CategoryDIY

Late Payments, Credit Scores and Credit Reports

A missed credit card or loan payment can have a seriously detrimental effect on your credit report. The golden rule of using a credit card is to make your payments on time every time, building a respectable payment history, avoiding debt, and keeping your creditor happy.

But what happens when you fall behind with your monthly payments; what happens when you miss a single loan or credit card payment as a result of a mistake, an oversight or a lack of funds? How will your creditor react, how quickly will the credit reporting agencies find out, and what options do you have for getting back on your feet?

How Late Payments Affect Your Credit Score

A late payment can reduce your credit score significantly and remain on your report for 7 years. It won’t impact your score throughout that time and the longer you leave it, the less of an impact it will have. However, the impact could be significant for individuals with good credit and bad credit.

As an example, if you have a credit score of 750 to 800, which is towards the upper end, a late payment could knock up to 710 points from your score. More importantly, it will remain on your payment history for years to come and reduce your chances of getting everything from a student loan to a credit card and mortgage.

How Soon do Late Payments Show on Credit Reports

You won’t be hit with a derogatory mark as soon as you miss a credit card payment. The credit card issuer may charge you a fee, but by law, they are not allowed to market it as a missed payment until it is 30 days due. And this doesn’t just apply to credit card debt, it’s true for loans as well.

Providing you cover the payment within 30-days, you can avoid a missed payment mark appearing on your credit report. But as soon as that period passes, your lender will inform the major credit bureaus and your score will take a hit.

Some lenders wait even longer before reporting, so you may have as long as 60 days to make that payment. Check with your creditor to see when they start reporting missed payments.

What About Partial Payments?

Many lenders treat a partial payment the same as a missed payment, especially where credit cards are concerned. If you’re struggling to meet your payment obligations, contact your creditor in advance, tell them how desperate your situation is and inform them that you can meet part of the payment.

They may offer you some reprieve, they may not, but you won’t know if you don’t ask. However, it’s worth noting that this will only impact your score if you don’t cover the remaining credit card payment before the 30-day period is up.

To avoid confusion, we should also mention that this only applies to the minimum payment. Some credit card users get confused with the difference between a balance and a minimum payment.

Simply put, the balance is what you clear at the end of the month to avoid accumulating debt and paying interest. If you fail to pay that balance on time, your debt will simply roll over to the next month, after which you will be required to meet a minimum payment on your debt. If, however, you miss that minimum payment, then you’re at risk of your credit report taking a hit.

Reporting agencies don’t record the difference between a rolling balance and a debt. If you spend $3,000 on your card every month but pay it off without fail and without delay, you won’t accumulate interest and technically, you won’t have debt. However, at the end of the month, the reporting agencies will show that you owe $3,000 on that card, just as they would show if you had accumulated a balance of $1,000 a month for three months and let it rollover.

How Long Does a Late Payment Stay?

A late payment will remain on your credit report for 7 years. But herein lies another confusion. Just because it reduces your score by 100 points and remains for 7 years doesn’t mean you will suffer a reduction of 100 points for those 7 years. 

It generally stops having a major impact on your score after a couple of years and while it will still have an impact in that 7-year period, it will be infinitesimal by the time you reach the end.

How Many Late Payments Can You Make Before it Reduces Your Score?

One late credit card payment is all it takes to reduce your score, providing that late payment was delayed by at least 30-days. However, that doesn’t mean you can forget about it once the 30-day period has passed and it definitely doesn’t mean that all the possible damage has been done.

It can and will get worse if you continue to avoid that payment. Your credit report will show how late the payment is in 30-day installments. When it reached 180 days, your account will enter default and may be charged-off, which will reduce your score and your chances of acquiring future credit even more.

Your creditor may sell your account to a collection agency. If this happens, the agency will chase you for repayment, seeking to establish a repayment plan or to request a settlement. Accounts are often in this stage when a consumer goes through debt settlement, as creditors and debt collectors are typically more susceptible to accepting reduced settlements because the debt has all but been written off.

How to Remove Late Payments from Your Credit Report

Although rare, it is possible to remove late payments from your credit report. There are also numerous ways you can reverse late payment fees, and we recommend trying these whenever you can as it will save you a few bucks.

Here are a few options to remove late payments and late payment fees:

Use Your Respectable History

The quickest way to get what you want is to ask for it. If you have a clean credit history and have made your payments on time in the past, you can request that the fee/mark be removed. 

Write them a letter requesting forgiveness, explain that it was an oversight or a temporary issue and point to your record as proof that this will likely not happen again. Creditors may seem like heartless corporations, but real humans make their decisions for them and, like all companies, they have to put their customers first.

Request Automatic Payments

Lenders have been known to remove late payment fees if the debtor signs up for automatic payments. It makes their job easier as it prevents issues in the future and ensures they get what they are owed, so it’s something they actively promote.

They may make this offer themselves, but if not, contact them and ask them if there is anything you can do to remove the late payment. They should bring this up; if they don’t, you can. It doesn’t hurt to ask and the worse they can do is say no.

Claim Difficulties

If you claim financial difficulties or hardships and make it clear that a late payment will make those difficulties much worse, the lender may be willing to help. Contrary to what you might think, their goal is not to make life difficult for you and to destroy you financially. 

