Credit Check

Credit Check
A credit check is an official review of the credit history listed in your credit report. Lenders, credit card companies, and others conduct credit checks to determine how likely you are to make payments on time.

What is a Credit Check?

A credit check—also known as a “credit inquiry”—is an official review of your credit report. Your credit report contains a range of financial information such as whether you’ve made payments on time and if you’ve defaulted on loans. Credit reports are created by the three major credit bureaus: Experian, Equifax, and Transunion. The information added to your report remains there for seven years.

Are there different kinds of Credit Checks?

Credit checks come in two varieties: hard and soft.

Hard credit checks are used by credit card companies, lenders, and landlords to determine your creditworthiness. Essentially, these people want to know if you’re going to make payments on time, and they choose whether to offer you a credit card, loan, or apartment based on what they see.

Soft credit checks are typically used by financial institutions who want to offer you a pre-approved offer. For instance, if a credit card company sees that you’re good about making payments, they may pre-approve you for a card.

Who can conduct a Credit Check?

Under law, anyone with a demonstrated need can access your credit report. If it’s requested, the credit bureaus can send your report to lenders, employers, government agencies, investors, or the courts.

Soft credit checks can be done without your permission. Hard credit checks, however, must first be authorized. A hard credit check will typically be required if you apply for a loan, credit card, or rental property.1 When you submit your application, you usually also sign an agreement that allows access to your credit report. Hard credit checks are recorded on your report, and if you have too many of them, they can lower your credit score by a few points.2

How long does a Credit Check stay on my credit report?

Both hard and soft credit checks stay on your credit report for up to two years. They are visible to anyone who views your report. Hard inquiries only have a negative impact on your credit score for 12 months.3

How can I see my credit report?

You can request a free credit report from each of the three credit bureaus once a year. What you see on your credit report is exactly what lenders and landlords will see if they conduct a credit check. If your credit report shows that you have delinquent payments or outstanding debt, it’s a good idea to take care of them as soon as you can.

Why is it important to check my credit report?

Your credit report—and the credit score that is calculated based on your credit report—play a large role in many decisions that have a big impact on your life. Based on a credit check, a lender will decide how much interest you’ll pay for a loan, and a landlord will decide whether or not to rent you an apartment.

If you don’t know what’s in your credit report, it’s a good idea to request one and address any negative information as soon as you can. Occasionally, credit reports contain errors, and if you find an inaccuracy in yours, you should take action to correct it. You can do so by following the Federal Trade Commission’s step-by-step instructions.

Bottom Line

Credit checks are used to make decisions that have a big impact on your life. Consider requesting your credit report so you know what’s in it.

References

1 “Who May Request my Credit Report?” Consumer Financial Protection Bureau, https://www.consumerfinance.gov/askcfpb/1305/who-may-request-my-credit-report.html. Accessed 30 March 2017.

2 “The Difference Between Hard and Soft Credit Inquiries.” TransUnion, 12 Dec. 2014, http://blog.transunion.com/the-difference-between-hard-and-soft-credit-inquiries/. Accessed 30 March 2017.

3 “The Difference Between Hard and Soft Credit Inquiries.” TransUnion, 12 Dec. 2014, http://blog.transunion.com/the-difference-between-hard-and-soft-credit-inquiries/. Accessed 30 March 2017.

A Free Credit Score is Nice, but a Free Credit Report is Better…

The Credit Bureaus may think they have your number. But do they? No one knows your payment behavior better than you, here’s how to make sure you’re being represented accurately.

If you watch TV, you’ve seen ads for credit checking services. They’re everywhere. If you added up all the “Get Your Credit Score” ads and all ads starring Peyton Manning, you’d have approximately 10,000% of all commercials on TV. Why are there so many of these services? And what’s the point of using one?

Know Your Score

A quick Googling of “free credit score” will bring up links for sites like creditkarma.com, freecreditreport.com, credit.com, creditsesame.com and, um, quizzle.com. (They also give you a free credit score. What, you couldn’t figure that out from their name?)

A lot of these sites will indeed give you a free FICO credit score. When you sign up for their service, they do not ask you to enter your billing information. In fact, if you happen to encounter a site that does make you enter your billing information in order to receive a credit score, run the other way. It might be a scam. The only exceptions are the sites for FICO and three major credit bureaus—Experian, TransUnion and Equifax.

