8 Ways to Save on Back-to-School Shopping!

It may still feel like summertime, but many students across the U.S. are heading back to school. Back-to-school shopping can be a budget-busting event, especially when Mom or Dad likes shopping for school supplies just as much as the kiddos! Here are eight ways to save on back-to-school shopping to help equip your kids for school without breaking the bank:

  1. Watch for sales – Everyone puts school supplies on sale, but they don’t always put the same things on sale at the same time. Take advantage of rock-bottom pricing on clothes at the local department store, get pens, pencils, and paper at the office supply place, and shop for backpacks at the sporting goods store when these places advertise sales.
  2. Remember the grocery stores – Many grocery stores offer sales on school supplies this time of year, and chances are that you are already there for other things anyway. Sometimes you can take advantage of extra savings along with your weekly grocery purchases.
  3. Check online first – It’s not always cheapest online, but sometimes it is. Don’t just look at Amazon. Check out Staples, Walmart, and your other favorite retailers’ websites as well.
  4. Start early – Nothing pumps up the price of shopping like not having many choices. If you can only find that calculator at one store at full price, what choice do you have? Starting even a week before school starts gives you time to wait for things to be shipped. Starting in the middle of summer could mean getting that calculator on sale for half price.
  5. Stick to the list – Getting five brand-new Trapper Keepers may sound exciting, but that might not be what they really need. In fact, many elementary school children need uniformity in their supplies, not the flashiest swag. Older children might benefit more from thin, lightweight file folders to force into that overstuffed backpack. Check with your child’s school to get a copy of their recommended school supplies list—then stick to it.
  6. Take inventory first – Go around your house and see what you already have. Surely after buying a protractor for five straight years you have one lying around somewhere in your house. Pens and pencils need replacing often, but notebooks that barely got any use are ripe for being reused instead of repurchased.
  7. Split bulk purchases – If you have several school-age kids, or if you know a group of parents, chances are pretty good you could save on some things by splitting up the big pack from Costco among each of the kiddos. That goes double for things like facial tissue, paper towels, and bleach wipes.
  8. Shop without the kids – Unless your family revels in the joy of school supply shopping, go without them. A notebook is a notebook when it’s on the kitchen counter. It’s not the cool notebook that they have to have when it’s on a shelf with all the more expensive notebooks.

If you’re on a tight budget and could use some help improving your credit score, contact Key Credit Repair today to schedule a free consultation!

10 Ways to Set Your Kids up for Financial Success

You worked hard for your money. Along the way, you learned a lot of lessons about financial success. It’s only natural that you would want your kids to benefit from the mistakes you made and the successes you’ve had. Here are 10 ways to set your kids up for financial success:

  1. Start saving for college – A lot of very successful people have trouble financially because of a student loan burden. You don’t have to pay for their entire college tuition, but starting your kids off with a lower loan amount makes things easier for them as they set out into the world on their own.
  2. Take them to the bank – Most banks will let you open a checking account with a parent’s permission when children are 13 years or older. Don’t do it for them, go with them. Let them see firsthand how banks work, how to talk to professionals, and what it means to save money.
  3. Teach them how money works – Take them into a store and give them $5 or $10 and some goals. Let them figure out how to find prices, compare what they want to what they can afford, and then make a choice on their own for what to purchase.
  4. Teach them the importance of saving money – Have your kids put money in a piggy bank every few days or every week, then after a few months, let them take it out and count it. Let them see how a few coins and dollars here and there can grow into a surprisingly large amount of money.
  5. Let them make mistakes – As with other areas of life, no lesson is learned better than the lesson experienced. Let them “waste” money on candy or stickers. They’ll eventually learn what it’s like to want something but not have the money to buy what they want. This will teach them the importance of saving money for future needs instead of splurging on something for instant gratification that may have no real value tomorrow. 
  6. Jump start their credit – One of the key elements of a credit score is the length of credit history. Unfortunately, life doesn’t wait for you to build up a credit history until after you turn 18. Get a credit card with a low limit and put your child on the account. That starts the clock ticking. Putting your 16-year-old on an extra credit card account that is responsibly used gives them a 5-year-long credit history when they turn 21. Don’t loan them cash for a car. Instead, get a loan from a lender so they can learn about loan terms, interest rates, and building good credit.
  7. Open a savings account in their name – Offer to match whatever they contribute, as an employer would with a 401(k). Make sure they understand that they can withdraw money at any time, but it’s best to leave the money in savings until they really need it. If they don’t need it for a while, that’s a bonus, as chances are good it will come in handy for a down payment or large purchase when they are ready to set out on their own.
  8. Teach them Finance 101 – People often complain that schools don’t teach basic finance. While schools don’t usually teach students about personal finance, parents should. Show them your paystubs. Show them what percentage is withheld for taxes. Show them health insurance deductions and why that matters. Explain the percentage of your monthly income that goes to paying bills and how much is left over for extra things like going to the movies or eating out. This will give them a better understanding about where your household income goes and why they can’t always have that expensive toy or game they want.
  9. Show them how to budget – If you don’t know how to set up a household budget, do some research or grab some books from the library. Far too many 18-year-olds hit the real world thinking the only kind of budgeting happens on a spreadsheet, and they’re in for a shock when they realize it’s a lot simpler on a computer screen than it is when you have to apply it to real life.
  10. Let them earn money – Nothing teaches a person the value of money like learning the amount of effort it takes to earn it. For the youngest, allowances are fine, but older children should understand the difference between contributing to household chores and doing something extra. For example, maybe mowing the lawn pays $20, but doing the dishes when it’s your turn is just being a contributing member of the family unit. Guide them through the thought process of “I would have to do this much work to buy that…” and watch the wheels start turning.

