5 Surprising Ways You Can Hurt Your Credit Score


Everyone knows that missing a payment can hurt your credit, but did you know that applying for credit can also lower your score?

Behavior like missing your payments is widely known to be bad for your credit score, but there are many ways you can hurt your score—some of which are a little less well-known. We rounded up five things that are pretty common behaviors, and one that, quite honestly, is just really annoying.

1. Getting a credit card charge-off.

You know missing payments is bad, but you may not have realized how bad it can get. Miss too many credit card payments and the credit card company will decide you aren’t likely to ever make those payments. That’s when they hit you with a charge-off.

When you account is charged-off, it basically means that it’s been shut down. You will no longer be able to use that card to make purchases, take out cash advances, transfer balances, etc. However, you will still definitely be liable for paying back the charged-off balance. That credit card has turned from a useful financial tool into nothing more than a chunk of debt that you have to repay.

Your credit card company will report the charge-off to the credit bureaus, and the information will remain on your credit report for seven years—starting from the date that you first became delinquent on the account.

That charge-off will cause your credit score to drop—and it won’t be a tiny drop either. Payment history is the single most important part of your credit score; it makes up 35 percent of your total. Luckily, your score will improve over time—assuming that you continue to make all your payments on time—but that first drop will be a rocky one.

2. Applying for more credit.

When you’re trying to get a new loan or credit card, most legitimate lenders will want to perform a credit check before determining if they’ll lend to you. That’s because your credit score is seen as an indication of your likelihood to pay back any money you borrow. But not every credit check is the same; some are hard credit checks while others are soft credit checks—and they affect your score in totally different ways.

With a hard credit check, your entire credit report is pulled for the lender to examine. These checks are themselves recorded on your credit report—and since they represent an instance of looking for new credit, they can cause your score to lower. (For more, check out how “new credit inquiries” factor into your score.) You have to give permission before a lender can run a hard check.

Soft credit checks, on the other hand, do not require your permission before they can be run. However, they also don’t return nearly as much information. They’re not a full deep dive into your credit history; they’re more like a summary. They also aren’t recorded on your credit report and do not affect your score. These checks can be run by anyone. If you’ve ever received a “pre-approved” loan or credit card offer in the mail, it’s because someone ran a soft check on your report.

If you can’t qualify for a bank loan and need to get a bad credit loan instead, you should stick with lenders who perform soft credit checks. That way, your score won’t be impacted and there won’t be any risk in applying. Additionally, you should do your best to avoid no credit check loans at all costs. Not performing any sort of credit check is a flashing neon warning sign that the lender doesn’t care about your ability to repay. In fact, they might stand to make more money by giving you a loan that you can’t afford and trapping you in a long-term cycle of debt.

3. Carrying any high balance on your credit card.

Paying your credit card bill each month is great, but it’s not enough to maintain good credit. Ideally, you want to pay your credit cards off in full every month—that way, you get all the benefits of using one, like points or miles, without accruing any interest. But lots of us carry balances on our cards from month to month, paying them down a little at a time.

Here’s the thing: A lower balance is much, much better for your score than a high balance. At 30 percent of your overall credit score,  your “amounts owed” is the second most important factor in your score. But we’re not going to just sit here and tell you to “owe less debt,” cuz that’s kind of obvious and isn’t super helpful. If you’re carrying high balances, you should aim to get them down to 20-25 percent of your total. Doing so should lead to a nice little uptick in your score.

And you should also be warned that most issuers report balances before your payment is received. So even paying off your balance in full every month could leave you vulnerable to high balances. To be safe, you should always avoid spending more than 30 percent of your balance, even if you plan to pay to it off by month’s end. Otherwise, you’ll risk negatively impacting your credit score for no good reason.

4. Failing to have a diverse credit mix. 

Okay, so spending too much money on your credit card—even if you’re paying it off every month—can be bad for your credit. Clearly, the solution is to just not have a credit card, right?

Wrong! That’s also bad for your credit. Yet another factor in your score is your “credit mix,” which tallies all the different kinds of credit that you’ve taken out. It looks at credit cards versus student loans versus mortgages and auto loans versus personal loans, etc. So if you think that you can take care of your credit score by, for instance, paying back your student loans without ever having a credit card, you’re wrong.

If you have bad credit and can’t qualify for a standard credit card, you should consider getting a secured credit card. Secured cards require you to put down some money as collateral that also serves to set your credit limit. So a $500 deposit would give you a $500 limit on your card. The great thing about these cards is that the lenders who issue them will report your payment information to the credit bureaus, which makes them a great method for rebuilding your credit.

5. By having the same name as someone else with bad credit. 

Yeah. It turns out that your credit score can be negatively affected without you doing a darn thing wrong! You can do everything right—pay your bills on time, keep your credit card balances low, only apply for new credit when it’s totally appropriate—and your score can still get dinged if the credit bureaus mix up your info with someone else’s.

Now, it’s totally understandable that the credit bureaus would make mistakes. After all, they are keeping detailed records for hundreds of millions of adults across the US. Errors are an inevitability. But that doesn’t make it any less frustrating when your information gets confused with someone else’s, especially if they’re making poor decisions with their credit.

Oftentimes, these errors will arise from you and that other person having a same or similar name, resulting in what’s called a “mixed” file. Other times, this incorrect information on your report could be the result of something much more serious. It could be an indication that someone has stolen your identity.

In order to keep on top of your credit report, you should be regularly checking it for inaccuracies. Here’s the good news: You can request three free copies of your credit report per year, one from each credit bureau. To order your free copy today, just visit AnnualCreditReport.com.

If you find an error and need to have it corrected, just follow the instructions laid out in our blog post, How Do You Contest Errors On Your Credit Report? When it comes to preserving your good credit—or improving your bad credit—you have enough to worry about without someone else’s mistakes ending up on your score.

To learn more about ways you can fix a bad credit score, check out these related posts and articles from OppLoans:

What questions do you have about credit scores? We want to hear from you! You can email us or you can find us on Facebook and Twitter.

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Loan Sharks: “You’re Going to Need a Better Loan”

Sharks are stealthy, dangerous and so much fun to observe (from the safety of your couch). But what about the other dangerous predators that share their name?

Updated: May 3, 2018

DUUUNN DUN, DUUUNN DUN! Shark week might only come once a year, but there’s one kind of shark that’s always skulking around, waiting to feast on your finances: the dreaded loan shark.

Here’s something we all can (probably) agree on: real, water-based sharks are fascinating. They’re stealthy, dangerous, and so much fun to watch from the comfort of your couch as they turn the vast ocean food chain into their own personal buffet.

But while sharks might be dangerous if you’re a dolphin or particularly dense bloom of plankton, the truth about sharks is that they’re much less vicious than the predators who share their name.

While normal sharks feast on schools of fish, loan sharks spend their time terrorizing humanity, patrolling underbanked neighborhoods and the depths of the internet (we’re looking at you, shady online payday loan companies!) for fresh meat.

Want to avoid being devoured by a predatory payday or title lender? Throw on your scuba gear and join OppLoans as we hit the high seas and hunt us some loan sharks!

What do sharks and payday lenders have in common? A lengthy sordid past, for one.

