NYC Bans Credit Checks – Employment and Credit

The main reason NYC Bans Credit Checks as to why you have a credit score is a simple one – it’s a way for lenders to gauge your financial history to determine whether or not you’ll be able to reliably pay them back. Obviously, a poor FICO score indicates that you’re not an ideal candidate and there’s inherent risk, while a good score indicates the opposite. But did you know that the majority of states also permit employers to check the credit scores of potential employees as a means of measuring the same thing?

Whether you deem it fair or not, the fact is that most states allow pre-employment credit screening. But New York City made headlines in April 2015 when its city council passed a bill prohibiting credit checks for employment. The belief, of course, by New York City council members – as well as officials in California, Washington, Nevada, Oregon, Connecticut, Delaware, Hawaii, Illinois, Maryland, Vermont who have adopted similar legislation – is that one’s credit score is not a valid representation of whether someone will succeed in a professional position. Furthermore, proponents argue that credit checks can lead to discrimination among low-income or financially challenged individuals, which can actually damage credit on a whole.

Exceptions

Although it’s illegal for employers to conduct pre-employment credit checks on potential new employees in the states and municipalities mentioned above – as well as a handful of others – it’s worth noting that some exceptions apply. For instance, law enforcement positions and jobs that require state or federal clearance, are examples of instances where credit checks aren’t just recommended – but required.

Maintaining Good Credit

As we told you, the vast majority of states still permit employers to check credit scores of potential employees. And while maintaining a good credit score is important for non-job related reasons, if you live in these states, having good credit is also potentially essential to becoming employed. With that being said, here’s a look at some good tips to keeping that credit score of yours up:

Pay bills on time: Your payment history accounts for 35 percent of your overall credit score, the single biggest category. Paying bills on time is a big part of that. Do what you have to do to get this done.
Keep amounts owed down: In general, it’s best to keep your amounts owed under 30 percent of your overall credit allotment to ensure a better score. If you have debts to pay down, always put more toward high-interest loans first.
Take out different types of credit: One of the factors that goes into a credit score is the types of credit you’ve utilized. In general, the more the merrier (i.e. mortgage loans, auto loans, credit cards, etc.)

With New York City jumping aboard the banning pre-employment credit check bandwagon, many others could follow suit soon. And while that’s certainly good news for those seeking jobs, it shouldn’t minimize the importance of having a good credit score and enacting credit repair when appropriate.

Credit Card Debt and Depression – Sad News

There are various types of debt that a person can rack up. But, Credit Card Debt and Depression is scary. There’s what’s considered long-term debt, which is characterized as bank loans, student loans and mortgages. There’s mid-term debt, such as auto loans and personal loans. And then there’s short-term debt, such as credit card debt and overdue bills. According to a new study by the Institute for Research on Poverty and the Center for Financial Security at the University of Wisconsin, it’s this short-term debt that researchers have found is linked to depressive symptoms, especially if the individual is single, near retirement or uneducated.

And if you think about it – the results make sense. Long-term debt, such as a mortgage, can be thought of as an investment. So can mid-term debt, like student loans – it’s essentially debt with a purpose. However, lofty credit card debt and overdue bills – in this study, overdue bills are characterized as being more than two months late – more reflect one’s financial irresponsibility.

Study Details

The study measured 8,500 consumers over two time periods, from 1987 to 1989 and then again from 1992 to 1994 through the National Survey of Families and Households. The two time periods reflect spans where unsecured debt escalated in the United States. Respondents were asked to identify how many days per week they felt 12 depressive symptoms, of which a significant relationship was discovered between depressive symptoms and short-term debt, especially of the unmarried, near retirement or uneducated crowd, of which limited resources might exist for breaking out of such habits.