No matter how old we are, sometimes we could all use a little advice about managing our finances. Even the most responsible people can find themselves in a tough financial situation with poor credit at some time in their lives. If you need assistance improving your credit score, reach out to Key Credit Repair today for a free consultation.

Does Divorce Impacted Your Credit Score?

Divorce doesn’t directly impact your credit score. In other words, if there were two people with the same credit histories, the same jobs, and the same expenses and debts, but one was divorced and one wasn’t, they would have the same credit score. However, just because divorce isn’t a factor on its own doesn’t mean that the effects of divorce can’t impact your credit score.

The most common issue arises when it comes to joint accounts. Accounts that were previously held jointly may either no longer exist or may no longer be joint accounts. When such accounts are closed, they not only no longer affect your credit score moving forward, but they may also shorten the length of your credit history. A shorter credit history can result in a lower score. 

As accounts are closed and reopened, it may change the total credit available, the total credit used, and the mix of credit accounts, all of which impact your credit score. Although it is unlikely to be one of your top concerns at the time, do begin working on recreating your former credit profile.

Another issue comes when accounts that should have been closed or separated remain jointly held. That means your ex-spouse’s credit behavior is still associated with your credit behavior. Their late payments count against you just like they were your own, so ensure that such accounts are taken out of your name as soon as possible.

Finally, if your spouse was in charge of paying the bills or knowing where all the accounts were and how to access them, it might take you some time to understand how everything works. Unfortunately, during that time, if you miss payments, that will hurt your credit score. Fortunately, many lenders are understanding of new circumstances and will grant some leeway, so be sure to ask if you need some. Otherwise, a few missed payments here and there can be quickly overcome by a growing positive credit history.

Need help with credit repair after a divorce? Contact Key Credit Repair today and request a free consultation. We can help!

Recovering From Bankruptcy

Bankruptcy emerged as an alternative to more draconian measures that left people as indentured servants or worse over a run of bad luck or even a period of poor decision-making. For most people, bankruptcy offers a chance to get a fresh start, hopefully with better luck and smarter choices. Still, bankruptcy isn’t a freebie. Bankruptcy is a public record and remains on your credit report for up to 10 years. Bankruptcy may hamper your ability to access good opportunities in lending, business financing, even renting a house, so it is important to start working to recover from bankruptcy right away.

In order to recover from bankruptcy, you will need to show that you can be responsible with credit. You show that you are responsible with credit by using credit well, but to get credit, you need to show that you are responsible with credit—so it’s a catch-22. 

Fortunately, there are two simple ways to break out of this loop. First, you may find your mailbox full of invitations to buy a used car with a loan. The interest rate will not be low, and you won’t be able to buy the newest or most expensive car, but these dealerships are happy to give you a car loan for two reasons. One, if you don’t pay the loan, they can repossess the car and recover most of their expense. Two, car dealers only make money when they sell cars. Waiting for you to be “ready” financially isn’t profitable for them.