Sharks as a species have been around for a long time, about 400 millions years, to be exact. In fact, these terrifying beasts of the open sea actually predate dinosaurs. Okay, so loan sharks don’t date back that far. But ever since loans have been a thing (and those suckers are mentioned in The Bible, so it’s been a while), there have been loan sharks out here taking advantage of borrowers.

Let’s take a step back for a moment. What is a loan shark, exactly? The media commonly refers to modern-day loan sharks as “predatory lenders,” and these are companies that charge unreasonably high interest rates to borrowers who may be unable to repay their loans.

Like a great white shark stalking an injured killer whale, predatory loan sharks look for prey that’s down on its luck, targeting primarily underprivileged communities filled with individuals who have no other options for fast cash.

When faced with a financial emergency, people with bad credit, low incomes, and no way to access traditional lines of financing like bank loans or credit cards, often turn to predatory lenders offering no credit check loans.

But many payday and title loan sharks don’t even verify borrower income before doling out the loan, and when all is said and done, a cash-strapped borrower can be trapped in a seemingly endless cycle of debt, when those sky-high interest rates come back to bite them.

Some examples of loan sharks? Storefront and online payday lenders, who charge upwards of 400 percent APR (annual percentage rate), and give borrowers crazy-short terms (sometimes as little as 14 days) to repay their loans.

Which is more dangerous? A loan shark, or a regular shark?

Ask a shark that question, and he’ll tell you his species gets a bad rap. We’re inclined to agree.

In 2012, the average payday loan borrower took out eight loans (for about $375 each) and paid $520 in interest and fees alone. Consider that for a moment. Paying that much for a small loan from a bank is unheard of, and even though credit card interest can be a dangerous thing to play with, you won’t see credit card borrower paying more than 400 percent APR!

Why are borrowers who are already struggling financially being hunted by these predators?

Because they pay.

According to the Consumer Financial Protection Bureau, 80 percent of payday loan borrowers take out another loan within a month of paying off their previous loan. Meanwhile, just 3 percent of the known 500 species of shark are known to have attacked humans.

Do you want to know what the average number of people killed by sharks every year is? (Drumroll, please.) It’s ONE. By contrast, in 2010, 12 million Americans took out a payday loan last year.

You tell us what’s more dangerous: taking a refreshing ocean swim, or drowning in debt? We’ll take our chances in the salt water, thank you very much!

Don’t be a loan shark’s next victim.

Here’s the rub: just because you THINK you have to do business with a loan shark, doesn’t mean you actually do. Sure, your credit might be shot, and you might not have the cash you need to make your next rent, utility or car payment. But don’t let those smooth-talking sharks convince you they’re your only hope.

A better option? Get a safe and responsible personal installment loan from OppLoans.

Instead of being forced to take out a small cash loan with sky-high interest rates they’ll need to pay back within two weeks, our customers receive loans between $1,000 and $10,000, which have up to 36 months to repay.

OppLoans provides fast cash—even to people with bad or no credit—with interest rates that are up to 125 percent lower than payday lenders.

In addition to our lower rates and more flexible terms, we report payments to the credit bureaus which can improve your credit score as you pay off your loan over time.

Want to learn more about predatory lenders? Check out these related pages and articles from OppLoans:

What are your best tips for steering clear of loan shark waters? We want to hear from you! You can email us or you can find us on Facebook and Twitter.

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10 Tips to Help You Score That Big Promotion

Doing a great job is step one, but you have to make sure your bosses know you’re ready for a new challenge—and a bigger salary.

You want to get ahead, but you’re not sure how. You think you’re really good at your job—you’re great at it, in fact—and yet that big promotion always seems to elude you. What gives?

Well, working hard and being good at your job are good foundations for getting a promotion, but they’re not the entire ballgame. You have to make sure that your bosses understand your value and your career goals. A promotion isn’t a reward based on what you’ve already done, it’s a bet on what you are going to do moving forward.

We asked a number of employment and HR experts what their best advice was for people looking to score that big promotion. Here’s what they had to say.

1. Show your worth

Doing good work is always a good step towards being promoted. But crushing a project isn’t going to help much if no one actually notices how well you did. To that end, Steve Pritchard, HR consultant for The London School of Make-Up (@londmakeup) recommends that you make your worth known:

“Never expect that what you do at work will be instantly recognized by staff higher up in the system, if you’re doing nothing out of the ordinary,” says Pritchard.

“Make a point of your goals for the company and what it is you are doing to help your company achieve great results. Don’t let your hard work go unnoticed, but at the same time, don’t force your opinions or work achievements on your boss/managers.”

Make sure you do this strategically and professionally, setting pre-established values and pointing towards how your efforts have tangibly helped the company—and doing all of this within an appropriate setting, like a quarterly review. This is all to say, don’t just walk around your office loudly proclaiming about how you crushed it. Please.

2. Learn new skills.

According to Dr. Timothy G. Wiedman, Professor Emeritus of Management & Human Resources at Doane University (@DoaneUniversity), you can make yourself more valuable to your company—and make yourself more promotable, by continually learning and adding new skills to your repertoire:

“Make yourself more valuable to the organization by keeping your skills up-to-date.  Take courses, attend seminars or webinars, and/or earn job-related certifications. Many organizations will contribute financially to your continuing education, but you may have to ask.  And don’t keep your self-improvement activities a secret. Don’t brag, but do keep your boss informed about those activities.”

3. Manage your time and stay busy.

Sure, everybody would love to add some extra skills? But who has the time? Well, VitaMedica (@vitamedica) Chief Marketing Office Stuart Ridge has a great recommendation. Avoid downtime at work and use those extra hours to improve your skill set and take on new projects:

Always find work for yourself. While you shouldn’t be constantly stressed and overbooked, be sure to fill your slower times with additional projects, supplemental trainings, or assisting another team. This not only shows your superiors that you take initiative and work hard, but also helps you develop the skills needed to advance.

4. Help your boss.

Simply put, your boss is one of the most important people in your life when it comes to getting a promotion. Either they’re the one giving you the promotion, or their the one whose recommendation will seal the deal.

Are you looking to get a promotion? Make sure that you are helping your boss achieve their goals, and take pains to make sure they understand just how valuable you are. According to Pritchard:

“The boss is your priority when it comes to getting a promotion; they need to know that you’re willing to go above and beyond. Set up a meeting with your boss to find out exactly what it is they want to achieve out of a particular task, or their overall goals for the end of the month and suggest ways in which you can help to achieve them.

You want to show your boss you’re in your job for the long run; by suggesting new ideas and strategies for your company to thrive, you’re showing your commitment to the job, which will not go unmissed.”

5. Show professional courtesy.

If your bosses don’t see you as a professional, then they are less likely to think you’re worthy of a promotion. While no one wants to be bland automaton at their job, there are many ways that you can let everyone know that you are serious about your job.

Professor Wiedman has four tips in particular:

  • Be punctual.  Always get to work on time and get to meetings and appointments early.”
  • Participate in discussions at meetings and ask relevant questions (but do not go overboard—respect others’ air-time).”
  • Meet all deadlines.  Always get an early start on projects so that the unexpected will not trip you up: Procrastination ruins careers!  (And keep in mind that this is doubly-true in a team-based environment where colleagues rely upon your contributions!)”
  • Spell-check and proof-read all written communication (including e-mails) sent to bosses, colleagues, and all outsiders connected to the business.  Your written communication reflects upon your competence, so punctuation and grammar do matter!”