Considerations

One important to consideration about this study is that depressive symptoms and clinical depression are not the same thing. So, it’s not accurate to say, according to this study at least, that those with short-term debt are more likely to be depressed. Depressive symptoms include the likes of:

Sleep changes
Self loathing
Feelings of helplessness/hopelessness

Another important factor to take into consideration regarding this study is that it was conducted well before the national mortgage crisis and subsequent economic recession of 2009, when long-term debt was the pitfall of many people’s difficulties and many were forced into filling for bankruptcy as a result. That’s not even taking into account how much student loan debt, mid-term debt, has ballooned over the past two decades. So while this study links short-term debt with depressive symptoms, it’s a good bet that if it was held during other years, say 2009-2011, long-term debt and mid-term debt would also likely show some sort of correlation.

Regardless of what you make of this study, you shouldn’t take short-term debt lightly. For instance, payment history is the single largest factor into the makeup of your credit score. Failing to pay bills on time can directly impact that – and not for the better. Excessive credit card debt can also be a credit score killer, as generally it’s advised to keep such debt under 30 percent of your total credit allotment in order for your credit score not to take a dip.

One of Every 10 American Consumers Doesn't Have A Credit Score

No Credit Scores – 45 Millions Americans

No Credit Scores- America is a country made up of about 319 million people. However, according to a new report recently released by the Consumer Financial Protection Bureau (CFPB), up to 45 million Americans either have no history with the major credit reporting bureaus or No Credit Scores that’s so outdated or limited that they’re classified as unable to be scored.

Think about that: that’s 45 million Americans, or roughly one out of every 10 individuals in the country.

Report Details of No Credit Scores

According to the report, 26 million Americans don’t have history with the major credit reporting bureaus and another 19 million have outdated or limited credit history. The African American and Hispanic demographics were found most likely to be classified in one of the two aforementioned groups, with a 15 percent rate of credit invisibility compared to 9 percent for Caucasians. Furthermore, low income consumers are 30 percent more likely to have credit invisibility, compared to just low single digit percentages in upper income areas. No Credit Scores for 45 Million Americans.

Young adults ages 18-19 make up the majority of this “no credit score” stat at about 80 percent, as the study indicated that many had little time to build credit history or use debit cards instead of credit cards, among other reasons. Credit invisibility or lack of adequate history is also high among those 60 years old and greater.

Importance of a Credit Score

Those 45 million who don’t have an adequate credit score are obviously at a major disadvantage when it comes to getting a loan – whether it be a home, auto or student loan. But thankfully, there are a number of ways one can either build – or rebuild – credit history:

Get a secure credit card: These cards draw on money that is deposited in a bank and don’t require a credit score to obtain. Just be sure the card you choose reports to the three main agencies, as not all of them do.
Credit builder loans: These are loans where the lender makes payments over a loan’s life and then receives the money, along with any accrued interest, after this time period is over. If you belong to a credit union, you should qualify for a credit builder loan.
First credit cards: Remember, about 80 percent of those without a credit score are 18-19-year-olds. Make sure you get your kids an entry-level, low limit credit card before they go off to college or after they graduate high school so that they can begin to build credit and learn about managing it responsibly.

So if you’re among the 45 million Americans with No Credit Scores, now is the time to do something about it. And once you do, don’t forget that in order to attain the low interest loan – and loan approval altogether – benefits that a good credit score permits, it’s essential to keep it in tip top shape so that a lengthy credit repair process isn’t necessary.

New FICO Score – What You Need to Know

Presently, it’s estimated that there are approximately 53 million Americans who do not have credit scores or credit reports. Noting this, they also don’t qualify for credit access, making it difficult for these tens of millions of people to secure housing, utilities, a car – even something as seemingly simple as a cellular phone.

No credit history – or a lack of favorable credit history – and most are out of luck.

But according to a recent report in the Wall Street Journal, this could all be changing. The report states that FICO is close to releasing a new scoring formula that’s specifically designed to help high-risk consumers, as well as consumers without credit history or a credit report, access credit. The score has yet to be officially named, but the WSJ states that it’s already being tested by 12 credit card companies and expected to be rolled out on a widespread scale by the end of 2015. While it likely won’t open the door to new credit lines for all 53 million consumers that don’t have credit scores or credit history, it’s believed it will benefit about 15 million.