It’s important to see things from their perspective. If you borrow $15,000 and your balance climbs to $20,000 with interest, their main goal is to get that $15,000 back, after which everything else is profit. If you pay $10,000 and start slipping-up, the risk of default will increase. The worse your financial situation becomes, the higher that risk will be. 

If they eventually sell the account to a debt collector, that remaining $10,000 could earn them just a couple of hundred dollars, which means they will lose a substantial sum of money. They are generally willing to help any way they can if doing so will increase their profits.

How to Avoid Late Payments

A late payment can do some serious damage to your payment history so the best thing to do is to prevent it from occurring in the first place. It’s a no-brainer, but this is a common issue and it’s one that countless consumers have every single year. So, keep your credit card and loan payments stable with these tips.

Set Automatic Payments

Occasionally, consumers forget to pay. Life is hectic, they have a lot of responsibilities to juggle, and it’s easy for them to overlook a single payment. If this happens, it should be caught and fixed before the 30-day period ends and the credit bureaus find out. But even then, fees can accumulate, and problems escalate.

To avoid this, set up automatic payments so your minimum payment is paid in full every month. You can do this for all debt, including student loan payments. Just make sure you have the money in your account to meet this minimum charge, otherwise, you could be paying for debt on one account by accumulating it on another.

Set a Budget

A credit card is designed to encourage you to spend money you don’t have. You’re buying things you can’t afford now in the hope or expectation that you will cover them later, only to realize that you’re struggling so much you can’t even cover the minimum payment.

If you ever find yourself in a situation like this, it’s time to analyze your finances and create a sensible budget. You may feel like you have a good idea of what you’re spending each month and how this compares to your gross income, but the vast majority of consumers seriously underestimate their expenses.

Improve Your Credit by Fixing Your Debt-to-Income Ratio

Calculate your debt to income ratio by comparing your total debt (credit card payments, student loans) to your gross income. The higher this is, the harder you need to work, and the less you need to spend on your credit card. 

Your debt to income ratio should be your central focus when seeking to improve your credit score, because while it’s not considered for loan and credit card applications, it does play a role in mortgage applications and is important for calculating affordability.

Conclusion: It’s Not the End of the World

A late payment can strike a disastrous blow to your credit report, but it’s not the end of the world and you do have a few options at your disposal. Not only do you have up to 30 (and sometimes 60) days to make the payment and prevent a derogatory market, but you can file a claim to have it removed in the event that it does appear.

And if none of that works, a little credit repair can get you back on track. Just keep making those payments every month, talk with your lender when you find yourself in trouble, and remember that nothing is unfixable where credit is concerned.

Late Payments, Credit Scores and Credit Reports is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

The Best Time to Buy a TV, Mattress and More: Here’s Your Guide

Some purchases are tough to plan: car repairs, patches for a leaky roof, a working furnace right before the big snowstorm hits.

But more often than not, you can plan ahead for life’s necessities — and some non-necessities, too.

Before you let an impulse buy drain your bank account, consult our handy calendar of the best time to buy absolutely everything. You might be surprised at the deals each new season brings!

Our Guide to the Best Time to Buy Everything

Be a smart shopper and plan your purchases according to this calendar, which plots the best deals, month by month.

What to Buy in January

Kick off the new year with big savings.

TVs

Retailers know that the newest TVs and other electronics are revealed at the annual Consumer Electronics Show in January. This makes January the best time to buy a TV, thanks to major discounts — as long as you don’t covet the new, fancy models too much.

Calendars

No need to rush to the bookstore in December to get a new wall or desk calendar. Buy one in January to get a discount.

Gym Memberships and Home Fitness Equipment

The pandemic may have kept you out of the gym, and you might still be hesitant to return. But gyms are known to offer big incentives to sign up and get fit in the New Year. Home gym equipment also goes on sale in January, as do scales, according to Consumer Reports. Here’s some guidance on what equipment you need for a good, affordable home gym.

Linens

The yearly tradition of hosting a white sale dates back to the 1870s, when linens were only available in white. But modern white sales include linens and home goods in every color of the rainbow.

Don’t be swayed by sheets with super-high thread counts — you probably don’t know what different thread counts feel like.

Christmas Gear

I know, you have an entire 11 months until you get invited to your next ugly sweater party. But my Goodwill intel reports that January is the best time to find a truly hideous sweater for way cheap. Other Christmas supplies are also on sale in January, including holiday cards and decorations.

What to Buy in February

Fall in love with these deals during February.

Mattresses

Presidents Day is a good time to buy a mattress because it gives you a long weekend to shop with your partner for an item you should both agree on before buying.

That’s why retailers use the holiday to post sales on pricy items many people have put off buying or replacing for a while. Take advantage.

Jewelry

One of the best times to buy jewelry is in February — but only after Valentine’s Day.

Look for deep discounts after retailers remove their rose-colored glasses. It’s not worth paying the “love tax” to celebrate with your sweetheart, anyway.

Also look for discounts on other Valentine’s Day goods, such as cards and chocolate after the holiday itself.

Winter Coats

Winter coats take up a ton of room in your closet and just as much room in stores. Help retailers clear ’em out this month, and you’ll get a big discount.

