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 due to Covid-19. 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.

Will Carrying a Balance on Credit Cards Help My Credit Score?


It’s estimated that nearly 60 percent of all credit card holders – or about 110 million Americans – currently have some sort of a balance on their credit card. And we’re willing to bet that if you ask, a good portion of these credit card holders will tell you that carrying debt over month-to-month isn’t a bad thing. In fact, we’re willing to bet that many will tell you that carrying a balance actually helps your credit score.


This is one of the most common credit score misconceptions – and while carrying over a balance won’t necessarily hurt your credit score depending on the amount, it certainly will not help it. What’s more is that carrying over a balance is likely to cost you much more money long-term when you consider interest rates. The average credit card interest rate today is more than 19 percent. Let’s take a closer look at this myth:


Why Carrying a Balance Won’t Help Your Credit Score

Like we said above, just because you’re carrying a balance on your credit card doesn’t mean your score will be negatively impacted. But it certainly won’t help your score. Paying down your debt or paying your credit card off will help your score, however, because you’ll be freeing up more of your credit utilization, or improving your debt-to-credit ratio. If you’re unable to pay off your credit card balance in full each month, it’s recommended that your credit utilization is no greater than 30 percent to maintain a good credit score. This means that if your credit card maximum is $1,000, you’ll want to owe no more than $300. If your credit utilization ratio goes above 30 percent, then you’ll likely begin to see your score dip.


Costly Balances

It’s recommended to only charge what you know you can pay off each month. However, we realize that this isn’t realistic for many Americans. But aside from the fact that carrying a balance won’t help your credit score, it could also cost you big bucks in the long term. That’s because if you’re carrying a balance over from month-to-month, you’ll have to pay interest on this balance – and that can add up over time, especially if you get into a habit of only making the minimum payment and let you balance balloon.


Credit Card Management Tips

So what are some of the best practices to keeping your credit score high as it pertains to managing your credit card? Here’s a look:


  • Make your payments on time: If nothing else, you want to ensure you’re making at the least the minimum payment by your due date. Payment history accounts for 35 percent of your FICO score.
  • Set alerts to keep your utilization ratio in check: Many credit card companies will allow you to set email or text message alerts for if your debt-to-credit ratio goes above 30 percent on your card.
  • Prioritize your credit card: Being that it likely has a much higher interest rate than your other debt, you should be prioritizing paying down debt on your credit card to save money in the long run. If you are able to make multiple payments each month to keep the balance low, consider doing so.
  • Be careful about closing other accounts: If you have multiple credit cards, keep in mind that the sum of them will factor into your overall limit and debt-to-credit ratio. So if you lose a certain amount of credit by closing one or more cards, you could inadvertently cause your utilization ratio to rise – and that will cause your credit score to drop.

Credit Repair 101: How to Improve a Poor Credit Score



  1. That’s your credit score. It’s not horrible, especially considering that the FICO score ranges from 300 to 850. But since it falls into the general “fair” category, it certainly isn’t prestigious as a score of 750, which is considered “excellent.” With this score, it wouldn’t be unusual to have to pay a higher interest rate than you would with a better score. Naturally, you want to repair credit, but how?

Here’s a look at some pointers on how to improve a poor credit score:

  • On-time payment: Pay your bills on time! Even bills that are a day or two late can have a big impact on your credit score. If you need to, set up reminders or automatic payments.
  • Check your report: Be sure to keep an eye on your credit report. Look out for errors – you’d be surprised at how often they occur. In fact, it’s estimated that up to 80 percent of all credit reports contain some type of error. If you find any errors, dispute them to help improve your score.
  • Reduce debts: Come up with a payment plan to pay down the debt on major accounts. Focus on paying off the high-interest accounts first. With credit cards, try to keep the balance within 30 percent of your overall credit limit. This is key to credit repair.
  • Credit cards: Don’t close unused cards and don’t open any new cards as a means of increasing your score or raising your credit limit, respectively.