New FICO Score: The Basics

Much of this new FICO score is still a mystery, but there’s a lot that we already know about it. Here’s a look:

The big thing that this new FICO score will include are payment history of cable bills, phone bills, electric bills and gas bills. It should go without saying that these aren’t normally things that are included in a credit score. It will also factor in things like address changes, the thinking being that the more frequently a consumer changes residencies, the less trustworthy they are.
There are believed to be other factors that will be included in the new FICO score which can be learned from the LexisNexis database.
Standard FICO factors such as payment history, debt, credit history and types of credit would also still be used in this new model.
The scoring scale will still range from 300 to 800, but it’s estimated that about one-third of all newly scored consumers, under the new scoring model, would have a score over 620, which is generally considered the line where lenders either approve or deny.

However, while we know that a handful of credit card issuers are currently using the score, the verdict is still out on whether or not more of them – or all of them – will eventually adopt this new scoring model. Also, questions remain about how thorough and consistent the cable companies, gas companies and electric companies will be about reporting this data (or if they’ll report it at all). The bottom line is that the score appears to be a good idea in concept, and lenders will likely approve as it could mean more business – and more money. But there’s still a lot of details to work out before it can become as widespread as the current FICO score. Stay tuned…

Do You Really Know Your Credit Score? – Expert Advice

Do You Really Know Your Credit ScoreKeeping regular track of your FICO score is a good way to know you are on the right path as you repair credit and work toward greater financial opportunities. But, it turns out that the score you see when you log into My FICO or your bank’s online portal doesn’t tell the whole story. Depending on what you are buying, your potential lender can be looking at any one of 18 or more unique scores.

Why the Different Numbers?

Do You Really Know Your Credit Score? There are a couple of different reasons behind the different scores. The first is that your FICO score is generally calculated by a third-party credit reporting bureau. Experian, Equifax and TransUnion each use FICO’s software to calculate your credit score based on the information that they have in their credit reports on you. They then sell these scores to financial organizations and lenders. Each bureau typically has different information; you can see the differences when you pull your credit report. Because of this, the score that is sent your your lender will be different.

And, different lenders may emphasize different desirable qualities. A credit card company may be more interested in your ability to manage available credit. An auto lender may want to see how well you have done in the past with installment loans. While the factors that make up your FICO score will all still count, some will count more heavily than others depending on a specific lender’s needs.

What You Can Do

In general, the difference between one score and another will not be wide; if you have generally good credit, the small differences between scores may not make a difference in your ability to borrow. For large financial commitments like home loans, lenders typically will pull all three scores.

If you are particularly curious and wish to get a deeper look at your scores, Fair Isaac will soon be providing additional data. Soon, paying customers at My FICO will be able to see the 18 most popular versions of their FICO scores on the site.

In the meantime, the usual wise advice holds true. Your FICO score is based on what is reported on your credit reports. Pull all three reports once a year to check each of them for inaccuracies. Attend to any issues such as collections and missed payments right away to bring up your score. If you want to apply for more revolving credit, consider paying down the credit that you currently have. Lenders like to see under 30% utilization. If you want to buy a home, your credit history should show some sort of installment loan. Consider buying a car using an auto loan to build your history in this area.

By making responsible credit decisions and carefully monitoring your reports, you can increase your score and get access to the financial opportunities that are important to you.

Free FICO Score – How to get one.

FICO scores are used in 9 out of 10 lending decisions. But, until recently, this all-important three digit number was kept secret from consumers. A couple of years ago, consumers were given the option to see their scores for a fee. Now, in a move that makes it easier than ever to get an idea how you look to potential creditors, many banks are providing FICO scores to their customers for free.

Places You Can Get Your Free FICO Score

In an effort to empower consumers and help people get more educated about credit, many financial institutions are offering free FICO scores to their customers. Want yours? You can get access if you have any of the following accounts:

Car Loans from Ally

Ally is one of the country’s largest auto lenders. As of February, people who have their car loans through this bank will be able to take a look at their FICO scores for free.

Slate from Chase

This popular reward credit card has added FICO scores as a new perk. A representative from Chase said that customers asked for free FICO scores to better manage their finances. Since about 10 million people hold Slate cards, this is a major move toward helping Americans learn more about their credit scores.