If you don’t need or want a car loan, the second simple solution is a secured credit card. A secured credit card is where you deposit an amount, such as $500, with a bank or lender. In exchange, they give you a regular credit card with a $500 limit. You make regular charges and regular payments. Each on-time payment boosts your credit score. If you fail to pay, they just keep your $500.

Once you have credit again, recovering is as simple as continuing to make on-time payments until your bankruptcy and previous missed payments are old news. If you’re recovering from bankruptcy and need help repairing your credit score, reach out to Key Credit Repair today and schedule a free consultation.

Optimal Credit Score for Buying a House

When it comes to getting a mortgage to buy a house, your credit score will play a large role in determining whether you can get a mortgage, and if so, how favorable the terms will be for you. At an abstract level, the optimal credit score for buying a house is the one that allows you to buy the home you want in a manner that you can afford.

At a more tangible level, 580 is the minimum credit score one can have in order to get a low down payment loan from the Federal Housing Administration (FHA). Mortgage scores below 620 are considered subprime. These mortgages will require higher down payments, mortgage insurance, and will likely charge higher interest rates. A credit score above 670 is eligible to be financed in the prime mortgage market.

Higher scores offer home buyers better terms. However, at a certain point, a higher credit score may become less relevant than other factors. For example, a certain lender may require a down payment of 20% and a credit score of at least 720 to get the best possible terms and interest rate on a home mortgage. Under these circumstances, a credit score higher than 720 offers no advantage. However, the same lender may also offer its best possible mortgage rates to those with a 10% down payment and a 760 credit score. In this case, the optimal credit score would be 760. Finally, valued customers of a particular financial institution might get the best possible mortgage with just 2% down and a 680 credit score, particularly if they hold a large amount of assets at the bank. So it really depends on the lender.

Most online mortgage searches and applications have a top tier of credit score above which there is no amount that changes the available mortgages. For example, the Bankrate mortgage search engine simply allows for 740+ as the highest credit score entry. 

If you’re thinking about buying a house and your credit score could use a little help, reach out to the experts at Key Credit Repair today to request a free consultation!

Does Deferring Your Student Loans Hurt Your Credit?

At first glance, it might seem like deferring your student loans could hurt your credit. After all, you aren’t making payments on a loan that you have, and making late payments is a surefire way to hurt your credit. Fortunately, credit scores work differently.

In order for a payment to be late, it first must be due. Just like a term paper can’t be late until your professor tells you when it’s due, a payment cannot be late before there is an agreement on when it needs to be paid. Not all loans require monthly payments. Some loans, for example, require only a single payment, called a balloon payment, at the end of the loan. As you would expect, not making monthly payments does not count against the borrower during that time.

Likewise, a student loan deferment is an agreement between both the borrower and the lender to wait until a later date for payments to be required. So, an official deferment will not count against your credit as missed or late payments.

There are two general types of deferments. A subsidized deferment means that no payments are necessary, and no interest is accrued. An unsubsidized deferment means that no payments are required, but interest will still accrue. The difference is that when the deferment ends, the final loan amount of the unsubsidized loan will be higher than the final amount of the subsidized loan. This may have a small negative impact on your credit score, because the total amount of money owed is part of the calculations.

However, it is also important to remember that any payments you do make may count as on-time payments, so making payments while in deferment may help improve your credit, so long as the lender reports such payments to the credit bureaus.

If you would like to learn more about improving your credit score, reach out to Key Credit Repair to schedule your free consultation.

5 Tips for Fixing Your Credit Score

Your credit score is an important part of your financial life. More lenders than ever rely on credit scores to determine not only who is approved for a loan but who gets the best terms on those loans. If you are able to secure a loan with a poor credit score, taking a loan with a higher interest rate could cost you thousands of dollars over the life of the loan.
Beyond that, employers, landlords, and car dealerships sometimes want to see a good credit score before working with you. The good news is that fixing your credit score is relatively easy. The bad news is that it might take a while.

