Top 10 U.S. States With Highest Credit Card Debt

Did you take out student loans? Do you own a home? Do you have unpaid bills that have gone to collections? Do you have a balance on your credit card?

If you’ve answered “yes” to any of these four questions, chances are you’re in debt of some kind. Debt isn’t necessarily a bad thing. For instance, mortgages and students loans are essential for the majority of Americans in order to get the education required to make other dreams (like owning a home) a necessity. However, maxing out credit cards, bills going to collections, and bankruptcies and foreclosures aren’t good things to have on your record.

When it comes to debt, however, you’re hardly alone – and debt varies on a state-by-state basis. If you live in Minnesota or either of the Dakotas, for instance, you live in a state where the fewest percentage of Americans are in debt. Elsewhere around the nation, it’s a different story. That said, here’s a closer look at the top 10 states with the highest percentage of Americans in debt.

Top 10 States According to Residents in Debt

The following data is based on a December 2017 report from Forbes, according to data tracked in 2016:

Louisiana: Louisiana leads the nation in this category, as nearly half of its residents (46 percent) are in debt.
Texas: Just slightly behind Louisiana, about 44 percent of all residents of the Lonestar State are in debt.
South Carolina: 43 percent of all South Carolinians are in debt.
West Virginia: 42 percent of West Virginia residents are in debt.
Nevada: Nevada rounds out the top five, with 41 percent of its residents in debt.
Alabama, Georgia, Kentucky, Mississippi, New Mexico: Though this is a top 10 list, the five states of Alabama, Georgia, Kentucky, Mississippi and New Mexico all tie for sixth place, with about 40 percent of residents, respectively, in debt.

Most Indebted States (By Value)

While the following list considers the percentage of residents in debt, we figured it would be noteworthy to include a separate list of the states where residents are the most indebted. Perhaps not surprisingly, the wealthiest states in the nation tend to lead this list because they’re buying more expensive properties, cars, etc. Unlike the list above, this one isn’t necessarily a bad list – just so long as the residents keep up with their payments in paying down debt owed. Here’s a look:

California: With all that Hollywood glitz and glam, and high coastal property values, the average California resident is in debt at just over $336,000.
Hawaii: Everything is more expensive in Hawaii, which is why the average resident is in the hole about $321,000.
Maryland: The average Maryland resident is about $263,500 in debt.
New Jersey: Though a bit surprising, the average New Jersey resident is some $257,500 in debt.
Washington: Rounding out the top five is Washington, where the average residents is $243,800

New Credit Scoring Models Won’t Work if Lenders Ignore Them

Chances are you’ve already heard some of the rumblings regarding the way new credit scoring models work. To recap, some of the newer models exclude any medical debt that consumers owe as well as the likes of settled delinquencies and collections. Under new scoring models, tax liens and civil judgments have also changed in the ways they are reported – all for the betterment of consumers. In a perfect world, this is great news for the consumer, as individuals are likely to see a boost in their credit scores and qualify for lower interest rates on long-term financed purchases like auto and mortgage loans. As a result of these changes, credit score boosts may be enough to qualify consumers that otherwise wouldn’t have even qualified for a loan. But there’s one problem – lenders aren’t embracing them to the same degree that consumers are. In fact, some are using old formulas to determine consumer risk that don’t exclude everything that we listed above.

New Credit Scoring Models Won’t Work if Lenders Ignore Them. New Credit Scoring Models Won’t Work if Lenders Ignore Them”

As a result of these changes, credit score boosts may be enough to qualify consumers that otherwise wouldn’t have even qualified for a loan.

But there’s one problem – lenders aren’t embracing them to the same degree that consumers are. In fact, some are using old formulas to determine consumer risk that don’t exclude everything that we listed above.

Why Aren’t Lenders Using New Scoring Models?

So just why aren’t the majority of lenders using the new scoring models and instead relying on old FICO scoring formulas? That’s a good question, and it’s one where the answer varies based on the lender. For instance, some lenders have stated that they’re too small and the older formulas are a better indication of potential consumer risk. Other lenders, conversely, say that they’re too big to institute changes in how they determine consumer risk and that any change this significant could be disruptive to the way that they do business. Then there are the lenders who are just simply putting off integrating such formulas.

Whatever the reason, the true loser is the consumer in all of this. In a way, lender refusal to use new credit scoring formulas discourages responsible credit behavior. Think about it: Why should a consumer be motivated to pay off a collection if a settled collection is still going to be counted against them on their credit report and credit score? The refusal of lenders to adapt to the current times and the newer scoring models could actually prevent consumers from enacting credit repair strategies.