Sallie Mae Student Loans

A student loan is often the first installment loan a young adult commits to. By offering free FICO scores, the lender hopes to help young borrowers learn more about credit.

Barclaycard and Discover

FICO launched a partnership program called Open Access in November of 2013. As part of this agreement, Discover IT Card and Barclaycard holders have been able to access their FICO scores each month on their statements.

Bank of America

If you have a credit card through Bank of America, you can start checking your statements for your FICO score later this year.

J.P. Morgan Chase

J.P. Morgan Chase’s plans to give free FICO scores was announced during the recent State of the Union address.

What Determines Your FICO Score

Your FICO score is a three digit number between 300 and 850 that is derived from information in your credit reports. It is possible to have three separate FICO scores, as a score is created for information from each major credit bureau. So, if information shows up on one credit report but not another, it can ultimately change your score. The scores are determined based on five characteristics:

Your payment history. How good you are about paying back debts you owe is the most important factor in your credit score.
The amount that you owe. People who have high levels of debt compared to the amount of credit they’ve been extended will have lower scores. Those who keep utilization low, however, will benefit.
The length of your credit history. Someone who has been responsibly using credit for a decade will score higher than someone who opened their first card last month.
Types of credit used. Many banks like to see a mix of installment and revolving credit to see how you manage different financial responsibilities.
New credit inquiries. Each new inquiry temporarily lowers your score. Seeking too much credit can make lenders worry that you are overextended.

The good news is, your score moves up whenever you make positive changes like lowering your credit card debt. Keep up good spending habits, and your FICO score will rise, giving you access to new opportunities.

Relaxed Mortgage Standards – What they mean for you.

After the mortgage crisis, lenders have gotten increasingly strict, making it hard for many people to qualify for home loans. However, new, less stringent requirements could mean that many buyers who were formerly shut out could now get the loans that will allow them to buy homes of their own.

Loans Not Available to Most Buyers

Recent figures show that almost one-third of loans went to borrowers with credit scores of 780 and above. People with scores between 700 and 790 claimed 44%. Only 23 percent of loans went to people who had scores between 640 and 699. Those with credit scores of 619 and below were completely in the cold; only 0.3% of all mortgages were granted to people in that bracket. With average FICO scores at 646 nationwide, this means that a large swath of consumers have been closed out of the housing market. This has not just been a hurdle for individuals; economists say that the tight lending market has held back a recovery in the housing market, generally dampening economic growth.

Lenders say that the tight borrowing environment is the result of deals with Freddie Mac and Fannie Mae. The organizations currently back over half of all mortgages. Lenders say that the guarantors’ policies were unclear, leading lenders to err on the side of caution. However, new standards are being released that should clarify borrowers’ circumstances and make it possible for many of those who could not borrow before to get a loan.

Easier Standards for Borrowers

The new regulations took effect on Dec. 1, so results of the new rules should be apparent soon. However, Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute, says that because the changes are big, it can take some time to see their full impact. Among the changes coming to home loans:

Faster turnaround times. Lenders, including SunTrust Banks and Wells Fargo, say that borrowers should see their applications processed more quickly. Generally, it has taken two months or more for an application for a loan to be expected. But turnarounds should be faster within the first few weeks of the new policies.
Less punishment for one-time lapses. Borrowers whose credit scores have taken big hits because of one-time events like job loss, a large medical bill or other personal catastrophes will find a more forgiving environment.
Fewer credit overlays. Lenders have been asking for extremely high credit scores and also asking for guarantees that include high income and high balances in the bank. Fannie Mae and Freddie Mac say that those stringent restrictions are more than they require, so these could be reduced or go away completely.
Less rigorous documentation. Under the previous system, a borrower who had a late payment on a car loan could have been asked to write a memo that detailed what happened and why the payment was late. This could be required even when the minor negative mark was not preventing the borrower from getting a loan. Under the new system, this sort of documentation will be less common, leading to quicker processing of loans.
Lower credit scores okay. In the past, many lenders would not consider a borrower under a score of 660. But, mortgage company Mason-McDuffie of California said that the new rules can let them consider credit scores as low as 620, which is the limit for loans that are backed by Fannie Mae or Freddie Mac.