Read Your Report

While knowing your FICO credit score is nice, it’s even better to know your credit report. After all, your credit score is really just a summary of what your credit report contains. To properly monitor your credit history for inaccuracies, fraud and secret messages from aliens, you’ll need all the information, not just the numerical grade.

(And this is important to do… monitoring and protecting your credit can keep your finances safe and your credit score high— which will provide you more affordable access to credit, so you can avoid often dangerous products like bad credit loans and “no credit check loans.”)

Here’s the good news: you don’t need to sign up for anything to get a free credit report. Unlike your credit score, you are already entitled to three of them per year, one from each credit bureau (read more in Have Bad Credit? Check Your Credit Report!). These free annual credit reports are mandated by the Fair Credit Reporting Act (FCRA), which is enforced by the Federal Trade Commission (FTC).

The credit bureaus set up a website, www.annualcreditreport.com to handle all online credit report inquiries. You can also call 1-877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348.1

That’s all you have to do. You can literally request a free copy of your credit report right now. It’s okay, we’ll wait…

(Intermission)

Improve Your Credit

Welcome back! Now that you have your free credit report to pair with your free credit score, you can compare the two and make sure everything’s accurate. If your credit score is not where you would like it to be then you can peruse your credit report to see why exactly that is. And if you’re looking to start building a better credit history with a strategic, affordable loan, click below. Or visit our homepage for more information and read other blog posts for tips on how to improve your finances.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

References

  1. Consumer Information: Free Credit Reports.” Federal Trade Commission. Accessed February 4, 2016. https://www.consumer.ftc.gov/articles/0155-free-credit-reports

Credit Bureau Files: The Truth is Out There

Do you know every detail of your credit history? The credit bureaus do. But don’t panic, credit bureaus don’t just collect the bad, but also your positive credit history too. Here’s what you need to know:

“If you sign up for one of our credit cards, you can get 10% off today’s purchase. Interested?” Remember those cool cargo shorts you bought at Gap your freshman year? Good, neither does anyone else. But if you’ve ever opened up a retail store credit card for that quick, instant discount, and then forgotten about it as soon as you left the store, that unpaid purchase could haunt you for up to seven years. Why? Because of the credit bureaus.

So what is a Credit Bureau and why should we care?

A credit bureau is a company that collects and organizes credit information and payment behavior and reports it to creditors like banks, lenders and other organizations. So if you bought those cargo shorts and then forgot to pay the balance on your card, that negative information—or black mark on your credit history—gets collected by a credit bureau and reported.1

This can impact you directly in ways like higher interest rates and lower credit limits. (And it can get so much worse: If you have bad credit, you’re more likely to fall victim to companies marketing bad credit loans and no credit check loans—often dangerous and predatory financial products designed to trap you in debt. You can learn more about predatory lenders in our OppLoans ebook “How to Protect Yourself from Payday Loans and Predatory Lenders“.)

The three major credit bureaus are Equifax, Experian and TransUnion. These are for-profit, private corporations cast a wide net (going back as far as seven years into your financial history), looking for information about your purchasing and repayment behavior, constantly asking questions like: do you make your payments on time, do you make your payments at all, have you ever experienced a bankruptcy or negative judgement?

Once they’ve compiled all of this data, they analyze it and produce a credit report. The free credit reports you get often do not include your score, but the ones you get from your bank, credit card company, or the ones you pay for most frequently do include the score. You can learn more about what type of information is included in your credit report here in this Experian post.

The credit report is then sold to third parties like, say, a landlord. The landlord wants to check your credit because he wants to know if you’re responsible with your payments. If you have a history of paying your bills on time and not exceeding your credit limits, then you are a lower risk candidate and more likely to get that sweet apartment with a roof and everything.

This whole business with the credit bureaus sounds kind of impersonal and judgy, doesn’t it? It is. To the credit bureaus, consumers are really just a sum of positive and negative payment histories that equal either high or low risk individuals.

