It’s estimated that about 50 million American adults don’t have a credit score.
That’s right — not good credit, OK credit or poor credit. We’re talking no credit. And that can be a huge problem if you’re unable to pay for something like a car or a home with cash and need to take out a loan to finance it. No credit score means no loan.
There are a few reasons why you might not have any sort of credit history. Perhaps you’ve gotten into the habit of paying for everything with cash? Or maybe you’ve established lines of credit, but haven’t used them within the past two years? If you’re new to America, it’s possible that you haven’t established it yet. Whatever the reason, we’d strongly suggest you start establishing some credit roots immediately, as that three-digit number holds so much weight when it comes to your financial future. This post will take a closer look at what to do if you don’t currently have a credit score. Here’s a look:
Don’t Have a Credit Score? Do This!
No credit score? Here are some considerations for how to establish credit:
Get a secured credit card: Think of these as credit cards for beginners. They work just like a credit card does, except you need to have a cash deposit to back up any usage. Usually, this cash deposit you put forward is the same amount as your credit limit. Secured cards work just as how regular credit cards do for the most part. You can charge purchases and you’ll have a payment date to abide by. Any balance not paid in full is subject to interest. After you’ve dipped your feet in the water with a secured card, it’s usually pretty easy to take the next step to an unsecured one.
Get a retail credit card: Yes, you can get some nice perks based on the store that offers it, but the real incentive is that these are usually easier cards to get approved for — even if your credit is lacking.
Find a co-signer: If you don’t want to go the secured card route, consider asking a friend or family member if they’ll co-sign with you on a credit card.
Ask to be an authorized user on a family member’s card: Don’t want to go the co-signer route? See if someone will add you as a user on their existing credit card. This can be a great way to build credit based on that card’s total usage, whether it’s you doing the spending or not.
Can your rent payments help you? Many landlords use rent-reporting services, which can help their tenants build credit, especially when it comes to making on-time payments. Not every scoring formula will take this into consideration, but many do.
How To Travel and Not “Go Broke”
Whether you’re a snowbird escaping the cold for warmer pastures, someone who always uses their annual vacation time right away or you just regularly travel this time of year as a pick-me-up following Christmas and New Year’s, getting away at any time – let alone during the winter – is always something to look forward to. That said, nothing can quite dampen your travel experiences like coming home with bad credit or no money.
So how can you travel and not go broke? Here’s a look:
Plan properly: The first step to traveling in a fiscally responsible manner is budgeting appropriately. Do your research on flights, lodging, meals, entertainment, etc. to come up with an accurate ballpark number of what you’ll need, then save until you meet this magic number so you’re not just charging everything and paying it off later.
Look for ways to save: If you won’t be able to hit your target budget or if you want to reduce your target budget, consider cashing in airline miles to help with flight costs or hotel rewards points for lodging. You may even be able to turn any earned credit card rewards points into something related to your trip. Some memberships, like AAA, can even get you discounts at certain places. If you don’t have a rewards account set up with certain vendors, start now. You can bank the points for future trips.
Consider cash: If you’ve saved enough to meet your projected budget, consider pulling the money in cash and paying for some of – if not all – of your expenses that way. This is beneficial for a few reasons. One, you likely won’t spend more than what you budgeted for. And two, paying in cash also helps prevent credit card fraud. Domestic and tourist hotspots abroad alike tend to be areas where identity theft is common.
Know the customs: This is especially true if you’re traveling abroad, as the country and city that you’re venturing to may have different customs on tipping. While it’s common in the U.S. to tip drivers and most service industry workers, this isn’t always the case abroad. You might think that a tip here or there wouldn’t add up, but if you spend $100 on dinner every night of a 10-day trip and think that 20 percent gratuity is the norm somewhere where it’s not, you’re throwing away a few hundred dollars that you don’t need to spend.
Look for low price alternatives: Conventional lodging and transportation methods might not be the best for your budget. That said, look into Airbnb for lodging to see if you can get a cheaper rate, take an Uber or Lyft instead of a taxi cabs, or consider public transportation for getting around town. The savings can significantly add up.
How to Survive a Financial Hardship and Not Ruin Your Credit
While we all hope we’ll never be in a situation where it’s difficult to pay the bills, things happen. You might be furloughed due to circumstances beyond your control, like the hundreds of thousands of people out of work right now with the partial government shutdown. Or perhaps you or your spouse were laid off, let go or forced to take a sizable pay cut. Maybe an unforeseen expense is making things difficult. Even if your financial hardship is temporary, that doesn’t mean it’s easy. Things can become especially dicey if you rely on your credit card to make ends meet on your bills, a strategy that can greatly raise your debt and lower your credit score.
