Each year, the Consumer Federation of America, or CFA, releases a report on credit scores. Specifically, this report is an analysis of credit score knowledge and what consumers do and don’t know about the impact of their score, warning signs that could lead to poor scores and more.

The good news is that the CFA’s 6th-annual report on the matter, released earlier this week, indicates that Americans have learned from their past mistakes, notably older Americans who got into trouble during the “great recession”. But the bad news is that the report indicates that consumers still have a long way to go in terms of truly understanding the impact credit scores can have and how wide-ranging this impact is.

Check the Report: What Consumers Don’t Know

The biggest misconception that consumers have when it comes to credit scores is just how significant a low score can be when it comes to purchasing. If a credit score scale goes up to 850, a low scores is usually considered 620 or less. Generally speaking, the lower the credit score, the more difficult an individual will have getting financing for any type of purchase – that is, if they’re even approved for financing at all. Typically, poor scores can add anywhere from five to 20 percent to to the total cost of the loan. The CFA report showed that about only 20 percent of all consumers truly know just how much low credit scores can hurt.

The report found that another big unknown has to do with just who can check your credit score. While most consumers know that credit checks are essential for things like mortgages and auto loans, most don’t know that landlords, would-be employers, insurance agents, cell phone carriers and utility companies can also check your credit score in an effort to determine your “risk” as a consumer.

Other unknowns include:

  • About half of all those surveyed didn’t know that lenders are required to inform consumers of their credit score during the application process, whether they’ve been approved or not.
  • About two out of every five people surveyed believed that age and marital status factor into a credit score. That’s obviously not the case.


The good news about the most recent CFA report is that about 80 percent of those surveyed knew the basics about credit scores and credit reporting. Data showed that many are well aware of the negatives that can greatly impact a credit score (i.e. foreclosures, high credit card balances, bankruptcy, missed payments, etc.). But in the case of credit scores, what you don’t know can greatly hurt you. So while the CFA report does have some positives, there’s still a long way to go in order for consumers to truly understand many of the important aspects of credit.

Choosing your next credit card

When you are first rebuilding your credit, it can be tempting to jump at any card that will have you. But, after you’ve developed some positive credit history, you can afford to be choosier when it comes to credit card offers. Before you apply for that new piece of plastic, give some thought to all of the following regarding Choosing a new credit card.

1. The APR

The annual percentage rate is how much it will cost you in interest to carry a balance on the card. In many cases, it is a certain set percentage plus prime, which is variable. Try to get the lowest APR you can qualify for, even if you don’t plan to carry a balance on the account. If you are not approved for a low rate at first, you can also call back periodically and ask for a lower rate.

2. The credit limit

With a card that only has a limit of a thousand or so dollars, it’s easy to hit a high utilization rate quickly. This can drag down your credit score. Be careful about limits and try to keep your balance under 30% of what is available. If you feel you can safely manage more credit, ask your credit card company for a higher limit. They’ll have to run your credit again, but, they may extend a higher rate if you have a good history of payment.

3. Annual fees

This is where many cards, especially reward cards, get you. Some cards have fees as high as $100 per year. When possible, look for cards that carry no annual fees. If you are looking at a rewards card that has a sizable fee, do the math to figure out whether the incentives are enough to balance the annual cost. You should also know what fees are charged if you forget to make a payment or if you go over your limit.

4. Rewards and incentives

It’s fun to get paid to spend your own money. Look for cards that offer cash back or bonuses. Ideally, these cards should offer bonuses in categories that you use often and come with no fees. If your card is one that offers different cash back bonuses at different times of year, time your spending to make the most out of your new card. When looking at incentives, you should also assess the requirements. To get some bonuses, you have to put a certain amount of charges on the card within a set period of time.

5. Your spending habits

Look at past credit card bills and your monthly bank records to honestly assess how you spend money. Do you tend to overspend when you have access to new credit? And, do you have a good reason for applying for a new card? If you do not have a lot of financial discipline, it may be best to think twice about getting a new card if there’s not much benefit.

Credit can be a temptation, but, it can also be a handy tool. Access to credit cards can mean more control over when you and how you spend and can give you bonuses like cash back and airline miles. Need some help learning to manage credit wisely? Get in touch with us. At Key Credit Repair, we offer counseling and advice to help you make the most of your financial life.

Authorized User Accounts

Credit Card Agreement – How to dissect it.

Dissecting Your Credit Card Agreement By Reading The Fine Print
If you’re planning on opening up a new credit card account anytime soon, make sure you’re ready to read every last bit of fine print in the agreement before you sign. Furthermore, you need to make sure you understand all of the terms used in the document to avoid signing up for more than you bargained for. Once you have a firm grasp on the industry terms, you can easily pick through the credit card options to find the best one for your needs.

Annual Percentage Rate

Each type of credit card Credit Card Agreement has an annual percentage rate, or APR, attached to the account. The assigned APR applies to totals that carry over month-to-month and balance transfers from other accounts. Some credit card companies even occasionally adjust the assigned rate according to the transaction type or for promotional periods.

Credit cards may offer either a variable or non-variable APR, depending on your account type. You can expect variable rates to raise or lower on a monthly, quarterly or yearly basis, based on changes to the market. The non-variable rate stays at a stable percentage, despite market changes, unless it is temporarily lowered as an incentive.

You can find the actual APR usually listed in bold right in the fine print, but it’s important to read the surrounding information to find out interest charge details.