What to Buy in March

Spring forward by making these smart purchases in March.

A woman carries her luggage down an alleyway in Europe.

Luggage

Don’t wait until a week before your big family vacation to get a new suitcase. March is the best time to buy luggage, as it’s on sale to entice shoppers who are desperate to be done with their snowy, dreary winters and who crave a little spring break.

Just don’t forget where you put it when it’s time to pack.

What to Buy in April

The smart shopper always plans ahead.

Tools

You don’t have to wait until Father’s Day to find excellent prices on tools and home improvement gear.

If you’re eager to start your home DIY projects in the spring, go ahead and shop now.

Sneakers

Everyone’s finally going outside again. Let sporting goods stores make it easier for you to keep up with your New Year’s resolution (remember that?) by discounting those new kicks.

What to Buy in May

Is your refrigerator running? If not, May is a great time to get a new one.

Baby Gear

I understand you’re not going to time your baby’s birth to get the best deal on all their accoutrements.

But if your kiddo needs a new stroller or high chair, May is a good time to shop, according to Consumer Reports — especially if you can grab the Memorial Day deals.

Refrigerators

New refrigerator models debut in the summer. Shop in May to get last year’s model at a better price.

You can’t tell the difference between last year’s refrigerator models and this year’s, right? Didn’t think so.

Also look for deals on other necessities like freezers, oven ranges and air conditioners, according to Consumer Reports.

What to Buy in June

Here come the… deals?

A young girl watches a movie on her iPhone on a plane.

Vacation Tickets

Hopefully 2021 proves to be a better year for travel. Planning a summer vacation? Travel early or late in the summer instead of during peak times. And you’ll pay less for airfare if you can travel midweek.

Outdoor Gear

Now that summer is in full swing, outdoor gear — like tents, backpacks, lanterns and even fitness gear — is marked down.

Cookware and China

June is typically peak wedding season, and stores hope you’ve planned ahead to buy wedding registry gifts.

Now is when those items are discounted, and it’s the perfect time to replace or upgrade what’s in your own cabinets.

What to Buy in July

Don’t sweat these savings.

Furniture

New styles hit stores in February and August, so retailers spend much of July clearing out old stock, especially over Fourth of July weekend — making this the best time to buy furniture.

Dehumidifiers

July means humidity. Pick up an older version of a much-needed dehumidifier in July or August, according to Consumer Reports.

What to Buy in August

The dog days of summer offer some amazing bargains.

Computers (Except Apple Products)

Computer manufacturers typically release their new models in the summer, so back-to-school sales are a great time to buy last season’s model. The specs probably won’t be different enough for you to notice, unless you’re a hardcore gamer or designer.

Apple products, however, typically get announced in the fall, so hold off to get that new MacBook.

Grills

Grilling season doesn’t stop at the stroke of Labor Day. Buy at the tail end of summer to enjoy your grill until almost Thanksgiving (OK, depending on where you live).

What to Buy in September

Back to school? More like back to the checkout lane.

Thanksgiving Flights

Generally, September is the best month to buy Thanksgiving flights.

Swimsuits

Even though your local pool might be closed for the season, you should think about stocking up on swimsuits for next year.

A House

This might not be a frequent purchase, but if you’re in the market for a new home, it can help to hold off past the busy spring and summer buying seasons.

Your costs typically drop a few percentage points at the end of September (after the kids have gone back to school), making this the best time to buy a house.

What to Buy in October

There’s a joke about spooky deals in here, but I won’t make it.

Denim

Jeans typically get discounted in October, after back-to-school sales have ended and families are stocked up on fall attire.

Patio Furniture

Goodbye summer, hello savings.

It’s worth checking out the patio furniture if you don’t mind storing it over the winter. When that first warm spring day hits, you’ll be ready to bask in the sunshine.

Leaf Blowers

October means fall leaves — and they are likely covering your yard. Pick up a leaf blower, and while you’re at it, get ready for the snowy days ahead with a snow blower, according to Consumer Reports.

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What to Buy in November

The days get shorter, but the deals get bigger.

Small Appliances

This time of year is ripe with rock-bottom prices on giftable small appliances.

If you’re looking for a blender, food processor, coffee maker or anything else that’ll proudly take up space on your kitchen counter, it’s worth waiting until Black Friday sales begin in stores and online.

A woman gets her wedding gown fastened in the back.

Wedding Gowns

Bridal shops are slow before the proposal rush during the holiday season, so the few weeks before Thanksgiving is a good time to start trying on gowns.

Ask about sample sales and last year’s styles that may be priced to move.

What to Buy in December

Celebrate the season… by shopping smart, obviously.

Swimming Pools

If your family’s been begging for a backyard pool, December is the best time to have one installed. It might be chilly, but pool pros would rather avoid working on 90-degree days!

Plus, when their workload slows in the winter, many contractors are willing to lower their prices.

Toys

Toy deals stick around after those Black Friday and Cyber Monday sales in November.

Even if you’re done with holiday shopping for your little ones, consider picking up their favorite character and activity toys while they’re still discounted to stash away for birthdays.

Lisa Rowan is a former staff writer and producer at The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

By: Cherise Romero

In reply to Jeanine Skowronski.