And most importantly of all, use common sense. Don’t move debt around – pay it off. Manage credit cards responsibly and know the basics about your credit score and what can make it go down and up. If you feel like you’re really in over your head, consider consulting with a credit counselor.

Bad Credit Home Loan

Good Credit Score – When it Comes to Real Estate

Your credit scoreis essentially the lifeblood of your borrowing ability. A low score will often be accompanied by high interest rates – that is, if your mortgage even gets approved at all – while a high score will be accompanied by low interest rates, saving you more long-term. But when it comes to real estate and mortgages, you might be wondering just what exactly constitutes as “good” credit, and whether or not your credit score is weighed differently when applying for a mortgage than when, say, applying for a car loan or when opening a new credit card. This post will take a look at that:

What is ‘Good’ Credit in Real Estate?

In the real estate world, most experts agree that if your FICO score is at least 740, you’ll be eligible for the best interest rates that are offered at the time. However, for every 20 points your credit score comes in below this 740 threshold, you’re likely to have add-ons to the interest rate – and you may not be eligible for certain programs. So say, for instance, that you have a 740 credit score and you lock in a 4.125 percent interest rate on your mortgage loan. If your score came in at 700, your rate might be 4.5 percent, at 660 it might be 5 percent and so on.

The experts also agree that too low a credit score will result in either very high interest rates or in complete denial of your mortgage application. Generally speaking, this low range where things can become somewhat sticky is between 600 and 620.

In saying all of this, it is worth noting that whether a mortgage application is approved or denied, as well as the interest rate, is largely dependent on the lender that you’re working with. For instance, some lenders may be more flexible with low credit scores than others.

What if I Have Poor Real Estate Credit?

If you’re in the 600-620 gray area and are either unsure of whether your mortgage application will be approved or if you can afford a higher interest rate if it is approved, your best option is to work to repair your credit to make you a more attractive consumer in the future. Here are some tips and suggestions in doing so:

  • Make sure you pay all of your bills on time. This is one of the largest weighed factors in determining your credit score.
  • Concentrate on paying down high-interest debt.
  • Check your credit report to ensure that it is error-free. (It’s estimated that the majority of credit reports have some sort of error on them.)
  • Ensure that your debts owed is at or less than 30 percent of your total credit allotment.
  • Only take out new lines of credit when necessary.

6 Ways Not to Reset the Clock on Old Debt


Everyone makes mistakes, but when mistakes are committed pertaining to financial decisions, the consequences have a tendency to be more far reaching. For instance, things like foreclosure, bankruptcy and old debt can stay on your credit report and impact your credit score for many years before it is essentially erased from your record. While it’s possible to enact credit repair strategies while you wait for the clock to expire on these negatives, your score likely won’t see the boost that you’re looking for until time expires on the debt. It’s important for consumers to be aware of the statute of limitations pertaining to debt in their particular state – but it’s also just as important for consumers to be aware of a variety of no-no’s that could potentially restart the clock on old debt, keeping it on your record for many more years. This post will take a look at several of these things to stay away from so you don’t restart the clock on old debt that is soon to expire.

How Not to Reset the Clock on Old Debt

  1. Watch the Clock: There are two “clocks” you need to be aware of – the statute of limitations clock and the credit report clock. The former varies by state, is usually anywhere from three to six years and basically sets a timeframe for how long collections may be forced on a debt. The credit report clock dictates how long old debt can stay on your record, which is seven years.
  2. Know the Default Date: Seven years after you’ve defaulted on a debt, it must come off your credit report. Be sure you know this date and build good credit, as your score will likely progress the closer you get to the seven year mark. Judgments are the exception, as they can stay on your report up to seven years from the filing date.
  3. Be Careful with Collectors: A debt collector’s job is to get you to settle or make payments on a debt. Some try to accomplish this by any means necessary. Be careful what you say if you choose to speak with them, as just an admittance that the debt is yours can essentially tick the clock back to the start.
  4. Tell Collectors to Stop: If you’re being pestered by debt collectors, it’s your right to tell them to stop. This can be an ideal way to avoid a possible slip up – just be sure not to admit the debt is yours when you contact them.
  5. Be Wary of Payment Options: Many collectors will offer the option of paying off a debt for a lesser amount than what you actually owe. Be wary of paying off debt and always be sure you have confirmation that it was paid in full if you proceed with such an option.
  6. Hire a Lawyer: If you ever believe you’re in the wrong, seek legal representation.