More Opportunity

Amid all of these changes, it is expected that hundreds of thousands of borrowers will now be eligible for home loans. The Urban Institute says that as many as 1.2 million additional mortgages would be written every year if loan availability were to go back up to what are regarded as normal levels. There is strong optimism that the new rules can speed up the economic recovery and improve the finances of millions of individuals.

If you have wanted to buy a home but strict rules were keeping you out of the game, now could be the time to start preparing. Take a look at your credit health and fix up any minor blemishes. The attention to these details can mean not just getting a loan but ensuring that you get the best possible rate available. Talk to us today about the steps necessary to improve your credit and qualify for the newly available loans that can get you into a home of your own.

Credit Repair Procrastination – Why do we wait?

It’s not uncommon to be afraid to dig into your finances. Many people feel that they don’t properly understand their finances or that it’d be difficult to learn. Not sure what is holding you back? Read on to learn common reasons that people avoid .

Why Are You Avoiding Repairing Your Credit? Credit Repair Procrastination

1. You think it’s too difficult.

If you did not get a good education in personal finance, you may not know a lot about credit. Luckily, there are many resources to help you learn. Knowing what goes into your credit score can help you predict the outcome.

2. You think your credit doesn’t matter.

If you pay in cash for everything, you may think your credit score doesn’t matter. However, bad credit can affect every aspect of your life from where you can get a job to how much you pay for insurance.

3. You don’t know how much you owe.

Not sure what your debt is? You’re not alone. According to The New York Times, people tend to report in surveys only about half as much as credit card companies say is owed to them.

4. You don’t have the funds to pay off old debt.

A recent study found that, on average, people with delinquent debt owe over $5,000 in credit card debt, past medical bills and other types of debt. can feel impossible if you don’t have the money on-hand to pay back your creditors.

5. You don’t know where to start.

If you’ve never examined your credit, you may not even know how to start to repair credit scores. Look online for credit tips to find out what you owe and how to start debt management.

6. You don’t know what to do about erroneous debts.

Looked at your credit report and found that you don’t know what some of the entries are for? As many as 42 million people have errors on their credit reports.

7. You think you don’t have the time.

can be a time-consuming activity. But, with the help of quality companies, you can outsource some of the leg work while reaping the benefits of a better credit score.

8. You are embarrassed.

Many of us have had debt management issues due to youthful disregard for financial responsibilities or getting in over our heads with credit card debt. But, your bad credit won’t go away unless you confront the issue head on. Credit Repair Procrastination is common.

9. You don’t want a significant other to know.

There aren’t any hard figures on how many people are hiding debt from a husband or wife, but, the issue is common. By confronting your debt and working to repair your credit, you can build a better relationship and better possibilities for your shared future.

10. You feel alone.

Few people talk about their debt issues, so, you may feel like you are the only one who has struggled with bad credit. Caring companies can help you through your struggle and help you overcome any feelings of isolation, while giving you credit tips and the tools to build a better financial future.

For additional information on how you can start repairing your credit, feel free to Sign Up for $0 Today.

Home Insurance Costs – How Credit Will Impact them.

You already know how important a good fico score is to getting approved for loans and securing the best interest rates available for them. But you probably didn’t realize the impact it has on your home insurance premiums.

Yes, contrary to what you may have heard elsewhere, your credit score has a direct effect on how much you pay for homeowner’s insurance. For instance, according to PropertyCasualty360:

Homeowners with bad credit pay up to 91 percent more in home insurance premiums than those with excellent credit.
Homeowners with average or good credit pay almost 30 percent more than those with excellent credit.
The FICO score is used by about 85 percent of the nation’s home insurance providers in determining risk.
West Virginia, Washington D.C., Ohio and Virginia are where there’s the biggest discrepancy between premium costs for those with poor vs. excellent credit.
California, Massachusetts and Maryland are the three states that prohibit insurers from weighing credit scores into home insurance premiums.