The good news is there are certain tips and tactics you can follow if you’ve fallen on tough times to help you navigate your way through things without killing your credit score. Here’s a look at how to do it:
How to Keep Your Credit Score in Tough Times
Look into hardship plans with your credit card company: The credit card companies typically don’t publicize this benefit, so there’s a good chance that it’ll be up to you to initiate it. However, many companies do offer hardship plans to help people better manage their debt. Essentially, hardship plans are repayment plans specifically catered toward a particular consumer’s financial situation – and enrolling in such a plan has no direct impact on your credit. Be honest with your creditor about why you need to enroll in such a plan.
Stick to the necessities: You likely need to stay up on your car payments, mortgage payments, utilities and perhaps your phone bill. But your cable bill? Your Netflix, Hulu, Amazon Video and other streaming services? Eating out? Your daily morning Starbucks? Those are all things you can likely live without. Don’t be afraid to cancel or put a hold on these luxuries until you can get back on your feet. You’ll thank yourself in the long run.
Pick up a part-time job: If you’re out of work and your unemployment benefits aren’t cutting it, don’t be too prideful to get a part-time job to help you get through the tough times. Even just bringing in a few hundred dollars more per week can help you knock out some of the essential bills you’re on the hook for. Plus, you can always leave the part-time gig as soon as you secure full-time work in your desired field once again.
Minimally, always make on-time payments: Even if you can only pay the minimum payment on your credit card, make sure you do it. Credit scores are largely weighed on whether or not you make on-time payments. Skipping even once can cause your score to dip – and you don’t want to get docked for something so seemingly simple to avoid.
Most of all, if you’ve fallen on hard financial times – don’t panic. Come up with a strategy of how you’re going to address your situation, then act. It’s possible to do without sacrificing your credit score.
How to Maintain Your Credit in the New Year
What’s your New Year’s resolution?
To go to the gym more? To eat healthier? To be more patient?
The aforementioned are all great ideas, but we’d like to propose one additional resolution that’s worth considering: repairing and maintaining your credit score. That’s right, while many focus their New Year’s resolutions on their bodily health, we’d propose you put some focus on your financial health. And there’s arguably no more important number to your financial future than that little three-digit credit score. If your credit is less than stellar, make sure that you take the necessary steps to repair it. And if your credit is in good or excellent condition, then just as important is making sure that you stay in this range. Here’s a look at some tips and tricks for maintaining your credit score:
Tips for Maintaining Your Credit Score in 2019
Maintaining and/or repairing your credit score is all about knowing where your money is going. Between bill auto-pay and the convenience of just swiping a credit card when you need items, it can be very easy to lose track of where your money is going. And too free of spending can quickly undo any credit repair you made and cause those credit card bills to escalate.
That’s why one great tip is to track all of your expenses for a month to get a better idea of where your money is going and what you’re spending it on. This will allow you to analyze said expenses, eliminate ones that are unnecessary (or not in the budget any longer), and move on from there. Simply knowing where your money is going can help you prevent overspending and allocate additional funds that could go to repay certain debt.
Here’s a look at some other credit maintenance tips:
Consider a money management tool: If you want to keep a closer eye on your spending – and thereby your financial health – it’s never a bad idea to consider a money management tool. If you’re self-disciplined, a great one is Mint, which can be downloaded as an app. However, you may also choose to check with your bank to see what – if any – tools it offers.
Shop credit cards: Think your interest rate is too high on your current credit card? Don’t be afraid to shop around and see if someone is willing to give you a lower one. You could also circle back with your current credit card company and ask for a better rate. Studies show that most people who do are successful.
Budget for occasional expenses: The water bill that’s due quarterly. Your taxes twice a year. Some occasional expenses have a tendency to sneak up on you, potentially leaving you scrambling for a way to pay them. That’s why we suggest opening an additional account and allocating a certain amount of money per month toward any of these occasional expenses. You’ll be glad you did when you can pay these bills without having to get creative.
Experian offering potentially higher credit scores in exchange for access to people’s bank accounts.
Your Credit Minute Show Notes:
00:01 What’s up everyone. Nik Tsoukales here with Key Credit Repair. I’ve got some quick credit news for you, hot off the press from Housing Wire uh, yesterday morning. Um, we have Experian offering potentially high credit scores in exchange to access to people’s bank accounts, and a lot of people are wondering what this is all about. And a lot of people are wondering about some other news, that kind of coincides with this about having cell phone usage, or how you’re paying your cell phone, uh, affect your credit in a positive way.