But if the process is so impersonal, isn’t it possible that there are inaccuracies in my credit report? Absolutely. What’s more, credit information can differ between the credit bureaus: information reflected by one company’s report can vary from another’s. It’s important to check your credit reports annually so you can spot fraud and errors faster.

It might all sound like doom and gloom, but remember, positive paying information gets reported too. The best way to improve information on your credit report is through regular, positive payment behavior. If you take out a loan, make sure you can afford the payments  and then repay them on time. Don’t panic, you can always overcome a negative credit history with positive paying behavior. Learn more in The Journey to Turn Your Credit Around.

OppLoans can help you with affordable and strategic installment loans. OppLoans reports your payments to the credit bureaus and offers credit education to help you repair and improve your credit. Click below to get started today!

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Works Cited:

1 “Credit Bureau.” Investopedia.com http://www.investopedia.com/terms/c/creditbureau.asp. Accessed September 11, 2017.

5 Easy-to-Avoid Credit Card Mistakes

Credit is great, until it isn’t. Here are five common (and easy-to-avoid) credit card mistakes people make every day.

People rely on certain tools for specific situations. Car won’t start in the winter? Jumper cables. Need to tighten a bolt? Wrench. Your dad is Darth Vader? Lightsaber.

But without a doubt, the most common financial tool people use for unexpected situations is a credit card. We all know its real purpose is for emergencies or larger responsible purchases. While credit cards are a great resource, it’s easy to make mistakes. But the good news is that those mistakes are also easy to avoid.

Check out these five common credit mistakes and learn how to pass them by with credit-building practices.

1. Getting Too Many Cards

Some people accumulate credit cards like dust bunnies. In financial circles, this strategy is known as “not good.” While it may seem beneficial to activate a high number of credit cards and get to work using them on many different purchases, this can negatively impact your credit, especially once the balances start to mount. It’s a good idea to have one or even a few credit cards because it shows diverse forms of credit, but mismanaging the cards means a higher debt-to-income ratio, more annual fees, and potential black marks on your credit history.

2. Paying Only the Minimum

Paying the lowest possible amount on your credit card bill is something you should do only when it’s 100% necessary. But most other times, you want to pay the maximum you can afford on your card. The more you pay off, the less you pay in interest. This always looks good to creditors. Doing this will also extend you the benefits of the card (airline miles, gift cards, etc.), as well as keep your credit in tip-top shape. Online credit calculators can demonstrate the long term damage of only paying the minimum.1

3. Missing Payments

Missing a payment isn’t the end of the world. But nothing good can come from it either. Missed payments mean additional fees, damage to your FICO score, and negative information on your credit report that can remain there for seven years. If you do miss a payment, the best course of action is to pay it right away, even if you’re late. Even better, pre-emptively set your credit card to “autopay full balance” every month.

4. Letting Samuel L. Jackson Tell You Which Card to Get

You wouldn’t know it now, but there was a time when celebrities didn’t try to sell you cards every six minutes on TV. Creditors use robust marketing and promotional engines to publicize their offerings. They want you to activate a line of credit with their card, run up a balance, and pay it back with increasing interest over time. Do your homework and find a card, or cards, whose rates you can afford. It’s important that you meet the providers’ credit-worthiness needs and find a low fixed rate APR. Identifying the right card for you means not being swayed by promotions and benefits which may seem great at the time, but actually won’t do anything for you other than burden you with mounting debt.

5. Not Using a Credit Card at All

This one might seem strange. We know credit cards are fraught with danger and risk, right? Well, not necessarily. Using credit responsibly (not maxing out the cards, making full payments on time) is an important practice that builds positive credit history. Avoiding it all together means that when you go to make a larger purchase like a home, car, or mega-yacht, you won’t have a clean, responsible-looking credit history to point to. Use credit cards responsibly and you’ll look credit-worthy to lenders.

So What Happens When You Make Those Credit Card Mistakes?

Using a credit card can feel easy… sometimes too easy. Using credit and credit cards well is a little more difficult. That’s why many of us end up making these simple credit card mistakes. So what are the consequences of getting too many cards or missing those payments? The answer is simply bad credit. Your FICO score will take a hit, resulting in a lower credit score and decreased access to affordable credit. For this reason, many people with bad credit turn to dangerous bad credit loans or “no credit check loans.” These are often dangerous financial traps that can walk you into predatory loans you can’t really afford. These kinds of predatory loans can take your bad credit situation and make it much, much worse.

