Rebuilding Credit After Bankruptcy
Time is Your Credit’s Best Friend
Time is the biggest player in rebuilding your credit after filing for bankruptcy. The further in the past the bankruptcy filing is, the less damage it will cause to your credit score.
To “speed up” the rebuilding process, you will need to have a plan, work hard, and probably accept higher interest rates and fees.
So, unless you’re planning to make a major purchase on credit in the coming three to five years, you may want to consider the long route and just wait it out. Continue reading “Rebuilding Credit After Bankruptcy” »
How to Talk to Your Children About Money
Above all other lessons, strive to model healthy money management behaviors in your own finances. Many of us may make a mistake or two along the way regarding our credit, incurring excessive consumer debt, or failing to honor our financial promises. However, the effort of trying will be noticed by your children. Be honest and proactive when discussing money with children. Let them know it’s important to you. Continue reading “How to Talk to Your Children About Money” »
FICO Explained
What in the World Is a FICO?
When it comes to credit scores (also generically referred to as a credit rating), most Americans know that they are important and that they can have a major impact on our financial lives. However, very few know what goes into a credit score or just how influential it can be.
First of all, the term, “credit score” does NOT refer to a SINGLE scoring system. In the US, there are over a thousand credit scoring models in existence, created and used by hundreds of creditors and consumer reporting agencies. However, the most common credit scoring model (used in about 80% of all credit-based decisions) was developed by Fair Isaac Corporation (FICO for short). Continue reading “FICO Explained” »
What’s on a Credit Report?
Seriously, how are we, the average Joe or Jane on the street, supposed to build (or rebuild) our credit when no one ever teaches what’s on our credit to begin with? Well, here’s the answer:
• Contact information (no impact on credit score): It simply includes the names, addresses, employers, and, sometimes, marital statuses under which you have applied for credit in the past.
• Credit/Trade Lines: Details on the various lines of credit the consumer has had in the past 7-10 years, including balances, terms and their history of on-time payments. Continue reading “What’s on a Credit Report?” »
Why Care About Your Credit?
It’s a fair question: “If I’m not planning to make a purchase on credit anytime soon, why should I care about my credit?” While it’s true that the most commonly known use of credit has to do with getting approved for a loan, there are other situations when credit can have a positive or negative impact (direct or indirect) on our lives.
1. Many employers check job applicants’ credit prior to making a hiring decision. This may seem unfair and irrelevant to many, but employers reason that since a person’s credit is indicative of their efforts to repay financial obligations, employers may use that information as an additional insight into the job applicant’s overall qualifications for employment. When the potential employer is in the finance, law enforcement or government sector, credit checks are even more common. Continue reading “Why Care About Your Credit?” »
Protecting Your Identity
“If it sounds too good to be true, it probably is.”
If more consumers made this their mantra when faced with financial decisions, there would be very few successful scams and rip-offs in this world. Unfortunately, that is not the case. Thanks to the Internet and quick and easy banking options, fraud and scams have been increasing exponentially around the globe in recent years. Continue reading “Protecting Your Identity” »
“Leveling” our Expenses
I regularly teach in my Budgeting (“Spending Plan”) classes that our goal should be to turn as many of our Variable and Periodic expenses into Fixed (or “level”) expenses as possible.
A Fixed expense is one that occurs every single month at the same cost. Examples are rent or mortgage, car payments, 401(k) contributions, monthly bus passes and day care center bills.
A Variable expense occurs every month also, but the amount varies. Electricity, heating, gasoline, and groceries are among the most common variable expenses in our household budgets.
A Periodic expense, obviously, occurs less than monthly, irregularly or just once in a life time. Typical of this type of expense are medical-related charges, vacations, car or home repair, taxes, and most insurance premiums. Continue reading ““Leveling” our Expenses” »
Easy Credit, Lasting Pain
Financial Danger Zone
Easy Credit, Lasting Pain
How Payday, Title, Pawn, and Other Expensive Loans Work
When we regularly spend more then we earn, we go deeper and deeper into debt. As consumers, we often look for “quick-fix” solutions to our debt and for ways to continue surviving from paycheck to paycheck. Often, however, what starts out as a seemingly innocent idea quickly deteriorates into severe financial problems. Following are examples of such “quick-fix” solutions: Continue reading “Easy Credit, Lasting Pain” »
Why Should I Care about My Credit?
Credit (an agreement to repay a loan over time) is pervasive in our society. What used to be the exclusive privilege of the wealthy has only in the past half century or so became available to the masses. From buying a home or car to purchasing a burger, shake and fries, credit – whether in the form of a loan and a credit card – has become a familiar sight just about anywhere anything of value exchanges hands.
As credit’s popularity increases, so too do the purposes for which businesses use an individual’s personal credit history as a tool in making business choices. Decision-makers that are influenced to one degree or another by how an individual has used and managed their credit accounts include the following: Continue reading “Why Should I Care about My Credit?” »