00:28 So, in the past, what has always happened was if you’ve made your uh, utility payments on time, um, including your cell phone payments, it didn’t report to the credit agencies. But, if you wanted to default, it quickly reported as a collection. It’s probably the number one thing that we work on here at Key Credit Repair. But, you never got the positives from it, only the negatives if things fell apart. Well, Experian today, or yesterday, uh, announced that it’s releasing a new program called Experian Boost. Kind of an interesting little uh, little program. How beneficial it’s going to be, um, kind of up for debate, because it’s only Experian’s program. Obviously, we want to see all three credit agencies, and all three credit scores looking good. Experian, Trinity and then Equifax. But even so, this is a step in the right direction.
01:12 So essentially, what’s going to happen is you’re going to be providing Experian, and obviously this is an opt-in, you’re going to be providing Experian with your bank account information. Experian will then use some fancy software to log into your bank account and essentially analyze your transactions and look at things like utility payments, okay? They will then report those on-time payments to your utility companies, as well as your cell phone company, um, to uh, the Experian credit report. That will then get taken into account under their new FICO eight algorithm, and will potentially increase your credit scores.
01:45 Now, let’s say you’re not making a cell phone payment, or let’s say you stopped. You get a late. That’s one of the questions we’ve been asked today about this, and the answer to that is right now, probably not. What they’re telling us is if you stopped making a payment, maybe a payment’s not due, um, what’ll happen is if you stop making those payments, 90 days later the Experian Boost program simply will not take that account, uh, will not take that account into account. So, it will no longer report to uh, the Experian credit report, so keep that in mind. So, you shouldn’t be negatively affected. Obviously, if you miss payments for 90 days, it will then go into collections anyway, so you’ll get the negative ramifications of that then.
02:26 Um, some quick stuff. This is uh, for utility bills. Um, cell phones. Again, uh, if you stop paying, it will discontinue in 90 days. This is being used for FICO eight. Keep in mind, banks and lenders, for the purpose of mortgage lending, they’re not using FICO eight. They’re using FICO four. They’re using some prehistoric versions of the FICO algorithm. FICO eight is not the score of choice for home lending. And I say this, and I, and I warn everyone, because this is the credit score that our typical client is using to finance a home. Um, most of our clients are trying to buy a home eventually. They’re trying to become uh, homeowners from lenders, so it’s very important.
03:06 Um, also something to keep in the back of your mind is the fact that you are linking up your bank account information to Experian. Not to say that al-, already have everything on us, uh, they already have a lot of our data, but you’re also linking up your bank account information. So, they’ll have the ability to see uh, your spending habits, and where your money’s going, so that’s something to think about as well. Do we want to share that aspect of our finances with one of the credit agencies? We all know the credit agencies do resell data, okay? They’re big marketing company as well, so that’s another thing to keep in mind. Uh, guys, this is Nick Tsoukales with Credit News Daily. I’m going to include a link here for the text, or transcript of this blog. Feel free to read through it, and feel free to email us at firstname.lastname@example.org. If you have any questions on how this could adversely affect you, or even benefit you in the future. Thanks and have a great day.
What’s the best way to manage your credit card spending?
Your Credit Minute Show Notes:
00:00 Hey guys, credit question of the day coming from [Shanta Clark 00:00:03]. Thank you so much for sending us this message, um, and for giving us this post. So- so Shanta asked, “What’s the best way to manage your credit card spend?” Guys, the best way to manage it is to not use them. Call me old school. I’ve met a lot of rich people in the last 10 years and the general consensus is cash is king. Spend all the money in your pocket. Budget all you want, but if you can’t budget, don’t worry about it.
00:28 Save some money every week out of your paycheck. Um, and then if you wanna burn through everything else, burn through. Have fun spending it. Have a ball, okay? Let’s stay away from credit card debt. There shouldn’t be credit card spending. There shouldn’t be, uh, any credit card spending management. That shouldn’t be a tool. It shouldn’t be in system … It shouldn’t be a system. If you’re caught up in the points game, you’re dead in the water already guys.
00:52 So again, my suggestion … Um, Shanta Clark, again, thanks for your question, but my suggestion is stay away from the whole darn thing. It’s the number one wealth buster in the United States.
How much money should you save in case of an emergency?