6. Prove you’re ready.

There’s a reason that people don’t go up to their boss on their first day and demand a promotion: They haven’t done anything to earn it yet! If you want to get promoted, you not only have to show that you’ve done the work, you have to prove that you are ready for the added responsibility.

“If you want to be promoted at work, you’ll need to be able to prove that you are ready to take the next step forward,” says Deborah Sweeney, CEO of MyCorporation.com (@MyCorporation).  Promotions, while they do include a nice pay bump and title change, also mean an increase in workplace responsibilities.”

“You’ll need to be able to show your employer examples of moments when you took initiative and it paid off to benefit your department and the overall company. Promotions also help groom you for leadership roles, so you should be able to demonstrate moments where you helped lead or guide a team too.”

7. Ask questions and admit mistakes.

You’ve heard advice already about learning new skills, and the same goes for general work-related knowledge. If someone says something you don’t understand, ask them what they mean! Don’t worry about feeling stupid or uninformed; it’s much better to get the information you need and use it than to avoid a momentary bit of awkwardness.

“If you do not know something that’s job-related, ask!” says Wiedman. “A question that should have been asked—but wasn’t—can have catastrophic consequences that may never be forgotten.”

The same goes for making mistakes. If you screw-up, don’t hide it. That will only make things worse. People admire the character of people who immediately admit their mistakes. And character can go a long way towards getting your promoted.

“When you have made a mistake, admit it.  Immediately.  Do not wait to see if the boss has noticed.  Most bosses are more observant than you may think they are,” says Wiedman.

8. Manage expectations early on.

“Set the foundation for an eventual promotion from day one of a new job by making a solid first impression,” says Ridge, “but don’t maximize your successes straight from the beginning.” You’re much more likely to get a promotion if your boss doesn’t see your request for one as a huge surprise.

Ridge also advises that setting concrete goals, and finding the right balance between impressive goals and reachable ones—is a great way to set you on the path to a promotion:

“When setting goals with your boss, identify what your true “reach” goal would be, and then set the expectation slightly lower. This makes it easier for you to guarantee that you will hit all your goals, and makes it far more likely you will exceed them, giving you an excellent reputation come promotion time.”

“Keep in mind that this doesn’t mean setting overly simple goals for yourself. Find goals that your boss will see as in line with the requirements of the position, but that you know you will be able to exceed.”

9. Look for feedback.

Have you ever played pin the tail on the donkey? Can you imagine how difficult that game would be if you had no one directing you? The same logic applies to your performance in the workplace. If you aren’t getting feedback, how are you going to know what you need to improve!

“Tell your boss and your colleagues that you welcome constructive feedback so that you can continually improve your workplace performance,” says Wiedman, adding, “And then, use the feedback that you receive!”

That last bit is crucial. Listening to feedback is one thing. Acting on it is another. It’s something that a lot of people have difficulty with. Showing that you can use feedback to improve your performance will definitely make you stand out from the pack.

10. Be prepared.

This last bit is important. If you want to get a promotion, be prepared to ask for one. And if you’re going to ask for one, you should also be prepared to, well, to be prepared! You don’t want to go in and ask for a promotion without a plan for the conversation that’s going to follow.

HR expert and consultant Laura MacLeod (@FTIOProject) breaks the whole thing down into three steps.

  • “Do your research. This means: Document what you have done for the company, how it has benefited- culture or bottom line. Check out HR policies on promotions and talk with trusted colleagues who can shed light on when/how workers have been promoted in your department and company-wide.”
  • “Make an appointment to speak with your boss. Practice at home how/what you will say. Be clear, concise and direct. State facts on how you benefit the organization and are valuable. Your seniority, loyalty, etc. Give examples. Know your career trajectory and explain why and how the promotion makes sense both for you and the company.”
  • “If you don’t get the promotion, ask for an explanation. Frame it as: I’d like to know how to improve my work- understand expectations so I can continue to benefit the company. ALWAYS gear your pitch toward the company—How have you helped the company grow/improve/profit? That is your value.”

There is no perfect way to receive or ask for a promotion. But follow the tips laid out in this article, and you’ll be well-positioned to start getting ahead.

If you decide you’d rather work somewhere rather than get a promotion, you can check out these related posts and articles from OppLoans:

What are your best tips for scoring a promotion? We want to hear from you! You can email us or you can find us on Facebook and Twitter.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN


Laura MacLeod created From The Inside Out Project® (@FTIOProject) with all levels of employment in mind to assist in maintaining a harmonious workplace. Laura is a popular professor in graduate studies at the Hunter College Silberman School of Social Work and is published in Social Work with Groups Journal. Laura leads training sessions and staff support groups at Housing Works in New York City and speaks at conferences across the country.  
Steve Pritchard is an HR consultant who seeks the best from employees, striving to always take an original, innovative approach. Having previously worked in business and marketing, HR was a natural step to progress even further his career. Steve has now been working with The London School of Make-Up (@londmakeup) for over three years, handling HR and introducing new ideas to combat sensitive situations, with an aim to put both the employer and employee at ease in even the toughest situations.
Stuart RidgeStuart Ridge is the Chief Marketing Officer at VitaMedica (@vitamedica), a physician-formulated nutraceutical company that supports people in achieving optimal health. He has over 20 years of experience in marketing and managing high-performing marketing teams.
Deborah SweeneyDeborah Sweeney is the CEO of MyCorporation.com (@MyCorporation). MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and Twitter.
After completing 13 years as an operations manager working at two different ‘Fortune 1000’ companies, Dr. Timothy G. Wiedman spent the next 28 years in academia teaching courses in management, human resources, and quality control.  He is a member of the Human Resources Group of West Michigan and does annual volunteer work for the SHRM Foundation.  He holds two graduate degrees in business and has completed multiple professional certifications.

How Will Moving Countries Impact Your Credit Score?


Credit scoring methods change from country to country—and changing countries could mean starting over from square one.

You’re here because you want to know how moving to a new country will impact your credit. Maybe you’re planning to move because you need a change of pace or because you have a great new job opportunity—or maybe you’re having credit issues and specifically wondering whether moving countries could fix your problems.

Either way, you’ve come to the right place. We spoke to people who moved countries and found out what sort of change, if any, taking your credit score across a border causes.

Spoiler alert: There will be changes.

Wait, what’s a credit score?

Before we get into how moving to a new country will affect your credit score, let’s quickly make sure we all know exactly what a credit score is.

Your credit score is a three-digit number created through information gathered by the three major credit bureaus: Experian, TransUnion, and Equifax. This number is used by all manner of lenders to determine if they’ll lend to you and at what rate.

In general, a score above 720 is considered a great credit score, while 719 to 680 is considered good credit, and anything below 550 is considered poor credit.

Your credit score can have a big impact on nearly every aspect of your life, from educational to professional, so you’ll definitely want to pay all of your bills on time and pay off your debts whenever possible to keep your score as high as possible.

To learn more about how credit scores work, check out our Know Your Credit Score blog series.

Move out of the US and your score will basically reset to zero.

You may not be surprised to learn that moving to a new country has a major impact on your credit score. You may be surprised to learn that some other countries have a very different approach to credit.