For these reasons and more, it’s important to use and manage your credit and credit cards wisely. You can learn more about the responsible use of credit cards in our ebook “Credit Workbook: The OppLoans Guide to Understanding Your Credit, Credit Report and Credit Score.”

Credit Cards are an important resource that can improve your life and your finances, but they also come with risks. If you have a specific financial need, opening another credit card may not be the answer for you. OppLoans offers safe, reliable and credit-building installment loans with affordable, fixed monthly payments. Apply today and qualify within minutes to receive your funds as early as the next business day.

Related Posts

Fast Cash: The Hows and Whys of Getting Your Money Quickly and Safely.

My Credit Cards are Maxed Out, Now What?

A Free Credit Score is Nice, But a Free Credit Report is Better…

Works Cited:

1 Maluth, Hannah. “8 common credit card mistakes you might be making” USA Today, July 24, 2017, https://www.usatoday.com/story/money/personalfinance/2017/07/24/8-common-credit-card-mistakes-you-might-making/500610001/. Accessed September 11, 2017.

By the Numbers: Your FICO Credit Score

So you’ve learned your three digit FICO credit score. Mazel tov! Now learn what you can do with it…

There are a lot of numbers that are important in your life: your age, your address and your income level to name a few. But there might not be any three digit number as powerful as your FICO credit score (you can read more about your score and what it means in our blog post.) A bad credit score could mean the difference between being able to afford a house and having to stay in your cramped, one-bedroom apartment.

If you don’t know what your credit score is, the first thing you should do is go find out. Everyone is entitled to receive one free credit report per year from each of the three major credit bureaus.1 To get yours, just visit www.annualcreditreport.com.

But when you look up your FICO credit score, all you’re going to see is a three digit number that falls somewhere between 300 and 850. So what does it actually mean? Well, first of all, if your credit score happens to be under 300, you should probably go the hospital because you might be currently dead. Beyond that, always remember that 850 is the best and 300 is the worst, so a higher score is always better.

720-850 – Great Credit

Congrats! If you have a credit score of 720 or higher, you are going to have access to the best loans at the best interest rates. To get a score like this you need to have little debt or a large, steady income — or, ideally, both — and pay all your bills on time with sniper-like accuracy. If you have a credit score of 850 you might just be the Queen of England.

680-719 – Good Credit

A score in this range probably means you have a few black marks on your credit history—some late payments or more student debt than you would like, especially if you got that MFA in cell phone bedazzling. But while you could be working to improve your score, you are also going to qualify for most larger loans and for good interest rates. The only place you’ll feel a little bit of the hurt is when you’re looking for a larger loan like a mortgage. Even a few percentage points difference in interest on a $300,000 30-year mortgage is going to add up.

630-679 – Fair Credit

This is the point where you’re going to start feeling the pinch. Having a credit score in this range means that you are going to be facing some higher interest rates, but you also aren’t likely to be rejected when you request a loan or a credit card. Make sure you are paying your bills on time every month, deal with any outstanding collections agents who’ve been contacting you and make a plan for paying down your debt.

550-629 – Subprime Credit

This is the range in which you will start feeling not just the pinch, but also the sting of rejection. Traditional lenders, especially banks and credit unions, will likely turn down your applications and credit card offers in the mail will come with eye-popping interest rates—if they come at all. You aren’t going to qualify to buy a house, at least not one that’s in a livable condition. But you know the thing about credit scores? They can be fixed. Cut up your credit cards, make a plan to start paying down your debt and—most importantly—make a budget. You can learn more about building your credit in the eBook Credit Workbook: The OppLoans Guide to Understanding Your Credit, Credit Report and Credit Score.