How Your Credit Score Affects Your Relationship


Per The Federal Reserve study, which analyzed close to 50,000 couples over a 15-year period, those who started relationships with a gap of 66 points or more between their FICO scores are found to be about 25 percent more likely to call it quits in two to four years compared with those who share similar credit scores when they begin dating. In fact, the study indicated that people tend to prefer dating people that they have similar credit scores with, though we don’t imagine that asking a man or woman for their FICO score upon meeting is the most appealing pickup line.

The good news is that if you do date someone with a different credit score than yours, sticking things out with them has proven to be beneficial. In fact, The Federal Reserve study found that those who are together for more than four years tend to work toward more similar credit scores over time.

Planning a Valentine’s Day With Poor Credit

So say your credit stinks, but you really don’t want to screw things up with the person you’ve been dating for a few weeks. The good news is that you can see notable improvements in your credit score within six months should you enact some credit repair tactics, such as paying down balances so that your credit utilization ratio is at or less than 30 percent, making on-time payments and disputing any errors you find on your report.

In the meantime, it’s still perfectly feasible to have a fun, romantic Valentine’s Day. Here’s a look at some ways to do it without having it take a negative toll on your credit repair strategy:

  • Have a romantic night in: You don’t have to go out to a fancy restaurant to have a fun, memorable Valentine’s Day. Instead, cook or order in for a candlelight dinner at your house. Later, you can rent a movie to watch while you cuddle up together on the sofa.
  • Use that gift card you’ve been waiting to spend: Remember that gift card you received to the nicest restaurant in town for Christmas? If you can’t bear staying in on the most romantic night of the year, Valentine’s Day could be a perfect time to use it. This way, you can have that fun meal out without spending a lot of – or any of – your own money.
  • Set some ground rules: If you’ve been dating for a while, explain your situation to your significant other and set some ground rules. Perhaps you two decide to forego gifts and just go to dinner. Whatever you decide, doing Valentine’s Day on a budget is a good habit to get into, especially when you’re trying to get out of debt and repair your credit score. Your significant other will likely admire your newfound financial responsibility.


Though The Federal Reserve study doesn’t overwhelmingly spell breakup or divorce if your credit scores significantly vary, it should serve as another motivator to whip your credit score into shape. Not only can a high credit score save you lots of money via low interest rates, but it can also potentially help your relationship.


How to Pay Down Holiday Debt ASAP

Pulse racing? Head pounding? Anxiety starting to surface?

No, we’re not talking about the hangover you may or may not have woken up with on New Year’s Day morning, we’re talking about what you felt when you took a look at your recent credit card statement. You know, the one with all of your holiday purchases on it.

Even despite a shorter holiday shopping season from Thanksgiving falling later on the calendar in 2019, holiday sales increased about 3.5 percent this year compared to one year ago, while ecommerce sales increased to the tune of nearly 19 percent from the previous shopping season. If you followed this trend, it likely meant spending beyond your means. But now that the realization has set in, it’s important to not let this holiday debt linger, and for a few reasons:

Your holiday debt is likely revolving debt, that is debt that consumers aren’t obligated to pay off each month. In fact, credit card companies don’t want you to pay off your balance monthly because they earn more off you in interest the longer it takes for you to pay it off.
It could be hurting your credit score: Holiday debt could impact your credit utilization ratio, or your balance versus your total credit limit. Usually, you want to keep this at or below 30 percent for the best possible credit score. For example, if you have a credit card with a $10,000 limit, you want to have a balance at or under $3,000 for a better credit score.