“As someone who has moved countries and moved back, I can confirm that moving countries can have various effects on your credit score—not all of them desirable,” advised Ben Taylor, a writer who has lived in the United Kingdom and Portugal and offers advice for freelancers at Home Working Club (@homeworkingclub).

“Not all countries have the kind of sophisticated credit scoring systems people are used to in places like the UK and the USA. In some countries (Portugal is an example), applications for credit have a more significant ‘manual’ element with more human decision-making involved.”

But even though the US and UK have similar credit systems (Experian is a UK company, after all) that doesn’t mean your credit score carries over when you move across the Atlantic. Nick Brennan, founder and CEO of MyUKSIMCard.com (@UKSimCard), learned that lesson first-hand:

“I moved to London a year ago so I have a unique perspective on what happens to your credit score. Here are the main points:

“Everything resets to zero. The slate is wiped clean! That can be a good thing (if you have a bad credit score in your home country) but it can be a bad thing too (if you have a good credit score). I was the latter, and I found I couldn’t even initially get a $50USD/month postpaid/contract cell phone plan because I didn’t have any credit history. So in a way having no credit history was just like having a bad credit history.

You can build your credit with just a few credit card transactions a month.

“I started getting myself a credit history by doing a few little things,” says Brennan.

“Applying for a couple of low limit credit cards and immediately putting some transactions on them and then paying the bill in full each month. This started giving positive marks on my credit file. Even if you keep using your USA credit card for most transactions, just put a few small transactions each month on the local credit card so that your repayment history is uploaded monthly to your credit file by the credit card provider.

“Putting my name on the electoral roll for my local council (in the UK, non-citizens can vote in their local council elections). My name on the electoral roll is placed on the credit file and assists with your credit score (it shows further ‘proof’ of your residential address).

“Setting up a local UK bank account and having my utilities paid automatically through the bank account. Again this started giving positive marks on my credit file.

“In the UK, one of the main credit reporting agencies is Experian. They have a service where you can pay a small amount to get a copy of your credit file. This is a good way to see the criteria they use when scoring and then try to fill in those blanks, but also to monitor any issues on the file (for example if they have confused you with someone else with a bad credit history).

“Over the ensuing 12 months, I saw my credit score go from very poor, to poor, to fair, to good, to now excellent! I achieved this through the methods above and ensuring the credit cards were paid in full each month and the utility bills were being automatically paid from my bank account.”

But what if you’re just moving across a land border?

The same thing happens if you move to the US, even from Canada.

You might understand that you’ll have to go through a reset when you travel overseas, but surely crossing into a neighboring country can’t have such big credit ramifications, right? Wrong, as Andrew Stephenson, director of product marketing for New Air Appliances (@NewAirUSA) learned.

“In Canada, I had a good credit rating—having owned two properties, credit cards, etc and was pretty much debt free (other than a mortgage),” Stephenson told us. “I had 40 years of credit history in Canada. The company I worked for moved me to the US and my credit score went to zero. Amazingly, two countries that are physically connected and do so much business together you think would share credit info. But alas, no.

“I had to start over, to the point of having my company co-sign on a credit card for me because I couldn’t get approved. This also applied to trying to get a cell phone as well—T-Mobile is one of the only US carriers that will do a Canadian credit check. Three years later in the US, I have an excellent credit score and recently bought a house in Orange County, CA.”

And you definitely don’t want to make any moving decisions too hastily. Because credit changes can’t always easily be undone.

You can’t go home again. Well, you can, but it’ll screw up your score again.

Just because you move back to your original country doesn’t mean your credit will automatically go back to what it was. As Taylor explained:

“However, things don’t usually work out so well in the other direction. Being away from a country with a refined credit scoring system can be problematic when you return. If faced with an application for something that needs several years of addresses, many systems won’t cope with an overseas address, meaning it can take years to build a credit score back up. A gap of several years takes automated systems ‘off script,’ which can leave people who’ve been out of the country for a while unable to access relatively simple things, such as car finance and cellphone contracts.”

Moving countries is a big decision, and it’s one that has a big effect on your credit score. If your credit is already bad, moving can give you something of a clean slate. But it should probably only be one factor among many in such a huge life decision. If you’re thinking of moving abroad solely to escape bad credit, we can assure you there are simpler solutions.

To learn about how you can fix your credit score, check out these related posts and articles from OppLoans:

What are your favorite savings strategies? Let us know! You can email us or you can find us on Facebook and Twitter.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN


Nick Brennan is the Founder & CEO of MyUKSIMCard.com (@UKSimCard) which offers prepaid SIM Cards with data, minutes and texts for Americans heading to the UK and Europe.
A 20-year industry expert in Consumer and Digital Marketing, Andrew Stephenson moved from Toronto, Canada to Orange County, California for work in 2015 to build a digital innovation center for his previous agency. Currently, as Director of Product Marketing for New Air Appliances (@NewAirUSA), Andrew and his team oversee the planning and execution for new product launches through a mix of content marketing, online advertising and influencer marketing that connects with consumers along the path to purchase. 
Ben Taylor is a former expat in Portugal who now lives in the UK. I discuss my experiences of life overseas at MovingToPortugal.org and provide advice to freelancers at Home Working Club (@homeworkingclub).

Can a Cash Advance Actually Help Your Credit?

Cash advances just show up as normal credit card purchases on your credit report.

When you’re in a financial bind and you need some quick cash, taking out a cash advance on your credit card can be an okay solution. Sure, they don’t come with the ludicrously high interest rates and short repayment terms of a payday loan, but they’re still much costlier than just maintaining an emergency fund.

If you’re living paycheck to paycheck, you should also consider how a cash advance will affect your credit score. After all, a higher score will lead to lower (i.e. better) interest rates down the line, which means a rosier financial outlook overall.

But how does a cash advance affect your credit score? Is there a chance that it could even help your score in the long run?

A cash advance is a loan you take out on your credit card.

When you make a normal purchase on your credit card, that amount you spend is added to your total balance. The same is true when you take out a cash advance, the only difference being that you receive cash instead of a purchased item. If you were to take out a $60 advance, you would receive $60 in cash and $60 would be added to your total balance.

When it comes to repaying your cash advance, nothing changes from how you would regularly pay down your balance. Ideally, you should pay off your balance in full every month, but your monthly minimum payments would only marginally increase with a cash advance added to your total versus a regular purchase.

A cash advance is convenient, but it’s much more expensive than just using your card.

However, there are some very important differences between cash advances and regular credit card transactions. For one, a cash advance comes with a higher interest rate than normal transactions. The difference will vary from card to card and from customer to customer, but the average credit card APR  is a bit over 16 percent while the average cash advance APR is almost 24 percent. That’s a big difference.

Second, there is no way to avoid paying interest on a cash advance. With a standard credit card transaction, there is a 30-day grace period before interest starts to accrue. This is why it’s so important to pay your credit card off every month; it means borrowing money interest-free! But with a cash advance, interest starts accruing immediately. While it’s still a good idea to pay off your cash advance as soon as you can, there’s just no way to avoid paying interest.

Lastly, you’ll typically get charged a fee for taking out a credit card cash advance. And it’s not a tiny fee either. The average cash advance fee is usually something like $10 or 5 percent, whichever is higher. That means that a $500 cash advance would cost $25 right off the bat!