300-549 – Poor Credit

Don’t panic. If you have a credit score in this range, it might feel like you have no options. You likely have a lot of debt, little or no access to traditional financial tools and it feels like all the collections agencies have your number on speed dial. But you do have options. You can call a credit counselor, talk to your debtors and make a plan to settle your outstanding debts. You can set a budget, cut your spending and find a second job to earn some extra income. Sure, you have a bit farther to go than some other people do, but a good credit score and access to traditional financial tools are still within your reach. Lastly, make sure that you look out for predatory lenders. Lots of dangerous lenders will offer you a bad credit loan—which can sound enticing, but be careful. Plenty of “bad credit lenders” are bad actors, looking to take advantage of those who believe they have fewer options.

You’ll also need to be on the lookout for “No Credit Check Loans.” Lenders who claim they don’t care about your credit score may not actually care if you can afford your loan—usually a sign that they’re a predatory lender. Understand if your lender performs hard credit checks, soft credit checks, or no credit checks at all. There is a big difference between these types of credit checks and they definitely matter. To learn more about no credit check loans (and hard and soft credit inquiries) check out the most recent OppLoans’ No Credit Check Loans articles and expert interviews.

If you’re in need of some extra cash for an emergency, don’t call a payday lender. Instead, apply for an OppLoan. Even if you have less-than-perfect credit, we offer safe, reliable and credit-building installment loans with affordable, fixed monthly payments. Visit our website today and learn if you qualify within minutes and receive your funds as early as the next business day.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Works Cited:

1 “Credit Scores” Consumer.FTC.gov https://www.consumer.ftc.gov/articles/0152-credit-scores#what. Accessed September 11, 2017.

What is a FICO Score, Anyway?

You’ve got one. And your bank, employer and creditors know what it is. But do you?

Today, we have plenty of opportunities to make quick judgment calls about anything. We can read movie reviews before heading to the theater, check out a restaurant’s health inspection grade before ordering the sushi, even creep on someone’s Instagram before we decide whether or not to let them into our squad. So, who’s creeping on us?

Well, the answer is… everyone. From banks, landlords, even employers, the modern world is checking up on us before they make business, credit, even hiring decisions. A credit score is a quick way for someone to tell—at a glance—if we’re credit-worthy or not.

When people talk about a credit score, what they really mean is an actual number, or your FICO score. Created by Fair, Isaac and Company (FICO) in 1989, the FICO score is determined by both positive and negative information from your credit history. It breaks down like this:

35% Payment History — Have you paid past debts on time or are missed payments still showing up in your history?

30% Amounts Owed — This is a mix of debt measurements, including your debt to limit ratio, number of accounts with balances and more.

15% Length of Credit History — Do you have a long, healthy history of credit, or short (or no) credit history?

10% Credit Mix — How many different types of credit are you using? Is it just one credit card, or is it a wide variety of different credit and loans?

10% New Credit — Opening a number of new credit cards in a short amount of time can have a negative impact on your FICO score.1

All of this information is collected, blended on high, and the result is a score between 300 and 850 (read more in By the Numbers: Your FICO Credit Score). This is your FICO score. If it’s on the lower end, you may be considered a “riskier” candidate for credit, loans, and jobs. That can be a major bummer. Of course, no one wants to be seen as a low score. (If you do have a low FICO score and need a loan, you may consider no credit check loans—but it can come with its share of drawbacks and advantages so you’ll need to do your research. Many lenders offering “bad credit loans” are actually predatory, dangerous lenders. You can learn how to identify and avoid predatory lenders in our OppLoans ebook “How to Protect Yourself from Payday Loans and Predatory Lenders.”

The good news is that this number can always be improved with strategic financial choices. OppLoans provides resources, online courses, tools and financial products that help our customers improve their FICO scores every day.

Contact us today and our Loan Advocates will answer your questions.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Works Cited:

1 “What’s in my FICO Scores” MyFICO.com http://www.myfico.com/credit-education/whats-in-your-credit-score/. Accessed September 11, 2017.

Escape The Compound: How To Leave Compound Interest Behind

A personal installment loan is a great way to pay off a credit card with compounding interest that just keeps growing…

Sure you’re being charged interest. But are you being charged interest on your interest? Here’s a quick guide to understanding compound interest and how to avoid it.

The Basics

There are two components to your credit card bill that you always need to keep in mind: the principal and the interest. The principal is the amount of money that you actually spent; the interest is a fee that you’ve been charged based on a percentage of the principal.