Tip #1: Get copies of all three of your credit reports. It turns out there is nothing you can do to fix your credit score directly. Instead, your credit score is a mathematical result of a formula that uses the information in your credit reports to calculate a specific number. That means having the best credit score requires having the best data on your credit report. You can’t fix what you don’t know is broken, so you need to get a copy of your credit report and go through it with a fine-tooth comb. Every missed payment costs you points. Every paid off loan awards you points. So be sure you get what you deserve on both counts. You are entitled to a free credit report every year from each of the three major credit reporting bureaus. Review your report for any mistakes or out-of-date information. Look for incorrect information, but also look for information that seems to be missing. If you aren’t listed as the joint holder on an account that has a good history, you should be, because you could be missing out on precious credit score points.

Tip #2: Dispute any inaccurate information on your credit report. Go directly to the creditor if possible. The process for removing negative information from your credit is much faster when initiated from the creditor’s side than it is from the borrower’s side. If there is accurate, but older, negative information, you now have the ability to contact them and see if they will offer to take payment in exchange for removing the negative information from your credit reports. Your credit score assumes that the information on your credit report is accurate. That means mistakes on your credit report translate into mistakes on your credit score. Also be sure to report any inaccurate information. Just because it doesn’t seem to matter to you doesn’t mean it won’t matter to the algorithm. For example, too many addresses could indicate that you may be unstable.

Tip #3: Make on-time payments. It might sound simple, but the biggest impact you can have on your credit score over time is by making on-time payments. Making several on-time payments will improve your score more than making one large payment. Your credit score not only deducts points from your score for late payments, but it also adds points to your score for every payment made on time. The more on-time payments the better. The other advantage is that recent information is weighted more heavily than older information. Not only does paying on time increase the number of current accounts, it ensures that all recent data is in your favor. Set as many accounts to autopay as possible to ensure that you won’t accidentally forget to make a payment, especially if you receive paperless statements. Pay the minimum on time on every account you have and watch as those payments start to outweigh older, negative information.

Tip #4: Get a new equity line of credit or credit card, or ask for higher limits on your existing accounts. It may sound counterintuitive, but having more credit available to you can help increase your credit score. That’s because your credit score takes into account both how much total credit you have available and how much of that credit you are using. If you open a new account, that automatically increases your total amount of credit. It also lowers the total percentage you are using, even if the total overall amount is the same. Just don’t use the new account, or you can trigger the reverse effect. Remember, your credit score is not a calculation of your finances, only a calculation about how you have used your available credit. Keep your available credit high and your credit utilization low.

Tip #5: Sometimes you can give your credit score a jump start by including accounts that look good for you. Piggyback off a trusted relative or friend and their good credit. Most credit card companies will report payment history and credit usage to the credit reports of not just the primary card holder, but also to the reports from authorized users. That means every on-time payment your friend or family member makes also counts for you. Even better, if they have a high-limit card, that extra available credit counts for you as well. If they aren’t using much of their credit line, then that extra space lowers your credit utilization, too. Just be sure to pick only your most stable and trustworthy friends or family members, because their negative actions can hurt your score. You can also try new services like Experian Boost that improve your credit score by including things like phone bills or rent payments on your credit report, along with their good payment history, of course.

If you have enough time, just using credit when you need it and never being late on any payments will eventually result in a great credit score. However, if you don’t have that much time and need to improve your credit right away, these five tips can help speed up the process. Need more information on how to fix your credit score? Reach out to the experts at Key Credit Repair today for a free consultation!

Do Student Loans Affect Your Credit Score?

Student loans are a necessity for many students attending college. In some ways, these loans are just like any other. A borrower receives money from a lender and agrees to pay it back during a certain time frame with an agreed-upon rate of interest. In other ways, these loans can be very different. Subsidized loans allow the borrower to make no payments and accrue no interest while in school, for example. So,  do student loans affect your credit score? And HOW!

Your credit score is a number calculated using an algorithm from data that appears in your credit report. As such, any information that is not in your credit report has no effect on your credit score. 

Most lenders report your loans to the credit bureaus, so do student loans affect credit score? Yes. Part of your credit score is based upon how much total credit you have available, and how much total debt you have. Each new student loan increases the amount you owe. Owing a higher amount may not have a large impact on your credit score, but lenders will consider if your overall debt is too high for your income and financial situation.

If your loans are in deferment, this status will be reported. Your credit score does not take payments on deferred loans into account. Some scores exclude deferred loans from the calculation altogether.