Does a cash advance have any effect on your credit score?

Luckily, a cash advance won’t have any real effect on your credit. They aren’t recorded separately from other credit card transactions on your credit report, so the credit scoring algorithms have no way of knowing what’s a cash advance and what’s a regular transaction. All they’ll see is a higher credit card balance.

If you’re sensing a “but” coming, you are correct. Because, while cash advances won’t get noted on your credit score, a higher credit card balance will get noted and could possibly hurt your score if it grows too large. Your total amounts owed makes up 30 percent of your credit score, so taking out $1,000 cash advance and adding that thousand dollars to your balance could definitely lower your score.

And a cash advance definitely won’t help your score. Taking out additional debt and paying more money towards interest just means higher balances and less room in your budget to pay them down. In theory, paying off a cash advance would help your score since it will get noted in your payment history (which makes up 35 percent of your score) but it’s not really going to have any effect. Failing to pay your bill on time, however, will have an immediate negative effect.

Some “cash advance” loans are actually payday loans in disguise.

There are several types of no credit check loans that like to call themselves “cash advance” loans, possibly to make them seem more like credit card cash advances. But don’t be fooled.

While some bad credit loans, particularly installment loans, can be a useful way to cover emergency expenses, predatory no credit check loans are anything but. These loans come with much higher interest rates and significantly shorter payment terms, and they pose a much greater risk to your financial future.

These loans are typically payday loans or title loans, which can carry annual interest rates anywhere between 250 and 500 percent. They’re meant to be paid back in a single lump sum payment, usually only a few weeks to a month after the loan was first borrowed. These factors—high rates and short terms—can make these loans exceptionally hard to pay back on-time.

These predatory “cash advance loans” could really hurt your score.

Here’s the thing: These lenders don’t mind that. In fact, they stand to make a lot more money this way! If you can’t pay their cash advance loan back on time, they can let you roll the loan over—extending the due date in return for paying additional fees and interest. The more you roll the loan over, the more money the lender makes, all without the customer getting any closer to paying off the original loan.

While most of these lenders don’t report their loans to the credit bureaus—meaning that the loans themselves won’t affect the borrower’s credit score—the cycle of debt that these loans can create will certainly affect a person’s creditworthiness. More money going towards interest on a payday loan means less money for other bills and necessary living expenses. Defaulting on your gas bill because you rolled over your payday loan will ding your score for sure!

Plus, defaulting on a sketchy bad credit loan could mean getting sent to collections. And that collections agency will definitely report you to the credit bureaus. It’s pretty much a lose-lose!

While credit card cash advances are far from a perfect financial solution—and will not help raise your credit score—they are far preferable to “cash advance loans” that are really just payday loans in disguise.

To learn about some ways that you can actually improve your credit score, check out these related posts and articles from OppLoans:

Have you ever had a cash advance drop your score? We want to hear from you! You can email us or you can find us on Facebook and Twitter.

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A Brief History of Credit Scores

Before credit scores were invented in the 1950’s, lenders took a much more social approach to determining creditworthiness.

Your credit score is, for better or worse (and often worse) one of the more important numbers in your adult life. It dictates if you can get a loan and what rate you’ll pay. It could determine if you can ever own your own home. It might even determine if you get that dream job.

But how did this important number come to be? What secret Illuminati council first started tossing bank stubs and “past due notices” into a mysterious cauldron that spit out credit scores?

Okay, well, it definitely didn’t start like that. Instead, it went a little something like this …

For millennia, creditworthiness was judged on a much more casual basis.

Since the first caveman, Gug, asked his neighbor, Gorf, to borrow some wood to make a fire, lenders have had to consider whether the loans they offer will be paid back.

Sure Gug said that he “promise make fire with wood, give back more wood and cooked meat tomorrow,” but could Gug be counted on? What if Gug runs away to a different cave and Gorf never sees his wood again?

Perhaps Gorf could ask some of their fellows if Gug is reliable.

And that’s pretty much how things worked for the next tens of thousands of years. Even as early credit bureaus started to emerge, representatives would often speak to local businesses to find out if a particular applicant was reliably paying the money they owed in a reasonable manner.

Additionally, potential lenders would usually rely on character judgments. Maybe the person who walked into their office always paid their bills on time, but the loan officer just didn’t like something about the way the applicant conducted themselves. In which case: “No loan for you!”

That may not sound fair to you, and who do you turn to when something isn’t fair? Well, Bill Fair, himself, of course.

Credit scores were invented in the 1950’s.

In 1956, engineer Bill Fair teamed up with mathematician Earl Isaac to create Fair, Isaac and Company, with the goal of creating a standardized, impartial credit scoring system. Within two years, they had begun selling their first credit scoring system.

Today, that company goes by a different name: FICO.

The current FICO score system debuted in 1989 and has become the industry standard. It is a number between 300 and 850 determined by the following factors (by descending level of importance): payment history, amounts owed, length of credit history, types of credit used, and recent credit inquiries.

To learn more about each of these categories, check out our Know Your Credit Score blog series.

And who keeps track of those factors? The three major credit bureaus, of course!

An even briefer history of the credit bureaus.

The three major credit bureaus, Experian, TransUnion, and the always reliable Equifax, track your financial information to determine your credit score. Each of those companies has its own unique history.

Equifax is the oldest of the three credit bureaus, dating all the way back to 1899, when it was known as the Retail Credit Company. They were one of those early credit bureaus we mentioned above, and they would collect all manner of information about potential credit seekers, including personal details, like marital troubles or political opinions.

Criticism of these practices helped lead to the Fair Credit Reporting Act. And then Equifax never had any problems ever again.

TransUnion was founded in 1968 as a railroad leasing organization. Apparently, railroads weren’t interesting enough, because they immediately acquired the Credit Bureau of Cook County.

Experian is the newest of the credit bureaus. It was founded in 1996, making it a certified 90’s kid. We bet it loves pogs.

As a result of the Fair and Accurate Credit Transactions Act of 2003, you are entitled to a copy of your credit report from each of the three major credit bureaus once per year. To request one of these copies, just visit www.AnnualCreditReport.com.

Credit scores have done a lot. But many problems remain. 

So knowing that the goal of the FICO credit score was the creation of a more fair system, was that goal reached?

Sort of! A FICO score is probably a more impartial way to handle credit approval than just having some bank representative make a superficial judgment about potential applicants. But algorithms can actually reinforce racial disparities that already exist.

And even if an applicant qualifies for a better rate, an unscrupulous lender could still take advantage of them, as happened before the subprime housing crisis, when minority applicants who qualified for prime loans were given subprime loans instead.

But there are issues beyond racial discrimination, inaccuracies, and data breaches. On a basic level, you need to take out some form of a loan—whether it be in the form of credit card use or otherwise—to build up your credit score. Theoretically, you could be very financially responsible without ever using credit cards or going into debt … and that would leave you without any credit score to speak of.

We don’t know what the future of credit scores looks like, but hopefully, it’s a system with fewer mistakes and more fairness.

To learn more about credit, check out these related posts and articles from OppLoans:

What other stuff would you like to know about credit scores? We want to hear from you! You can email us or you can find us on Facebook and Twitter.