For example, if you spend $100 on a credit card with 5% monthly interest, you would owe a total of $105 the following month. In this scenario, even though you owe $105 total, the $100 principal remains the same and the 5% interest is counted separately. So if another month goes by and you are charged that interest again, you would still be charged 5% based on the $100 principal. The interest would be an additional $5 and you would owe a total of $110.

The Not-So-Basics

This is where compound interest enters into the equation. With compound interest, any interest charged is added to the principal. Instead of owing a $100 principal and a $5 interest, you would now owe a $105 principal. So far, so good. Right? You still owe the same amount of money as you did before.

Not so fast. The following month, instead of being charged 5% of the $100 principal, you would now be charged 5% of the $105 principal. Instead of owing $5.00 more, for a total of $110.00, you would owe $5.25 more, for a total of $110.25.

“Wow. A whole extra quarter. That’s really going to bust my budget,” you say, sarcastically. Well, if you only ever owe $100 on your card then, yes, the compound interest probably won’t hurt too bad. Even so, the thing about compound interest is that it adds up over time. And it adds up to quite a lot.

Using the same metrics — 5% interest charged and compounded monthly — you would owe $171.03 after one year on that original $100 principal. So while you only spent $100, you would now owe an additional $71.03 in interest. That’s an extra $.71 for every $1.00 spent. And if you had a $1,000 balance, you would owe $710.34 in interest. If you had a $10,000 balance? A whopping $7,103.39 in interest would be due. The more you spend, the more the interest adds up (learn more in What You Should Know About Interest Rates).

Now, the credit card in that previous example would have an APR of 60% (5% interest x 12 months). Most credit cards do not have an APR that high. However, while most cards have a lower APR, they also do not compound monthly; they compound daily. So a $10,000 balance on a credit card with a 20% APR and interest compounded daily would become a $12,206.91 balance after one year. That’s an extra $2,206.91 in interest.

It’s things like compounding interest that make credit card debt especially difficult to pay off. Accumulate a large enough balance at a high enough interest rate and, pretty soon, the interest owed each month alone becomes more than you can afford to pay.

The Alternative

One great way to pay down your credit card debt and escape from compound interest is to take out a personal installment loan. The major reason is that the interest on these products does not compound. Your principal never gets larger. It only ever gets smaller as you pay it off. Even if the APR on your loan is slightly higher than the APR on that credit card, the absence of compounding interest makes it easier to manage and still possibly cheaper. You simply use the loan to pay off that credit card and then you pay off the loan in easy monthly installments. Doing this for multiple credit cards and/or other debts is called ‘debt consolidation.’

When you take out an installment loan, you will know up-front how much you are going to pay each month. This makes it far easier to budget appropriately. Additionally, most of these loans have repayment periods of 36 months or longer — depending on the size of the loan and other factors — so you don’t have to spread yourself so thin to pay it back on time. Getting rid of your credit card debt and paying your installment loan on time every month is also a great way to help your credit score.

If you think that an installment loan may be right for you, then check out OppLoans. We are the ideal lender for people with less-than-perfect credit, as our installment loans come with affordable repayment terms. To find more information regarding our financial products or to apply for a loan today, please visit our website, www.opploans.com. Our team members will be happy to assist you.

OppLoans Offers Borrowers a Path to Improve Their Credit

How To Improve Your Credit in 500 Words

Here is some practical and easy to understand advice to improve your credit score.

CHICAGO— — OppLoans was featured in a recent report by the Center for Financial Services Innovation (www.cfsinnovation.com) on Quality and Innovation Among Small-Dollar Credit Installment Lenders. The report is rooted in CFSI’s Compass Principles: “Embrace Inclusion, Build Trust, Promote Success & Create Opportunity.”

CFSI consists of a network of financial services providers that are committed to strengthening consumer financial health, particularly among the traditionally overlooked segments of the financial services market. OppLoans’ core practices are in line with, and often exceed, the standards set forth in CFSI’s “Compass Guide to the Small-Dollar Credit.” High-quality small dollar loans are defined as ones that are:

– Made with high confidence in the borrower’s ability to repay
– Structured to support repayment
– Priced to align provider profitability with success for the borrower
– Created with opportunities for upward mobility and greater financial health
– Transparent in marketing, communication, and disclosures
– Accessible and convenient
– Supportive of the rights of borrowers

OppLoans was highlighted for “designing incentives to promote positive borrower behavior,” including having borrowers opt in for automatic payments to qualify for larger loans at the same rate and “providing online credit education clinics” to educate borrowers on budgeting, credit scores and more.