Now there are a lot of factors that also determine an insurance premium (i.e. age of the home, proximity to water, crime rates, etc.), but it’s not unreasonable to think that someone with excellent credit could save hundreds of dollars per year compared to someone with poor credit when it comes to home insurance. Say for example that a homeowner with excellent credit pays $1,000 a year for home insurance. That same homeowner with poor credit may pay $1,910 per year – a whooping $910 more just because of their credit score.

So just why is your credit score weighed so significantly when you’re shopping for home insurance? It’s because creditors have found that the credit score is a great predictor of risk. Therefore, it’s implied that those with poor credit are more likely to file a claim than those with excellent or good credit. It doesn’t matter whether it’s fair or not – it’s a fact that your credit score is a big influencer on your insurance policies.

So if your credit score is lacking, you’re likely paying out the nose on your home insurance as well, making debt management and working to repair credit all the more important. Here are some credit tips on how to increase your score – and thereby save:

Pay bills on time: This accounts for 35 percent of your FICO score, making on-time payment key.
Get finances in order: If you can pay down your debt so that it’s around 30 percent of your total credit allotment, you’ll see your score rise.
Check your credit: Get into a habit of occasionally checking your credit report and looking out for any errors. Errors are common and can negatively impact your score, so if you notice any discrepancies, contact that party and set the record straight.
Don’t go crazy: Don’t think that closing a paid off account is the answer to credit repair. In many cases, it won’t. Why? Because when you close an account, you also reduce your total credit allotment. Conversely, opening new accounts to increase your allotment isn’t a great credit repair solution either – especially if you run those amounts up.

As you can see, a good credit score is very important for much more than just qualifying for loans at low interest rates. For additional information feel free to Sign Up for $0 Today.

Professional Credit Help – What you need to know.

As you know, credit scores are essential to qualifying for – and locking in low interest rates – on the likes of credit cards, home loans, car loans and more. Furthermore, your credit score is often weighed into your homeowner’s and auto insurance policy premiums. Bottom line – it behooves you to have a favorable credit score.

Unfortunately, for about 1 out of every 5 Americans, that’s not the case. However, just because you have a poor credit score doesn’t mean

that it will be poor forever. Enacting simple credit repair tips like making on-time payments, paying down debt and regularly monitoring your credit can all go a long way in a relatively short period of time to repair credit. But for many Americans, routine debt management can be insurmountable based on the number of maxed out credit lines, payments that have gone to collections, etc. Thankfully, there’s help out there –
and people stuck in these more dire financial situations may choose to work with a credit repair agency to manage debt and improve their credit score.

Credit Repair Agency: The Basics

Simply put, a credit repair agency works with consumers with poor credit – and their creditors – to reach agreements that are satisfactory to both the consumer and the lender and to remove erroneous credit information.

What Can They Do for You?

Credit repair agencies through their Professional Credit Help system can help consumers with a variety of different credit issues. Here’s a look:

Challenge erroneous data: A credit repair organization will challenge the in-accurate data on a credit report working with both the 3 major credit agencies and the creditors directly.
Negotiate with lenders: They have the experience and know-how to negotiate with lenders on outstanding debts to come up with what’s normally a reduced payment amount to appease both the consumer and lender. Lenders aren’t always willing to negotiate, but those that do can help consumers reduce debt and raise their score.
Monitor credit: Here’s a credit tip: It’s estimated that 1 out of every 5 Americans has a mistake on their credit report. A good credit repair agency can help remove errors from your report, as well as those errors that cannot be verified.

It’s worth noting that while a credit repair agency will likely provide you with the tools and plan to get out of debt and raise your credit score, it’s up to the consumer to execute it. The one thing to take caution on when selecting a credit repair agency is the legitimacy of the business. While there are many credible, honest companies out there to help, there is also a bevy of fly-by-night, scammers that aren’t qualified to repair credit.

For additional information on how our company can improve your credit score, feel free to Sign Up for $0 Today.