Taking things a step further, the lender would also benefit by adopting these new scoring formulas. That’s because weighing consumers under the new scoring formulas would likely earn them new customers that may not have qualified for a loan before. New customers and more customers equal more revenue for a firm. Isn’t growing to become more profitable the goal of any business, big or small? Credit scoring is changing to become more consumer-friendly. Lenders need to be changing too. It should be a win-win for both parties involved.

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 Sign Up for $0 Today.

Getting Preapproved for a Car Loan – Saving You Money, Time & Hassle!

A traditional part of the home buying process is also part of the best vehicle shopping experience. The process of obtaining preapproval for an auto loan is now catching on as smart car shoppers realize the savings and control it can offer them. If are preparing to shop for a car and plan to finance the purchase, here are some credit tips and helpful information to get you started.

How to Prepare for the Application Process

Similar to the home loan process, getting preapproved for an auto loan starts with your credit score. Lenders want
to see proof of your debt management skills in the past, before offering you a loan.

It is very important to take time to make sure that your credit report is accurate, before you apply for preapproval
of any loan. Even small errors can mean higher interest rates or the embarrassment and disappointment of being denied
for the car loan, so take the time to make sure all information is correct. It is always best to repair credit, if needed,
prior to the application process.

If you find an inaccuracy on your credit report, taking the time to correct these will greatly improve the preapproval
process and your chances of getting a great rate on the loan, itself. If you have blemishes on your credit that will influence
your borrowing status, it may be wise to seek reputable credit repair assistance, before proceeding.

Making Application

After you are satisfied that your credit report depicts a fair, and honest, portrait of your borrowing and repayment history, now you are ready to begin contacting lenders and begin the application process. This should be done before you begin looking at vehicles, so that you will know exactly how much you want to spend, and you will be better able to resist the temptation to splurge on a car that is more expensive than what you need.

As you speak with the lender, verify any restrictions that they may place on the loan. Lenders may restrict purchasers of new vehicles to shop at established dealerships. Restrictions for a pre-owned vehicle often include restrictions on the age, type, condition and mileage of the vehicle you are considering. This is done to ensure that the vehicle’s value will support the amount of the loan, in case you default and leave the lender to sell the car.

Time To Shop

Once you have found the auto loan that best fits your needs and obtained preapproval, it is time to shop. Keeping in mind any lender restrictions and your preapproval limit will help you set parameters for your search that will make it easier to quickly locate a great vehicle.

When you have found the right vehicle, your preapproved loan status can often be used as a negotiation tool, sometimes resulting in a better offer from the dealership’s finance department.

For more information on how to repair your credit prior to getting preappproved for an auto loan, Sign Up for $0 Today.

Credit Scores and Car Insurance – Credit News

While credit scores and credit reports are most commonly associated with loan approvals, there’s more than just getting approved for a credit card, auto loan or mortgage that the little three-digit FICO score is used to calculate.

For instance, credit scores are also factored into things like auto insurance premiums. Yes, credit scores count for insurance too, which makes credit repair all the more important and quite the lesser known credit tip.

So just how is a credit score factored into an insurance premium? An insurance provider will typically base premium rates on an insurance score. And this insurance score takes into account your credit history in order to predict your likelihood of being involved in an accident or filing an insurance claim. Studies detail how credit history can be linked to risk and accident potential.

Here’s a closer look at a credit-based insurance score and why it’s important that you repair credit for more than just good interest rates on loans:

The higher your credit score – and thereby your credit-based insurance score – the greater the likelihood that you’ll qualify for low auto insurance premiums. Keep in mind that this premium also takes into consideration driving history and the amount of claims on your record.
If you have a low credit score, you’re more likely to pay more for your auto insurance premium, as you’ll likely have a lower overall credit-based insurance score.

If you have less than stellar credit, what can you do to improve it for auto insurance purposes? The same thing you would do to improve it for any other purpose:

Make sure payments are on time.
Open new credit lines in good standing.
Have a favorable credit history (i.e., no collections, missed payments, etc.)
Good debt management – try not to accrue more than 30 percent of your total credit line at once.

Yes, good credit is about more than just low interest rates on loans – it can also net you lower auto insurance premiums. So if your credit is lacking, take measures to get your finances in order today.

For more information on how to repair your credit, please Sign Up for $0 Today.