One of the most significant changes is how medical debt will be reported to collection agencies and added to a consumer’s credit report. The three major credit bureaus, Equifax, Experian and TransUnion, will now wait 180 days to report debt, which allows time for any insurance payments to go through.

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Why You Can’t Afford to Ignore Your Credit Health

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U.S. consumers need a credit wake-up call. In fact, nearly half of all Americans don’t know their credit scores. Credit health is an essential part of life, so why ignore it? Whether it’s apathy, will or lack of education, the time to pay attention is now. Consider the following factors as you focus on credit health. What you learn could change your future for the better.

  1. Bad credit costs money. It’s easy to ignore credit health until you understand what it costs…literally. The road to bad credit is a bumpy one, often resulting in:
    • Late fees. Overdue bills equal credit damage and dreaded late fees. If you are a repeat offender, these fees can cost you hundreds of dollars a year in unnecessary penalties.
    • Higher interest rates. The factors of credit scoring are broad, but the math boils down to one thing: risk. As your credit score increases, your risk level decreases, allowing lenders to reward you by offering deals and lower interest rates. On the other hand, bad credit means your lenders will raise interest rates to account for the risk of default and non-payment. The consequences of high interest rates can affect how much you pay for rent, mortgages, auto financing, student loans, and any other revolving or installment account. The result is thousands of dollars lost based on risk and sub-par credit.
    • Higher insurance premiums. In addition to rising interest rates, bad credit means you’ll pay more for home, auto, and even life insurance premiums.
    • Lost savings. The common thread in all of these factors is lost savings. Bad credit has the power to drain your bank account and make you vulnerable to unplanned expenses.
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