Your Credit Minute Show Notes:
00:00 All right guys. Credit question of the day. And we’ll actually make this a finance question of the day, is coming from [Sherry Lynn White 00:00:06]. Sherry Lynn thank you so much for posting your question on our Facebook page and the question is: How much money should you save in case of an emergency? Well, let’s think about this. In 2008, I would have said a year’s worth. Why? Because when people lost jobs in 2008, it took a lot longer to get a job. Now, the economy is a little stronger, if you’re going to apply for another job, it might be a shorter time frame. So, I would say the minimum should be six months. Okay. You want to look at all of your monthly expenses, you should be able to jot this down on a small piece of paper, even a napkin. Jot down those expenses, times six, that’s what you want to have in the bank. Now, if you’re getting out of debt, I would suggest actually putting that to the side. Okay. The debt’s probably costing you 20 plus percent, get a $1,000 in the bank, just in case of an emergency, something breaks down, you got a car issue, you need to rent a car, something happens. Okay. And attack the debt, don’t worry about your reserve.
01:03 SO the order is, put a thousand bucks in the bank, pay off the debt, and then move to get six months reserves. And once you’re done with the six months reserves, then you want to start investing in putting money into retirement. Thanks, guys. Have a great day.
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What is rapid re-score and how does it work?
Your Credit Minute Show Notes:
00:00 What’s up, YouTubers? Today we are going to talk about rapid rescores, the fastest, fastest way to increase your credit score. And we get a million questions a minute about this. Rapid rescores. “Hey, can you do a rapid rescore for me, Nik?” “I need a rapid rescore.” “Just rapid rescore that thing.”
00:18 What’s a rapid rescore? Does anyone even know really what this means? Well, we’re going to talk about it today here at Your Credit Minute. Let’s talk about rapid rescores, how this can help you close on your mortgage much quicker with a lower rate, how much it costs, how long does it take, let’s detail everything.
00:34 So, guys, rapid rescore is typical a product that’s only provided by your mortgage company. Okay? You go in for a mortgage and they pull up your credit report and your score is 680, and they’re not giving you the best rate possible. And you’re wondering why. You’ve looked at your credit, you’ve never had a late, you don’t have any derogatory information, but your credit score is still no more than average, and you’re wondering, “What can I do?” Well, the first thing you’re going to do is you’re going to call me, right? And I’m going to tell you, “Guys, you don’t need credit repair.” Okay? But you’re still wondering, “What do I do? How do I get my credit score up?” And typically, what I’m going to tell you is you got to pay down your credit card balances, right? We’ve talked about this in all of our previous videos where your credit card utilization rate is about 30% of what makes up your credit score. So, here are your credit limits, here are your credit balances. A little too close. The ratio or that credit card utilization rate is far higher than it needs to be.
01:28 So, what will Nik tell you? Pay down those credit cards, right? Bring down that utilization rate. Bring down that ratio, uh, as low as you can, okay? Really, what you want to do is you want to have your credit card balances or any sort of lines of credit below the 10% credit limit mark before you apply for any sort of a mortgage, or a card lending product, anything that’s major where you’re going to get a longer term interest rate and you’re going to end up overpaying for many, many years if your credit score isn’t exactly where it needs to be.
01:58 Now, here’s the problem, okay? You’ve paid down your credit card, um, it’s down to zero, you did it the day I asked you to do it. You go back to your lender and you say, “Hey, Mr. Banker Guy, time to close on my mortgage. I- I- I paid off all my credit cards. That 680 should be a 780 now. It should be a- a- a- a million eighty. Um, you know, let’s- let’s do a rerun my credit.” Your loan officer reruns the credit. Lo and behold, your credit score is exactly the same. Why?
02:29 Because typically the items … the activities that’s happening on your credit report today, it’s really not going to show up for at least, at least another 30, 60, sometimes 90 days. It really depends on when that creditor, that credit card company’s taking all that data and batching it out to the credit agencies. And we don’t know when that’s going to happen. That’s really up to them, okay?
02:52 So, what do we do? We found the house of our dreams, but we can’t buy it ’cause we’re going to get stuck with this lousy interest rate, okay, um, because of a credit score that really isn’t reflecting where my current position is with my credit cards, okay?
03:05 Um, and this is where rapid rescore comes in, okay? Also, some lenders are going to call it a CBU, okay? And that’s going to stand for Credit bureau update. It’s really all the same. And this is just some fancy marketing.
03:21 So, what you’re going to do is you’re going to take copies, okay, of your statements online, you’re going to print everything out, showing that you paid off that debt, that it’s now a zero balance, okay? And you’re going to submit it to your loan officer. As long as your loan officer offers that product, okay, some loan officers don’t, some banks don’t, um, your loan officer is going to go back to his credit vendor, which could be like a LandSafe, it could be a Birchwood, these are the companies that actually pull the credit report for, uh, the purpose of lending for them, okay?