Like we said above, it behooves you to settle any holiday debt you’ve accrued as quickly as possible. Here’s a look at some of the tips to help you get it done:

Reel in Spending

Simply paying the minimum amount on your credit card isn’t going to get the job done in the near-term, so we advise taking it easy in January so you can allocate more money toward your balance. Refrain from dining out, catch a movie on a streaming platform rather than go to the theater and skip the weekly after-work happy hour. Put what you save toward your debt balance.

Reduce Your 401K Contribution

If you’re contributing to a 401K each paycheck and you’re serious about paying down your debt quickly, we’d suggest temporarily decreasing your contribution and putting the excess money toward your debt. Just make sure that you’re disciplined enough to increase the contribution when you’ve paid off your holiday spending.

Combine Debts (if Applicable)

If you have debt on multiple credit cards, it may be worthwhile to look into combining it at a lower overall interest rate so that you just have one — rather than several — monthly payments to make each month. Doing so can offer a financial savings when it comes to the interest rate and make managing your debt payments much easier.

Reassess Monthly Spending

The new year is always a great time to reassess your monthly spending. Take stock of your expenditures and chart out what’s a necessity, what’s a luxury and what you don’t need anymore. Make sure you cut out anything that you don’t need anymore and think carefully about whether or not you need the “luxuries.” You might also shop around to see if you can save money on necessities like car insurance, homeowners insurance, cell phone plans, TV packages and more to see if there’s a better deal out there. When it comes to reducing monthly spending, it’s usually not just one thing, but several little things, that can make a big difference in the end.

Federal Reserve

Fed Survey Finds Credit Card Standards Tightened in Third Quarter

If you want to get an idea on how lenders are predicting the economic future, look no further than the most recent survey from the Federal Reserve. Specifically, the survey noted that banks and credit card companies got stingy when it came to consumers opening new lines of credit in the third quarter of this year, something that typically happens during times of economic uneasiness. In fact, according to the survey, the underwriting standards for credit card approval have increased to a point that hasn’t been seen since 2009, and we shouldn’t need to remind you of the fragile state of the economy a decade ago, at the cusp of this generation’s great economic recession.

So what does this Fed survey indicate, exactly? In layman’s terms, it means that if you want to open a new line of credit, your credit score had better be in really good standing. In fact, the Fed survey specifically indicated that it’s gotten a lot harder for consumers with credit scores under 620 to get approved for new lines of credit compared to what it was at the beginning of the year when there was much more confidence about the economic outlook. The bottom line is that if your credit isn’t in good standing, banks are going to worry about your ability to pay back any loans or lines of credit that you’ve opened now in uncertain times than they would in prosperous economic times. As a result, they’re going to be more stingy about what they approve. And while we always recommend taking the appropriate steps to make sure your credit is in good standing, it’s going to be arguably more important than ever in the near-term if banks continue to tighten the strings on the money they hand out. The good news is that if your credit score is in good shape or you work to ensure that it’s in good shape, you’re likely to benefit from reduced interest rates.

How to Improve Your Credit Score

Even if your credit score isn’t below the 620 mark that we indicated above, it always behooves you as a consumer to take the necessary steps to improve it. Here’s a look at how you can get improvement fast so that you’re not on the outside looking in if you need to take out a loan or line of credit down the road:

  • Keep balances low on existing credit cards: Keeping balances low on any revolving credit that you have (i.e., credit cards) can help improve your score. Generally, expect your score to be highest if you’re at or below about 30 percent of your credit utilization rate. For instance, if your credit card has a limit of $1,000, you want to carry a balance of no more than $300 for the best possible credit score.
  • Ask for an increase in your credit limit: To piggyback off the above point, if you’re eligible for a credit limit increase that can help out your credit utilization ratio and thereby improve your score, consider taking it.
  • Check your credit report: This gives you an idea of where you stand and what needs improvement so you can come up with a plan of attack. It can also help you identify and dispute any inaccuracies that may be present on your report.
  • Negotiate away: Have outstanding balances or debt that’s gone to collections? That can really hurt a credit score. Try negotiating with the lender to settle any debts so that they appear more favorable on your credit report.

How To Travel and Not “Go Broke”

How to Travel and Not go Broke

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.