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Is the Credit Blacklist a Real Thing or an Urban Myth?

bad credit blacklist

Even though it can feel like you’re being blacklisted, the real answer is much more mundane.

Your fingers are shaking as you type the last of your information into the credit card application. You’ve been denied in the past, but this time you are sure that you will be accepted. After all, the company sent you a notice saying that you were “pre-approved!”

You hit “submit,” cross your fingers, and wait. 15 seconds later a response comes back.


What the heck is going on here?! You mention it to your uncle Terry and he tells you about this thing called the “credit blacklist.” Basically, because you’ve misused credit cards in the past, you are on a secret list that will ensure you never get a credit card ever again.

Sounds about right, you think to yourself. But is that what’s really going on here? Is there really such a thing as a credit blacklist?

No, there is no such thing as a credit blacklist.

Please forgive us for not keeping you in suspense. But no there is absolutely no such thing as a credit blacklist.

Maintaining a hard blacklist is forbidden under the Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA). The FCRA was passed in 1970 and the ECOA was passed in 2003. Both are aimed at preventing discrimination in lending and ensuring proper use of citizens’ private data.

But if there is no credit blacklist, then why would someone consistently be denied for credit? The answer lies in their credit history, as well as the algorithms that large companies use to make their lending decisions.

Your credit history determines your credit future.

Whenever you take out a loan or a credit card, make a payment (or not make payment), add money to your credit card balance, close a card, pay off a loan, or file for bankruptcy, that information gets reported by your creditor and added to your credit report.

Information stays on your report for seven years (or longer in some cases, including bankruptcy) and it weaves a fairly comprehensive picture of how you’ve used credit in the past. When people talk about your “credit history,” they are basically referring to what’s contained in your credit report.

Or rather, your credit reports, because you actually have three of them. Each of the three major credit bureaus—Experian, TransUnion, and Equifax—collects information and maintains their own separate version of your credit report. Depending on which businesses report to them, information can vary between reports.

The info contained on your report is what’s used to create your credit score. More often than not, the score used is your FICO score (created by the FICO corporation), but it could also be your VantageScore, which was created a joint venture by the three credit bureaus.

If you are being denied for credit, it’s likely because of the info on your credit report and how it’s reflected in your score.

A poor credit history can have the same effect as being “blacklisted.”

The exact algorithm for creating your FICO score is secret, but the FICO corporation has made it known that your score consists of 5 different information categories and that some categories are more important than others.

The two most important categories are your payment history and your amounts owed. Payment history makes up 35 percent of your score, while amounts owed make up 30 percent. Together they make up well over half your total FICO score.

The other three categories combine to make up an additional 35 percent of your score. The length of your credit history comprises 15 percent, while your overall credit mix and your recent credit inquiries each make up 10 percent.

If you’re being denied for credit, the odds are good that it’s because of problems in your payment history and/or your amounts owed. Maybe you had a period where you were out of work and skipped a number of credit card or installment loan payments. Or perhaps you were one of the 58 percent of recent college graduates who racked up too much credit card debt within their first two years out of school.

Even if it’s been half a decade since you cleaned up your financial act, that information is still on your report and dragging down your creditworthiness.

Credit report errors could be resulting in a “blacklist” effect.

Credit bureaus collect information on hundreds of millions of Americans, so it’s not at all surprising that mistakes end up on people’s reports. But that lack of surprise doesn’t forgive the immense damage that these errors can do to your score.

Errors can arise from any number of things, including the company that reports the info to the bureau making a mistake on their end. Oftentimes, an error will stem from your information being confused with someone else’s because you two have the same name.

Don’t worry. These errors can be fixed. To check your report for errors, just visit www.AnnualCreditReport.com and request a copy. By federal law, each credit bureau is required to provide you with one free copy of your report per year. All you have to do is request it.

If you find an error on your report, then follow the instructions laid out in this blog post: How Do You Contest Errors On Your Credit Report?

Getting flagged by Chexsystems can feel like you’re on a blacklist.

Beyond the three major credit bureaus, there are a number of credit reporting agencies that track different aspects of consumer behavior.

One of the major agencies is Chexsystems, which tracks deposit accounts (stuff like checking and savings account). If you have a history of poor financial behavior with a checking account—racking up NSF fees, constant over drafting, refusing to pay a negative balance—then Chexsystems will flag you.

The next time you go to a bank to open a new account, you could be in for a rude awakening. While opening a bank account might seem like a formality, a poor Chexsystem score will basically ensure that your application for a bank account gets rejected.

Information stays on your Chexsystems for five years, which means that it could be that long before you are able to open another bank account. And if a lender, landlord, or utility company decides to pull your Chexsystems report, it could negatively affect your application with them as well.

There is no credit blacklist, but that doesn’t make having bad credit any easier.

If there were a hard and fast credit blacklist, it would almost be a little comforting. After all, getting your name removed from this blacklist would set you on the path to financial success. Personal loan and credit card applications would come flowing in, and you’d stop having to rely on bad credit loans, no credit check loans, and cash advances to get by.

But the truth is far more complicated. Poor financial behavior will stick with you long after you’ve cleaned up your act, and random errors on your credit report will ding you for stuff you didn’t even do!

The only thing you can do to improve your credit is to keep practicing smart money habits–plus a few weird little tricks that can help you out as well.

To learn more about ways to improve your credit score, check out these related posts and articles from OppLoans:

Have you ever felt like you were on a credit blacklist? We want to hear from you! You can email us or you can find us on Facebook and Twitter.

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3 Ways to Finance Dental Care, Even With Bad Credit

finance dental care with bad credit

Payment plans, special credit cards, and bad credit dental loans can all help you afford the oral care you need.

It’s easy to avoid going to the dentist, especially if you don’t have a ton of extra cash to shell out for a cleaning. But avoiding the dentist can lead to a much larger bill down the line when you end up needing a filling or, worse, a full root canal.

Even with dental insurance, you’re going to end up with a very sizeable bill after a major dental procedure. At that point, the question becomes: How are you going to pay for it?

If you don’t have a lot of extra money, or if you have bad credit, you probably can’t pay for the whole thing out of pocket. Instead, you’ll have to find another way to finance your visit. Here are your options.

1. Payment plans

Many dental practices have payment plans that allow you to pay off the cost of your procedures a little bit at a time. Assuming that you cannot pay the full amount up-front, payment plans are hands down your best option for financing dental work.

These payment plans have something you won’t find with any other form of dental financing: zero percent interest. Since this isn’t a loan or a credit card, you won’t end up paying more in the long run than you would have paid up front.

Unlike a loan or a credit card, payment plans won’t be reported to the credit bureaus—unless you default on your payments and it gets sent to a collections agency. But while not having your payments count towards your credit score isn’t ideal, the zero interest is worth the trade-off.

2. Dental credit cards

This is another payment option offered by many dentist offices. It’s not as good an option as a straightforward payment plan, but it has its benefits.

Instead of letting you pay off your dental procedure a little bit at a time, the office will help you submit an application to a financing company. If you are approved, you receive a credit card that you can use to pay your bill. You then pay off the credit card through monthly payments.

With a dental credit card, your monthly payment should be pretty small, usually something like two to three percent of your total bonus plus a $10-$15 monthly minimum. If you are on an incredibly tight budget, this can give you a lot of breathing room.