The debt was already sold to collections before I could make any kind of payment. Ive been getting calls left and right on it. It went from a few hundred dollars to 2 grande due to all the. Collections ridiculous interests.

Source: credit.com

Credit 101: What Is Revolving Utilization?

Aerial view of a young woman with brown hair contemplating her revolving utilization. She has a pen in her mouth and an open notebook on her desk.

According to Experian, the average credit score in the United States was just over 700 in 2019. That’s considered a good credit score—and if you want a good credit score, you have to consider your revolving utilization. Revolving utilization measures the amount of revolving credit limits that you are currently using, and it accounts for a large portion of your credit score.

Find out more about what revolving utilization is, how to manage it, and how it impacts your credit score below.

What Is Revolving Credit?

To understand revolving utilization, you first have to understand revolving credit. Revolving credit accounts are those that have a “revolving” balance, such as credit cards.

When you are approved for a credit card, you are given a credit limit. If you have a credit card with a limit of $1,000 and you use it to buy $200 worth of goods, you now have a $200 balance and an $800 remaining credit limit.

Now, if you pay that $200, you again have $1,000 of open credit. If you pay $150, you have $950 of open credit. But your credit revolves between balance owed and how much open credit you have available to use. How much you have to pay each month—known as the minimum payment—depends on how much your balance owed is.

Other forms of revolving credit include lines of credit and home equity lines of credit. They work similar to credit cards.

What Isn’t Revolving Credit?

Unlike revolving credit, installment loans involve taking out a lump sum and paying it back in an agreed-upon fashion over a set term of months or years. Typically, you agree to pay a certain amount per month for a certain number of months to cover the amount you borrowed plus any interest.

With an installment loan, the amount of your monthly payment is determined by your loan agreement, not the balance due. Common types of installment loans include vehicle loans, personal loans, student loans, and mortgages.

What Is Revolving Utilization?

Revolving utilization, also known as “credit utilization” or your “debt-to-limit ratio,” relates only to revolving credit and isn’t a factor with installment loans. Utilization refers to how much of your credit balance you’re using at a given time.

Here’s how to determine your individual and overall credit utilization:

  1. Look at your credit reports and identify all of your revolving accounts. Each of these accounts has a credit limit (the most you can spend on that account) and a balance (how much you have spent).
  2. To calculate individual utilization percentage on an account, divide the balance by the credit limit, and multiply that number by 100.
    1. $500/$1,000 = 0.5
    2. 5*100 = 50%
  3. To calculate overall utilization (all revolving accounts), add up all of the credit limits (total credit limit) and all of the balances (total spent) on your revolving accounts. Divide the total balance by total credit limit, and multiply that number by 100.

If you have a credit card with a $1,000 credit limit and a balance of $500, your utilization rate is 50%, for example. For the same card, if you have a balance of $100, your utilization rate is 10%.

When it comes to your credit score, revolving utilization is typically calculated in total. For example:

  • You have one card with a limit of $1,000 and a balance of $500.
  • You have a second card with a limit of $4,000 and a balance of $400.
  • You have a third card with a limit of $3,000 and a balance of $600.
  • Your total credit limit across all three cards is $8,000.
  • Your total utilization across all three cards is $1,500.
  • Your revolving utilization is around 19%.

How Can You Reduce Revolving Utilization?

You can reduce revolving utilization in two ways. First, you can pay down your balances. The less you owe, the less your utilization will be.

Second, you can increase your credit limit. If you apply for a new credit card but don’t use it, you’ll have more open credit, and that can reduce your utilization. You might also be able to ask your credit card company to review your account for a credit increase if you’re an account holder in good standing.

Find the Right Credit Card for You

What Is Revolving Utilization’s Impact on Your Credit Score?

Your revolving utilization rate does impact your credit. It’s the second-largest factor in the calculation of your credit score. Your utilization rate accounts for around 30% of your score. The only factor more important is whether you make your payments on time.

Why is credit utilization so important to your score? Because to lenders, it can say a lot about you as a borrower.

If you’re currently maxed out on all your existing credit, you may be struggling to pay your debts. Or you might not be managing your debts in the most responsible fashion. Either way, lenders might see you as a riskier investment and be less inclined to approve you for loans or other credit.

How Do You Know If You Have a Revolving Utilization Problem?

Sign up for Credit.com’s free Credit Report Card. It provides a snapshot of your credit report and gives you a grade for each of the five areas that make up your score. That includes payment history, credit utilization, age of credit, credit mix, and inquiries. The credit report card makes it easy for you to see what might be negatively affecting your credit score.

You can also sign up for ExtraCredit, an exciting new product from Credit.com. With an ExtraCredit account, you get a look at 28 of your FICO scores from all three credit bureaus—plus exclusive discounts and cashback offers as well as other features—for less than $25 a month.

Sign Up Now

The post Credit 101: What Is Revolving Utilization? appeared first on Credit.com.

Source: credit.com

What Is A Bad Credit Score? (and What You Can Do To Fix It)

Maybe you already know your credit score is lackluster, or maybe you’re dragging your feet to find out because you don’t want to know just how bad it is. Before worrying anymore about that dreaded…

The post What Is a Bad Credit Score? (And What You Can Do to Fix It) appeared first on Crediful.