03:50 Now, that company then is typically going to have a team on staff that will call your banker lender, okay, will call your credit card company, and will verify over the phone that that balance is, in fact, now a zero balance, okay? And they have been given the right by Experian, Equifax, and TransUnion, the three major credit bureaus, to go in and actually update that balance right then and there to reflect a zero. And they’ll tell the lender, “Hey, re-pull a credit report. Balance is now showing zero.” Lender re-pulls the credit report and, voila, you have your rapid rescore. That score has shot up to, you know, from that 680 to that 780 or 750 or whatever that number is going to be ’cause you’ve paid off all your credit card balances, okay?
04:34 This process typically takes three to five days to accomplish versus the 30 to 60 days of just waiting around after you’ve paid off your credit card balances. The cost to you, the consumer, is usually zero, okay? I know the lenders right now are paying somewhere in the vicinity of 30 to $50 per update, per credit bureau, which is fairly expensive on their end, so they’re going to make sure they, you know, they have a solid application before they do all this work for you, um, ’cause it’s- it’s coming out of their pocket first. And I- I believe in certain cases they even bill you at the end of your loan, okay? But it is a great product. It’s something that’s available. You do have to be in process with a mortgage company. It’s not something that’s offered out online. It’s not something even a credit repair company can do for you.
05:20 Now, keep in mind, this process is not credit repair. A mortgage lender does not do credit repair. They’re simply updating things that have been paid off, okay? So, if you just paid off a bunch of things, your credit’s not where it needs to be, but you found the home of your dreams, it’d probably be worth having a conversation with a local lender that you trust, that you found through, you know, whatever source it’s going to be, your realtor, the local Better B- … Better Business Bureau and discussing the rapid rescore or CBU product.
05:50 Uh, guys, this is Nik Tsoukales with Key Credit Repair. Thanks for checking us out every single day here on YouTube and Facebook. Um, please click the subscribe button below and check us out on a daily basis. And if you have any credit questions, um, beyond what you’ve seen in some of these videos or even your consultation, if you’ve spoken to us already, shoot me an instant message, shoot me an email, at NTsoukales@KeyCreditRepair.com and I’ll make sure I answer it right away. Thanks, guys. Have a great day.
The four aforementioned symptoms have all been linked to poor credit scores and credit card debt, according to consumer studies. In other words, bad credit can be bad for your health – and there’s some significant research to back this claim up.
Take a study recently published in the Proceedings of the National Academy of Sciences, for example. The study analyzed over 1,000 health records from birth to mid-life and found an alarming correlation between bad credit scores and heart health. Conversely, people with good credit scores were found to have had good heart health.
A separate study from Nerd Wallet discovered that more than 85 percent of surveyed Americans who have previously had or currently have credit card debt regret it. In citing reasons for regretting accumulating credit card debt, some of the answers weren’t surprising. Respondents stated reasons such as “it took too long to pay off” and “high interest rates cost me more money long term.” But there were a few other interesting reasons. For instance, stress and anxiety made the list.
Needless to say, but accumulating credit card debt can put you on the path to a poor credit score, which can thereby greatly impact your financial future. We don’t want to speak for all consumers, but that would certainly stress us out should we find ourselves unable to receive a reasonable auto loan or home mortgage.
The good news is that by enacting some credit repair strategies, you can boost your score rather significantly in a relatively short period of time. In the process, you can relieve some of that excess stress you’ve been carrying with you and possibly even improve your heart health. Here’s a closer look at some tips on how to do it:
How to Improve Your Credit Score
If you can’t pay off your credit card balance in full each month, you should at least be making the minimum payments. Ideally, however, you should be trying to keep your credit utilization ratio at or under 30 percent. The credit utilization ratio is essentially the amount of credit card debt you owe versus your total allotment. Your credit score should increase if it’s at or less than 30 percent.
Improve your consumer habits. If you’re in debt and can’t seem to get out of it, it’s likely time to take a closer look at your lifestyle. What things can you live without? Even the little things can add up long term and go a long way toward any debt management plan.
Don’t miss payments. We can’t stress this one enough, as it’s the single largest individual category that goes into calculating the FICO score. Miss a payment, and it could really cost you when it comes to your credit score.
So if you won’t take it from a financial expert to improve your credit score, perhaps you’ll take it from a doctor. After all, studies say it’s bad for your health. Doctor’s orders!