But those low monthly payments have a downside. Paying only the minimum payment every month means that it could take years to pay off your full balance. And taking that long to pay off your dental procedure means paying a ton of money in interest.

That’s because, compared to regular credit cards, dental cards have a high APR. In 2017, Time.com cited a rate of 26.99 percent, which is over 10 percent more than the average credit card rate.

On the plus side, those payments will be reported to the credit bureaus, which means that it could end up helping your credit score (or hurt your score if you can’t pay). But honestly, those extra payments on your credit report aren’t worth the extra interest.

If you decide to go with a dental credit card, don’t let those low monthly payments lull you into a false sense of security. Make sure you pay more than your minimum payment every month.

It’s the same as using one of your regular credit cards—which might be preferable to using one of these dental cards, depending on whether you can fit the full cost onto your card.

With credit cards of all kinds, the more you pay every month, the more you save overall.

3. Bad credit dental loans

Dental credit cards have a much higher acceptance rate than regular credit cards—which is generally true of any store-specific card. Still, if you have bad credit, the odds that you’ll be denied for one of these cards is much higher.

In cases like this, you’ll probably have to take out a bad credit loan in order to pay for your dental work. These loans come with much higher rates than standard personal loans, but that doesn’t mean that they can’t be a good financial solution.

When you’re looking for a bad credit loan to pay for dental work, make sure you steer clear of no credit check loans. These are products are offered by lenders that don’t care at all about your ability to repay your loan. In fact, they might stand to make more money if you can’t pay your loan on-time.

To learn more, check out our blog post: Payday Loan Rollover: How Short-Term Loans Turn Into Long-Term Debt.

Common no credit check loans include title loans and payday loans—which are sometimes referred to as “cash advance” loans. These are small-dollar, short-term loans that usually have to be paid back within a few weeks or a month. They have incredibly high APRs, often between 300 to 400 percent, but sometimes much higher.

They are exactly the kinds of loans you should be avoiding when looking to pay for dental work.

Instead, you should look for a bad credit installment loan that lets you pay your balance off over time. These payments will be larger than the monthly minimum on your credit card, but they’ll be much smaller than the payments for payday and title loans, which generally require that you pay the loan off all at once.

Make sure you find an installment loan that’s amortizing so that the amount you’re paying towards interest grows smaller over time. And if the lender runs a soft credit check during your application process, even better. That means that they care about your ability to repay the loan the first time, instead of just rolling it over.

Lastly, check to make sure that this lender reports payment information to the credit bureaus. If you’re going to spend a year or more making payments on your loan, you should at least get those payments added to your credit history.

After all, the best bad credit loans will help you fix your credit so that the next loan you get will come with a lower rate.

Other options for lowering the cost of dental care.

The first thing you should do is get dental insurance. It is much cheaper than medical insurance, and good a plan will dramatically lower the cost of dental care.  No one loves paying their insurance bill every month, but we can guarantee that you’ll hate paying the full cost of your root canal even more.

Another option is visiting a dental school and letting the students be the ones to give you care. If that makes you a bit squeamish, well, we can’t really blame you. But they will be doing these operations under close supervision, and the cost of the whole thing will be a fraction of what you’d pay at a regular dentist.

You can even talk to your dentist about getting a discount for paying them in cash. Many businesses, including dental practices, are willing to charge less for a service in return for cash payments!

Lastly, a great way to avoid large dentist bills is … to go to the dentist regularly. Preventative care is way cheaper than restorative care, so we recommend you choose regular cleanings over the occasional root canal.

The only thing we won’t ask you do to is to floss regularly. Come on now, we’re not madmen.

To learn more about handling medical costs when you have bad credit, check out these related posts and articles from OppLoans:

How do you finance your dental work? We want to hear from you! You can email us or you can find us on Facebook and Twitter.

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Why You Should NOT Close That Old Credit Card

Even if you’re closing it and replacing it with a new card, think again!

Your credit score might seem simple, but it’s not. And while basic “good money” habits will get you very far—stuff like paying your bills on-time and not maxing out your credit cards—there are other tricks to a good score that aren’t so obvious.

While it might seem like closing an old credit card is a good way to maintain good credit, it could actually have the opposite effect. Closing that card could actually hurt your score, not help it.

The 5 parts that make up your credit score.

Before we get into the specifics, let’s cover how your credit score is calculated. And when we say “credit score,” we are talking specifically about your score from FICO.

While the specific algorithms that are used to create your FICO score are unknown, we do know that credit scores are made from five different categories of info, some of which are more important than others.

The five categories are:

1. Payment History: This makes up 35 percent of your score, more than any other single category. It measures your history of paying your bills in full and on-time. If you have a bad credit score, odds are that your payment history is at least partially to blame. When a lender or a landlord is looking to do business with you, seeing that you keep up with your bills is key.

2. Amounts Owed: This is the second most important category, making up 30 percent of your score. The category is pretty straightforward: It measures how much money you currently owe. It calculates your credit card balances, as well as any outstanding loans you have, including personal loans, mortgage and auto loans, student loans, and certain bad credit loans. The only kinds of loans that won’t be included are no credit check loans—stuff like payday loans and title loans.

3. Length of Credit History: This category makes up 15 percent of your score, and it measures how long you’ve been using credit. The longer you’ve been responsibly using loans and credit cards, the better. It also takes into account the average age of your open accounts. Lenders not only like to see a long history of credit use, they also want to see longstanding relationships with other lenders and credit card companies.

4. Credit MixThis category makes up 10 percent of your score. It takes into account the different kinds of credit you’re using. This means credit cards versus personal loans versus home and auto loans versus student loans, etc. If the only type of borrowing you do comes from credit cards, for instance, that will ding your score. Lenders like to see a diverse credit mix.

5. New Credit Inquiries: This category also makes up 10 percent of your score, and it reflects the number of times that you have recently applied for more credit. Any time you apply for credit from a traditional lender, they will run a “hard” check on your credit. These checks are noted in your report, and too many within a short time frame can negatively impact your score—though not by much. Too many recent inquiries signal that you might be desperate for new credit, a sign that you aren’t handling your finances responsibly.

Got all that? Great. When it comes to closing your old credit card, the two categories that it can negatively affect are your amounts owed and the length of your credit history.

Closing a credit card will hurt your credit utilization ratio.

There is a second part to the “amounts owed” part of your score that we did not touch on in the above section. It’s called your “credit utilization ratio” and it relates specifically to your credit cards. It’s also a crucial element to your overall score.

Credit utilization ratio measures how much of your total credit limit is being used. For example, let’s say that you have two credit cards: Card A has a $3,000 limit and Card B has a $7,000 limit. That means, between the two cards, you have a total credit limit of $10,000

Now let’s say that you had spent $2,000 on Card A and $4,0000 on the Card B. This would mean you have spent a total of $6,000 against your $10,000 limit. Your credit utilization ratio would be 60 percent.

In an ideal world, you are paying off your credit card balances in full every month. But many people carry balances on their cards from month to month, paying them down a little bit at a time.

If you’re carrying outstanding balances on your cards, try not to let your credit utilization rise above 30 percent. That’s the range where your score will really start to suffer.

And here’s where closing that old card comes into play: Your credit utilization ratio is just as much about your total credit limit as it is your balances. If you have an old card that you are no longer using, that unused credit limit is improving your ratio.