15 Numbers You Need To Know To Make Smart Financial Decisions

The Wall Street Journal lists 15 important numbers that everyone should know to make better financial decisions. Here they are, broken down by category.

The post 15 Numbers You Need To Know To Make Smart Financial Decisions appeared first on Bible Money Matters and was written by Peter Anderson. Copyright © Bible Money Matters – please visit biblemoneymatters.com for more great content.

Source: biblemoneymatters.com

Spouse Has Bad Credit? How It Affects You.

Spouse Has Bad Credit? How It Affects You

It wasn’t until a few months after my husband and I got married that I decided to check both our credit scores. While my husband’s credit score wasn’t horrible, it certainly didn’t qualify as “excellent.” This got me thinking about how newlyweds’ financial histories can affect both spouses’ finances moving forward, and how critical it is to acknowledge this reality—ideally before getting hitched.

Why It’s Important to Have a Good Credit Score

Manisha Thakor cuts right to the chase in her book On My Own Two Feet: “Your credit score is essentially your financial reputation in numeric form.”

Aiming for an excellent credit score—generally defined as 750 or more—is a worthy goal, owing to the range of ways in which it can save you money. Credit scores are critical when applying for loans—for instance, car loans and mortgages. In addition, many employers consider prospective employees’ credit scores during the hiring process.

A high credit score means you can access lower interest rates when borrowing, because creditors will view you as reliable. The perceived risk that you’ll default on your loan is lower compared to those with poor credit scores. Lower interest rates, especially on large amounts borrowed over significant timeframes, can save you thousands and thousands of dollars!

A poor credit score can indirectly hurt your financial efforts as well; consider the fact that when you’re paying over the odds in debt repayments, you’re committing fewer dollars to saving and retirement planning.

photo credit: LendingMemo via photopin cc

Till Debt Do Us Part

Marriage makes you one combined financial unit.

However, that doesn’t mean your credit scores are merged; your credit history continues to be maintained on an individual basis. One spouse’s poor credit cannot directly damage the individual score of the other spouse.

That being said, if you apply for a loan as a married couple, creditors look at both your credit scores to determine your eligibility and terms. So, if one of you has the credit of an angel whereas the other’s credit history is limited or even littered with missed payments and liens, you may find your application is denied.

But, this is not just about loan applications—poor credit can belie more than just a few bad credit card habits. Other financial follies, like paying taxes late, not focusing on saving, and day-to-day overspending, could be lurking in the closet.

What Do You Do After You’ve Said I Do?

While bad credit isn’t good news, it’s not necessarily a reason not to get married. And, it’s not necessarily the precursor to divorce! It is, however, an alarm signaling that it is time to get clear on your joint financial situation and start communicating. Make sure you do this respectfully and compassionately to minimize blame and financial stress. (If you’re the type of person who’d like to know this information from prospective partners before things get serious, there are now dating sites catering just to you.)

Once you’ve identified that one of you has less-than-optimal credit, it’s time to take action. Here are four top tips for taking immediate action:

1. Check your credit report for mistakes: Errors are, unfortunately, pretty common and can be really detrimental. Check your report at least once per year.

2. Make payments on time: Yes, this is stating the obvious, but it needs to be said! Mary Beth Storjohann of Workable Wealth says, “35% of your credit score is based on how you pay your bills (making this the biggest determining factor for your score)! Are you often late of missing payments? The impact of just one 90-day late payment goes way beyond the three months you took to pay, so set up automatic bill payments.”

3. Lower your debt-to-credit ratio: This is how much debt you have as a proportion of your overall credit limits. 30% of your credit score is based on the amount of money you owe versus the amount of credit available to you. The higher the amount of credit you’re utilizing, the more negative the impact on your score. Keep the debt level as low as possible (30% of your limits, or less).

4. Pay down your debt faster: Make more than the minimum payments wherever possible by utilizing the snowball method or targeting the balance with the highest interest rate to pay down first.

photo credit: natloans via photopin cc

Alongside these tips, it’s super important to remember that improving your credit score won’t happen overnight. The length of time it takes for your score to improve is directly related to reasons for the drop. It can take anywhere from a few months to several years for your credit report to reflect the positive changes you’re making. As Mary Beth notes, “The most important thing is to be proactive in clearing up any issues.” In addition, two of the criteria factored into your score are the length of your overall credit history and the average age of your accounts.

So, don’t be discouraged—be patient and give it time.

And, Finally, Some Tips on What Not to Do!

There are always two sides to every coin so, while you’re following the tips above, make sure that you’re not unwittingly hurting your score and negating your good work.

Be mindful of the following ways that you could be hurting your credit score:

1. Opening too many new accounts: This comes back to the point that the average age of your accounts is a key factor. Opening lots of new accounts reduces that average.

2. Closing too many old accounts: Older accounts indicate that you have managed payments for a long time and increase the average age of your accounts. When you close credit card accounts, this also decreases the amount of credit available to you, which can reflect negatively if you have other accounts that are still carrying high balances (it essentially increases your debt to credit ratio).

3. Signing up for lots of retail incentive programs: Every time you apply for credit, the company issuing the credit will request information about you from the credit bureaus. Too many of these requests can reduce your score.