Credit Limit

When you open a credit card, there are several limits placed on your account. The information should include exact numbers for the upper limit on spending totals and daily cash advance amounts. Although most accounts will decline purchases above the limit, some just charge a higher fee for exceeding the listed amount. The process for raising the credit limit is also detailed in the agreement paperwork. Therefore, it’s important to initially read the fine print closely, and then store the document in a safe place for later review.

Monthly and Annual Fees

In addition to charging a percentage of the balance as interest, credit cards may have a monthly or annual fee. These fees are often wrapped into the total owed on the account at the end of the indicated billing period. However, you may find that the paperwork tells you how to avoid paying interest on that charge, which could save you hundreds of dollars over the years.

You can usually avoid these additional fees by obtaining a credit card through your bank rather than a standalone finance company. Alternatively, if you keep your account in good standing, you can request to have the fee waived by calling customer service at the beginning of each calendar year.

Purchase Protection

The main benefit of using credit cards for purchases is the satisfaction guarantee placed on each transaction. Credit card companies act as a layer of protection between buyers and sellers. If you purchase a product or service that doesn’t live up to your expectations, and the vendor will not work with you, you can have the charges reversed by the credit card company. In some cases, credit card transactions extend the warranty on the purchased item.

Protecting Yourself

As you carefully read the fine print, keep an eye out for unnecessary charges or unfair terms. Make sure to compare several credit card company’s usage terms and fees to weed out predatory lending institutions. Once you pin down the best option, keep the agreement terms in mind while using your account for payments or purchases to protect your pocketbook, and credit score, from harm.

For additional information, feel free to contact our office at 617-265-7900, or schedule a free consultation below.


Total interest you will pay !

How Much Interest Will You Pay in Your Lifetime? -Tips

Nobody likes to pay interest, but it’s a necessary evil for large purchases such as a home or a car, as well as part of the deal when you charge items with a credit card. (To really make your stomach churn about the interest that you’re paying, all you need to do is take a glance at your mortgage the next time a bill is due.)

But if we were to ask you how much total interest you pay throughout your lifetime, would you know? What would your guess be? $100,000? $200,000? Something greater?

The amount of interest you’ll pay throughout your life certainly depends on a variety of factors

your credit card limit and spending behaviors and your credit score. But according to a report on Credit.com, a site that has developed a tool to calculate how much interest you’ll pay over a lifetime based on the purchases that you’ve made, the average American can expect to pay $279,000 in interest. To put this number into perspective, consider the fact that recent estimates have stated that the cost of raising a child, from birth to 18, is $245,000. So yes, if you’re an average American, you can expect to pay more in interest than you would to raise a child.

Scary, we know. Thankfully, you can take measures to ensure that you’re more than just the “average American” when it comes to interest to curb this $279,000 number. The most obvious means is to save and pay cash for all of your purchases. After all, an additional $279,000 back in your pocket over a lifetime sounds pretty good to me, no? But that’s certainly not practical for everyone. With that in mind, here’s a look at some practical advice to reduce those lifetime interest payments:

Raise Your Credit Score

It’s worth noting that the $279,000 lifetime interest payment is based on someone with a fair credit score (620-679). So if your credit score is better than fair, you’re going to be paying less than the average American over the course of your lifetime due to your status as a more trustworthy consumer, which comes with lesser rates. Is your credit not up to par? Enact some credit repair strategies to improve it, as well as your finances:

  • Pay bills on time: Payment history accounts for 35 percent of the FICO score, the largest single category.
  • Reduce credit card debt: If your credit card debt is greater than 30 percent of your total credit allotment, your score will suffer. To boost your FICO score, pay down debts so that you owe less than 30 percent of your limit.
  • Credit history, types of credit and new credit are other factors that contribute to your score, but aren’t weighed as heavily as the two aforementioned categories.


Refinance Loans

Perhaps you took out an auto loan or bought a house when your credit score was just “fair” and now it’s “excellent” – you don’t have to continue to pay your bills with the interest rates that came with a fair score. Consider refinancing old loans if your credit status has changed to lock in lower interest rates. Check with your bank or credit union to see what interest rates are at and consider pulling the trigger and refinancing when rates are low enough. It doesn’t take long and can pay big dividends.

Credit Card Tips

The interest you’ll pay over a lifetime on credit cards come in a distant third place compared to interest on home loans and auto loans for most consumers, but it’s still a category worth focusing on. There are a number of things you can do to reduce interest payment, such as:

  • Pay on-time, in-full: Only charge what you know you can pay off.
  • Make multiple payments each month: Making more than one payment per month, even if you can’t completely pay the card off each time, can help lower your balance and thereby your interest.
  • Negotiate a lower rate: If you’re unhappy with your credit card interest rate, just a simple phone call to inquire about the possibility of getting a lower rate can work sometimes, especially if you’ve had the card for a long time.
  • Shop around: Not happy with your current interest rate? Shop other cards.

A final tip when it comes to charging is to seek alternatives for large purchases. For instance, instead of charging furniture when furnishing a home, look for a store that offers a 12- or 18-month same-as-cash payment plan. You can do the same with large medical bills – go on an interest-free plan if it’s paid off within a certain period of time.

Just because the average American pays $279,000 in interest over their lifetime, it doesn’t mean you can’t deviate from the norm. For more information on how to repair your credit score, feel free to contact our office at 617-265-7900 or schedule a Free consultation below.