Back to Card A and Card B. What if you got a $2,000 tax return and used it to pay off Card A? Your credit utilization ratio would now stand at 40 percent—still high, but way better than 60 percent. But if you closed the card, your ratio would balloon to 57 percent. That’s almost as high as when you started!

Old accounts help your score more than new accounts.

There’s another way that closing that old card will hurt your credit score, and it’s by lowering the average age of your accounts.

Lenders not only like to see that you’ve been using credit (responsibly) for a long time; they also like to see that you have been using the same accounts for a long time. It shows them that another lender has been able to maintain a long-term financial relationship with you as their customer.

So even if you closed out that old card in favor of a new one with better rewards and a lower interest rate, it would still ding your score. Keeping that old card open will allow it to stay on your credit report (as an open account), which will, in turn, be reflected in your score.

Of course, the trouble with keeping an old card open is that you might be tempted to use it. And if you’ve recently spent a lot of time paying down excessive credit card debt, taking on new debt beyond what you can immediately pay off is a recipe for financial disaster.

So instead, you should cut up the physical card. At the very least you should lock it away in a safe. Do whatever it takes to make sure that your old card can stay open and benefit your credit score without you using it to take on additional, unnecessary debt.

To learn more about your credit score, check out these related posts and articles from OppLoans:

How do you resist the temptation to use old credit cards? We want to hear from you! You can email us or you can find us on Facebook and Twitter.

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Can You Negotiate With Your Creditors?


Yes, you can negotiate with your creditors, but make sure you do your homework first.

We’ve all got bills we have to pay. And sometimes we don’t have all the money we need to pay them. So what’s the solution?

Well, if you have good credit, you can get a personal loan at reasonable rates. If you don’t have good credit, you might consider a bad credit loan or a no credit check loan, but those tend to have high interest rates and, if they’re a payday loan, very short payment terms.

And besides, taking out another loan or a credit card cash advance to pay your bills won’t really solve your problem. It’ll just leave you with another bill you aren’t sure how to pay.

Is it worth trying to negotiate with your creditors? And if so, what would be the best way to do so? Read on to find out!

The first step is admitting you have a problem.

Wouldn’t it be nice if your creditors just … stopped calling about your missing payments? Maybe if you just ignore them for long enough, they’ll forget you exist. Most creditors are goldfish, right?

As Jonas Sickler, marketing director for ReputationManagement.com (@repmgmt_com), told us: “Burying your head in the sand will make it worse, not better.”

And why is that? Because when your creditors stop calling, it isn’t because they’ve forgotten about your debt. It’s because they’ve turned it over to a debt collector who will start calling you instead.

So did anything change? Yep. Your credit did, and not in a good way.

“One of the most important debts to negotiate is collections,” says Sickler. “Having debt in collections can do significant damage to your financial reputation—affecting everything from your ability to get a car to a business loan, so it’s essential to resolve these issues rather than ignore them. Fortunately, you do have some bargaining power at your disposal.”

So how do you deal with the people to whom you owe money, collections or otherwise?

(Related reading: What Debt Collectors Can and Can’t Do.)

What’s realistic for you?

Once you’ve accepted that you’re going to have to deal with these debts, it’s time to figure out what your “dealing with it” budget looks like.

Here’s how author, financial educator, and friend of the Financial Sense Blog Gerri Detweiler (@GerriDetweiler) put it for us:

“Know what you can afford. This may sound obvious, but many people don’t really go into a discussion with a creditor understanding how much they can afford to pay on each debt. Before you make that call, you need to carefully review your spending to figure out the most you can afford to pay and still be able to pay essential bills like rent, utilities, or gas for your car.”

Once you have a realistic sense of your financial situation, it’s negotiation time.

Know what to expect.

Now that you know what your own situation is, it’s time to learn your creditor’s situation too.

First of all, know what they aren’t going to offer you. “Understand how it works,” advised Detweiler. “If you are able to afford your minimum payment each month then it is unlikely your creditor will reduce your payment as long as you are continuing to pay that amount. In other words, they aren’t going to let you pay less than you owe unless there is a clear risk that you are going to not pay them at all.”

Detweiler also explained that, even if the person you’re talking to wants to help you, they may be limited in their ability to do so: “Creditors tend to be very policy-driven. In other words, they will have their own internal guidelines that cover when and how they can reduce interest rates or payments in hardship situations. Your main goal, therefore, will be to get them to explain the options available to you.”

So you know what your situation is. You know what they can potentially offer you. Now how can you increase your odds of getting that thing or thing?

Use your leverage.

Creditors are, for the most part, businesspeople, and that means they don’t want to lose money. They’d rather get some of the money you owe them than none, especially if it means they don’t have to spend money on lawyers.

“Creditors want to collect as much as possible,” advised Detweiler. “You’ll have the most leverage if you are falling behind on payments. However, that will damage your credit scores. It’s a trade-off.

“If you are not already falling behind but you think it’s likely in the future, you may want to talk with a credit counseling agency. If you are already falling behind on payments, then you may want to look into debt settlement or even bankruptcy.

“You may have a lot more leverage with a debt collector. Debt collectors often negotiate debts and may be willing to accept less than the full balance. The older the debt, the easier it is to negotiate a smaller payment because they know the likelihood of collecting becomes slimmer as the debt becomes older. Just make sure you first check the statute of limitations on the debt. Agreeing to pay the debt or making a payment of the debt of any size may restart the statute of limitations, allowing them to sue you to collect.”

And whatever agreement you are able to reach, there’s something you’ll want to be certain to do:

“Never, and I mean never, schedule a single payment without having a written letter of intent,” warned Sickler. “This letter must state the total amount of debt owed, the total payment you are making to the creditor, and a statement certifying that the processing of the payment signifies payment in full for the entire outstanding debt. This is crucial. Not only do you want the debt resolved, but you need your credit report to show it as paid in full.”

(Related Reading: How Do You Contest Errors On Your Credit Report?)

What if your creditor stonewalls?

Some creditors will simply not be receptive to any negotiation. So what can you do?

“Don’t be surprised if your creditor doesn’t offer a significant relief, even though it makes sense to you that they should do so,” said Detweiler. “Creditors have their own internal policies that they must follow when consumers make these kinds of requests. Don’t take it personally. If you can’t get your creditor to work with you, consider talking with a credit counseling agency or a bankruptcy attorney.”

It’s not a good situation to find yourself in, but if you’re behind on your payments, there are some options. Hopefully, this guide helped you get a sense of what they are. Good luck!

To learn more about dealing with debt, check out these related posts and articles from OppLoans:

Have you ever negotiated directly with a creditor? We want to hear about it! You can email us or you can find us on Facebook and Twitter.

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Gerri DetweilerGerri Detweiler (@GerriDetweiler) is the education director for Nav, which helps business owners build business credit for free. She is also the coauthor of a free Kindle ebook:  Debt Collection Answers: How To Use Debt Collection Laws To Protect Your Rights.
jonas_sickler_headshot_smallerJonas Sickler is responsible for building and executing the digital marketing strategy at ReputationManagement.com (@repmgmt_com). The broad scope of his role encompasses strategic content creation, web analytics, and developing and deploying targeted digital campaigns from concept to completion.