4. Over-utilizing your credit. Mary Beth advises, “If you’re depending on your credit cards to fund your daily expenses and lifestyle needs, but aren’t able to pay them off in full at the end of each month, something needs to change. Start tracking your spending and get a handle on your expenses.”

In summary, start taking positive steps, be aware of actions that can hurt your credit, and focus on building solid financial foundations for the future.

This post was written by Erika Torres of GoGirl Finance. GoGirl Finance is a fast-growing community of women seeking and providing financial wisdom across money management, lifestyle, family and career. For more finance tips, follow GoGirl Finance on Twitter @GoGirlFinance

The post Spouse Has Bad Credit? How It Affects You. appeared first on MintLife Blog.

Source: mint.intuit.com

Repossession Credit Scores: What You Need to Know

One of the harsh truths of secured loans is that your asset can be repossessed if you fail to make the payments. In the words of the FTC, “your consumer rights may be limited” if you miss your monthly payments, and when that happens, both your financial situation and your bank balance will take a hit.

On this guide, we’ll look at what can happen when you fall behind on your car payments, and how much damage it can do to your credit score.

What is a Car Repossession?

An auto loan is a loan acquired for the sole purpose of purchasing a car. The lender covers the cost of the car, you get the vehicle you want, and in return you pay a fixed monthly sum until the loan balance is repaid.

If you fail to make to make a payment or you’re late, the lender may assume possession of your car and sell it to offset the losses. At the same time, they will report your missed and late payments to the main credit bureaus, and your credit score will take a hit. What’s more, if the sale is not enough to cover the remainder of the debt, you may be asked to pay the residual balance.

The same process applies to a title loan, whereby your car is used as collateral for a loan but isn’t actually the purpose of the loan.

To avoid repossession, you need to make your car payments on time every month. If you are late or make a partial payment, you may incur penalties and it’s possible that your credit score will suffer as well. If you continue to delay payment, the lender will seek to cover their costs as quickly and painlessly as possible.

How a Repossession Can Impact Your Credit Score

Car repossession can impact your credit history and credit score in several ways. Firstly, all missed and late car payments will be reported to the credit bureaus and will remain on your account for up to 7 years. They can also reduce your credit score. 

Secondly, if your car is repossessed on top of late payments, you could lose up to 100 points from your credit score, significantly reducing your chances of being accepted for a credit card, loan or mortgage in the future. 

And that’s not the end of it. If you have had your car for less than a couple of years, there’s a good chance the sale price will be much less than the loan balance. Car repossession doesn’t wipe the slate clean and could still leave you with a sizable issue. If you have a $10,000 balance and the car is sold for $5,000, you will owe $5,000 on the loan and the lender may also hit you with towing charges.

Don’t assume that the car is worth more than the value of the loan and that everything will be okay. The lender isn’t selling it direct; they won’t get the best price. Repossessed vehicles are sold cheaply, often for much less than their value, and in most cases, a balance remains. 

Lenders may be lenient with this balance as it’s not secured, so their options are limited. However, they can also file a judgment or sell it to a collection agency, at which point your problems increase and your credit score drops even further.

How Does a Repo Take Place?

If you have a substantial credit card debt and miss a payment, your creditor will typically take it easy on you. They can’t legally report the missed payment until at least 30-days have passed and most creditors won’t sell the account to a collection agency until it is at least 180-days overdue.

This leads many borrowers into a false sense of security, believing that an auto loan lender will be just as forgiving. But this is simply not true. Some lenders will repo your car just 90-days after your last payment, others will do it after 60 days. They don’t make as many allowances because they don’t need to—they can simply seize your asset, get most of the money back, and then chase the rest as needed.

Most repossessions happen quickly and with little warning. The lender will contact you beforehand and request that you pay what you owe, but the actual repo process doesn’t work quite like what you may have seen on TV. 

They’re not allowed to break down your door or threaten you; they’re not allowed to use force. And, most of the time, they don’t need to. If they see your car, they will load it onto their truck and disappear. They’re so used to this process that they can typically do it in less than 60-seconds.

It doesn’t matter whether you’re at home or at work—you just lost your ride.

What Can You Do Before a Repo Hits Your Credit Score?

Fortunately, there are ways to avoid the repo process and escape the damage. You just need to act quickly and don’t bury your head in the sand, as many borrowers do.

Request a Deferment

An auto loan lender won’t waste as much time as a creditor, simply because they don’t need to. However, they still understand that they won’t get top dollar for the car and are generally happy to make a few allowances if it means you have more chance of meeting your payments.

If you sense that your financial situation is on the decline, contact your lender and request a deferment. This should be done as soon as possible, preferably before you miss a payment.

A deferment buys you a little extra time, allowing you to take the next month or two off and adding these payments onto the end of the term. The FTC recommends that you get any agreement in writing, just in case they renege on their promise.

Refinance

One of the best ways to avoid car repossession, is to refinance your loan and secure more favorable terms. The balance may increase, and you’ll likely find yourself paying more interest over the long-term, but in the short-term, you’ll have smaller monthly payments to contend with and this makes the loan more manageable.

You will need a good credit score for this to work (although there are some bad credit lenders) but it will allow you to tweak the terms in your favor and potentially improve your credit situation.