The most important part of your credit score is determined by your payment history. Lenders report your student loan payments to the credit bureaus. Each on-time payment improves your score. Each late payment hurts your score. Often, student loans are issued and accounted for as individual loans. Even if the loans are grouped together by the lender and there is a single payment, the loan may still be reported individually on your credit report. For example, two years’ worth of student loans may actually be reported as eight-semester loans. This means making one late payment may actually be calculated as eight missed payments when it comes to student loans on your credit report.

If you default on government-issued student loans, they will be reported as a Government Claim. Government claims are considered derogatory remarks. Derogatory remarks result in substantial deductions from your credit score. Defaulting on private student loans will result in the loan being sent to collections, so student loans on your credit report will be a derogatory mark.

Paying your student loans on time is a great way to build credit and improve your score, but if you’ve gotten behind them, contact Key Credit Repair today for your Free Credit Repair Consultation.

Opening A Credit Card: Smart Idea?

You don’t have to look hard to find horror stories about people who got into financial trouble because of poor credit card management. However, a credit card can be a useful financial tool.  Sometimes it can be a smart decision in your situation. Just because credit cards can be abused, doesn’t mean that they should never be used by financially savvy people.

Some things in life are difficult to buy with cash. Cars can be one difficulty. Buying a home is a major one. Saving up hundreds of thousands of dollars just isn’t realistic for most people. When it comes time to use credit in the form of an auto loan or mortgage, your credit score will determine where and how you can borrow. Opening a credit card will often improve your credit score. Not only will you be able to prove that you can make on-time payments, but you will also increase your amount of available credit.

Of course, people who already have a lot of credit cards, and people who have trouble making payments on them, should not open a new account. This can lead to credit troubles, and you’ll need help repairing your credit. But for most people, opening a credit card account will allow you to establish a line of credit, and could provide some purchasing advantages. Some cards offer cash back on purchases, which can add up to a nice windfall over the course of a year. Other cards offer rewards that can be redeemed for free travel or merchandise. In addition, credit cards make online payments easier, which is important in today’s increasingly connected world.

Opening a credit card can also be a smart way to protect your money. Instead of carrying cash or a checkbook that can be lost or stolen, a credit card gives you purchasing power without the danger of misplacing your cash. If your card is ever lost or stolen, you can deactivate it right away.

It can be smart to open a card as long as you use good credit card management, and it fits into your current financial situation. If you find it difficult to manage your accounts and payments, get hold of us at Key Credit Repair and schedule your Free Credit Repair Consultation.

How to Teach Your Teens About Debt And Financial Responsibility

Financial literacy education is limited in schools. Most teens rely on their parents to teach them how to deal with money and manage it properly. As with most things, knowledge is power. Teach your teens about debt before they get into trouble.

Teens usually don’t respond too well to drawn-out lectures, especially about financial responsibility, so keep the speeches to a minimum. Instead, approach learning about debt like teaching them how to drive. They can learn from a book or the internet, but learning by doing it with you as a guide is when real knowledge sinks in.

If your teen doesn’t have a bank account, it is time to get one. Most banks or credit unions will open an account with your permission when a child is 13. Often, the bank will offer your child a debit card. Sign up and begin phase one of how to teach your teens about debt, financial responsibility and money management.

Sign them up for online access and have them make a few small purchases to experience the process. Once they see for themselves how it works, explain how a debit card may look like a credit card, but it behaves much differently. When It’s time for a discussion about credit cards, teach your about paying interest, credit limits, and how to report fraudulent charges or a stolen card.

To really help your teen understand debt, let them borrow money from you for something they have been wanting. However, treat it like a loan from a bank, not from Mom and Dad. Draw up an agreement with an interest rate, a payment date, and a minimum payment. You can even generate a monthly statement if you want to enhance the realism. Borrowing actual money and having to pay it back will provide real-world experience with lending and interest rates. The first time they can’t make a purchase because they still owe money will make a big impression.

Be sure to answer all of your teen’s questions through this process, and provide them with education resources they can use on their own. Most banks have an educational program specifically designed for teens that you can access for free as a customer. If not, the U.S. Consumer Financial Protection Bureau has educational materials anyone can use.

In the event your son or daughter has already learned a few things about credit the hard way, feel free to contact us at Key Credit Repair for a FREE Credit Repair Consultation.