Sell the Car Yourself

Desperate times call for desperate measures; if you’re on the brink of facing repossession, you should consider selling the car yourself. You’ll likely get more than your lender would and you can use this to clear the balance. 

Before you sell, calculate how much is left and make sure the sale will cover it. If not, you will need to find the additional funds yourself, preferably without acquiring additional debt. Ask friends or family members if they can help you out.

How Long a Repo Can Affect Your Credit Score

The damage caused by a repossession can remain on your credit score for 7 years, causing some financial difficulty. However, the damage will lessen over time and within three or four years it will be negligible at best.

Derogatory marks cease to have an impact on your credit score a long time before it disappears off your credit report, and it’s the same for late payments and repossessions.

Still, that doesn’t mean you should take things lightly. The lender can make life very difficult for you if you don’t meet your payments every month and don’t work with them to find a solution.

What About Voluntary Repossession?

If you’re missing payments because you’ve lost your job or suffered a major change in your financial circumstances, it may be time to consider voluntary repossession, in which case there are no missed payments and you don’t need to worry about repo men knocking on your door or coming to your workplace.

With voluntary repossession, the borrower contacts the lender, informs them they can no longer afford the payments, and arranges a time and a place to return the car. However, while this is a better option, it can do similar damage to the borrower’s credit score as a voluntary repossession, like a traditional repossession, is still a defaulted loan.

Missed payments aside, the only difference concerns how the repossession shows on the borrower’s credit report. Voluntary repossession will look better to a creditor who manually scans the report, but the majority of lenders run automatic checks and won’t notice a difference.

Summary: Act Quickly

If you have student loan, credit card, and other unsecured debt, a repo could reduce your chances of a successful debt payoff and potentially prevent you from getting a mortgage. But it’s not the end of the world. You can get a deferment, refinance or reinstate the loan, and even if the worst does happen, it may only take a year or so to get back on track after you fix your financial woes.

Repossession Credit Scores: What You Need to Know is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

DoorDash vs. UberEats: Which App Is Right For Your Next Side Gig?

For better or worse, apps like DoorDash and Uber Eats have disrupted the food-delivery industry. Since their launch in 2013 and 2014 respectively, restaurants across the country have outsourced delivery services to independent drivers who use the apps to make extra cash.

During the pandemic, these services have seen demand like never before. For customers, the apps make ordering food from just about any restaurant as easy as opening their smartphones. For drivers, it’s almost as easy to land a delivery job hawking food from local eateries.

But before you download your next job, take some time to review the key differences between DoorDash and Uber Eats so that you can make the most of your delivery gig.

DoorDash vs Uber Eats: The Top Food Delivery Apps Duke It Out

The general premise of the two apps is almost identical: Customers place food orders at local restaurants. The apps alert drivers in the area with the order details. The first driver to accept the order picks up the food and drops it off to the customer. Simple enough, right?

Several differences are worth noting, though. Some minor and some major. We took a deep dive into those differences, looking at pay, vehicle and job requirements, available locations, driver reviews and more to help you make an informed decision before you start delivering.

And if it’s too close to call, you can always sign up for both to see which one suits you better.

Round 1: App Reviews

A woman looks at what's offered on Uber Eats.

Because the apps are so popular, they’ve amassed more than 4.1 million driver reviews. Both companies require their drivers to use different apps than customers, a huge perk when trying to get a sense of drivers’ perspective. Worker reviews from Glassdoor are also included.

DoorDash Driver (Dasher) Reviews

Feedback from Dashers is overall mixed, but there’s a clear preference for the iOS version of the app. Trends in negative reviews across all platforms show that many drivers have trouble with glitches and crashes, especially Android users, and that the nature of the work takes a toll on their vehicles. Many negative reviews mention that DoorDash’s strict performance metrics are a hassle.

Workers reviewed DoorDash more than 760,000 times.

App Store (iOS) review: 4.7 out of 5.
Google Play (Android) review: 3.3 out of 5.

Glassdoor review: 3.7 out of 5.

Uber Driver Reviews

More than 3 million drivers reviewed Uber. A caveat worth noting is that Uber has one driver app. That means it’s hard to get the opinions of only Uber Eats drivers because general Uber app reviews are mixed in. Overall, reviews are positive.

Trends in negative delivery reviews on Glassdoor indicate GPS issues and trouble contacting customer service. Several drivers mentioned problems with promotion and surge pay (bonus pay during in-demand times). Negative reviews regarding vehicle wear-and-tear are common.

App Store (iOS) review: 4.6 out of 5.

Google Play (Android) review: 3.8 out of 5.

Glassdoor review: 3.9 out of 5.

Round 2: Job and Vehicle Requirements

A woman drives for Uber.

To become a Dasher or Uber Eats driver, you have to meet a baseline of requirements. Some are vehicle related and some are age and experience related.

DoorDash

To qualify as a Dasher you must be at least 18. Dashers need to have a valid driver’s license. There are no car requirements, but auto insurance is required. In some markets you can make deliveries on scooters, bicycles and motorcycles.

Uber Eats

To make automobile deliveries, the minimum age requirement is based on your local jurisdiction, plus at least one year of driving experience. Vehicles must be no more than 20 years old. Drivers must be properly insured and can use bikes and scooters in certain markets. The age requirements are higher for those who prefer two wheels — 18 for bicycles and 19 for scooters.

Round 3: Sign-Up Process

Becoming a delivery driver for DoorDash and Uber Eats is simpler than landing a part-time job. You can complete the entire process from your smartphone or computer.

DoorDash

You can sign up to become a Dasher on the driver app. You’ll have to consent to a background and motor vehicle check (and pass both). They could take as little as a few days, but err on the side of a week or two.

After passing the checks, you’ll need to select what type of “orientation” you want. The pandemic paused in-person orientations. Depending on your market you may need to request an “activation kit” instead. Receiving your activation kit may take an extra couple of weeks, according to driver reviews.

The activation kit includes a Dasher manual, a hot bag and a credit card, which is used to pay for orders. Once you receive and set up the card through the app, you can start accepting orders.

Uber Eats

For drivers new to Uber, you can sign up on the website or through the driver app. Because of the stricter vehicle requirements, the application requires more detailed information on your ride. A background check is also required, which may take three to five business days to process.

After the background check clears and your application is approved, you’re free to start taking orders. No orientation or additional equipment is needed.

If you’re a current rideshare driver for Uber, it’s easy to start delivering with Uber Eats. You simply opt in to Uber Eats orders through the driver app and start delivering without any additional screening.

Round 4: Pay and Tipping

The two apps handle pay a little differently, both in how you get paid and how you pay for customers’ orders when you pick them up. Neither company offers guaranteed wages (unless you live in California).

DoorDash

As of Fall 2019, the company switched to a payment model where Dashers earn a higher base pay per order in addition to keeping 100% of their tips. Previously, a customer’s tip would subsidize the Dasher’s base pay.

Check out how this food delivery driver may $8,000 in one month.

Dashers report earning between $11 and $15 an hour depending on location, but those earnings aren’t guaranteed. Pay is based on how many orders you accept per hour and how much customers tip you. DoorDash pays weekly through direct deposit, or you can access your earnings early through Fast Pay, for $1.99.

When picking up orders, you may be required to pay for the order using the company red card from your activation kit.

Uber Eats

Depending on your location, you can expect to earn $11 to $14 an hour on average. Again, those wages aren’t guaranteed because your earnings are based on orders and tips. With Uber Eats, you pocket 100% of your customers’ tips. You get paid weekly via direct deposit, or you can pay a fee to access your earnings early through Instant Pay for 50 cents.

You won’t be involved in the payment process for food orders. Partner restaurants are reimbursed directly by Uber.

Round 5: Available Locations

People walk alongside a lake and tall buildings.

This one’s easy. Both services are available in most big cities in all 50 states.

Previously, DoorDash and Uber Eats ran driver support centers in major metro areas of most states. In 2020, many of these centers closed due to the coronavirus. Some still exist, but neither company offers a comprehensive, public list of remaining locations.

Final Round: Additional Perks

Promotional offers are popular with both DoorDash and Uber, but they’re temporary and vary by location. Aside from sign-up bonuses and referral codes, here are a couple perks that are here to stay.

DoorDash

A few perks unique to DoorDash include grocery delivery options, automatic insurance coverage and health care services.

After you’re screened and accepted as a Dasher, you can choose to deliver food in any city where DoorDash operates, meaning there are no hard location requirements. The company also launched grocery delivery services in some Midwest and West Coast areas.

Dashers also get supplemental auto insurance and occupational accident insurance for accidents or injuries that fall outside your current auto insurance. The insurance plan covers up to $1 million in medical costs, a weekly payment of $500 for disabilities and $150,000 to dependents for fatal accidents. Coverage is automatic. There are no deductibles or premiums.

While DoorDash doesn’t offer health insurance, the company does partner with Stride Health, which provides free health care advising and assistance to Dashers who need help finding affordable insurance plans.

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Uber Eats

Uber Eats drivers get a variety of discounts and may be eligible for Uber Pro perks.

All Uber drivers receive discounts for vehicle maintenance and phone service plans. Uber also partners with Stride Health to provide health plans and tax advice. Drivers automatically receive supplemental auto insurance, which covers up to $1 million in damages. There’s a $1,000 deductible before benefits pay out.

Uber Pro perks have recently expanded to all of Uber’s markets across the U.S. Only top-rated drivers receive Pro perks like tuition and gas reimbursement, and the program is designed for Uber drivers primarily, not Uber Eats drivers.

If you drive for both Uber and Uber Eats, your food deliveries may apply to Uber Pro, but Uber-Eats-only drivers aren’t eligible.

Final Decision in DoorDash vs Uber Eats

Ding! Ding! It was an even match-up. Uber Eats and DoorDash were neck and neck throughout. No knockout punches. A good few jabs by DoorDash’s insurance coverage and grocery options and a couple of hooks by Uber’s overall ratings and ability to switch to ridesharing.

The decision goes to our judges. (That’s you.)

There are a lot more delivery options out there. Here’s how the top 10 delivery apps stack up.

Adam Hardy is a staff writer at The Penny Hoarder. He covers the gig economy, remote work and other unique ways to make money. Read his ​latest articles here, or say hi on Twitter @hardyjournalism.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com