“We are very pleased to be acknowledged as an innovator and trusted lender. We pride ourselves in having one of the highest customer experience rankings in the industry. We are also proud of having fair terms, credit education discounts and flexible payment options,” said Todd Schwartz, Founder & Executive Chairman of Opportunity Loans. “CFSI’s recognition affirms our team’s commitment to our customers.”

About OppLoans

Opportunity Financial, doing business as Opportunity Loans, is one of the highest rated online lenders in the industry, providing personal loans with flexible payment options at lower than customary interest rates in this segment. Opportunity Loans is licensed and able to lend in Alabama, California, Delaware, Idaho, Illinois, Kansas, Maryland, Missouri, New Mexico, South Carolina, Tennessee, Utah, Virginia and Wisconsin or arrange loans in Texas and Ohio. Visit Opportunity Loans at / or call (800) 990-9130.
For more information regarding online personal lending options, please visit the OppLoans website at OppLoans.com or call (800) 990-9130.

OppLoans
11 East Adams Street Suite 501
Chicago, IL 60603
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It’s Not Too Early to Start Budgeting for Holiday Shopping

Holiday Shopping on a Budget

‘Tis the season to … go broke buying gifts for your friends and family? We certainly hope not!

The holiday shopping season is coming up, and it can get pretty expensive. You don’t want to have a reputation for being a stingy gift giver, but you also don’t want to rack up credit card balances or take out an unnecessary personal loan to cover your holiday spending.

That’s why we spoke to the experts for tips on how to knock out your holiday shopping without emptying your bank account.

Don’t wait until the night before

Start planning right now. The sooner you start preparing, the better off you’ll be. Then you can sit back and enjoy a big glass of eggnog while everyone else is out scrambling for last-minute gifts.

As Sean Potter, the writer behind My Money Wizard, told us: “Like anything else related to personal finance, managing your holiday shopping spending is all about planning. The time to allot for your holiday spending is now, rather than a last-minute budgetary surprise on Christmas Eve.”

Make a list, check it twice

How should you start? Just like Santa would: Make a list.

“Know what you want to buy before it goes on sale (or sells out) by creating a gift list for everyone on your list,” advises Kendal Perez, savings expert with Coupon Sherpa. Download an app like Santa’s Bag (iPhone) or Christmas Gift List (Android) to keep the list and your budget at your fingertips.”

And speaking of budgets, that should be your very next step.

Create a budget for all your holiday expenses

Perez walked us through her budget process:

Gifts are not the only expense associated with the holidays, and the only way to get a clear understanding of how much you could spend is to review how much you did spend during the previous year. Review bank and credit card statements during last year’s holiday season and note how much you spent in each category, including food, travel, gifts, events, etc.

If you want to spend less this year, start chatting with friends and family to establish expectations so there are no surprises. Now is the time to suggest that gifts only be purchased for kids in the family, or to organize a Secret Santa swap so you’re only responsible for one gift instead of multiple gifts.

Once you calculate your potential spending and set expectations for the upcoming holiday, create a budget for this season. It can be an overall, not-to-exceed number, or it can be individual budgets for people on your list, plus other expenses, like groceries, travel, etc.

If you need help with a budget, check out our post on budgeting for beginners and this follow-up post on sticking to your budget once you’ve set it.

Again: Make sure your accounting “accounts” for all expenses

Karen Hoxmeier, creator and owner of My Bargain Buddy, also supports starting off with a list and budget:

Once you’ve determined how much money you have in your holiday budget, make a list of all the people you need to purchase a gift for and assign each person a maximum dollar amount for their gift. If you are hosting a holiday party, set the maximum amount you can spend on food, beverages, decorations, etc. The total for gifts and entertaining cannot exceed the amount you set for your holiday budget. Every time you make a purchase, log it on your spreadsheet.

Save paycheck to paycheck

Ashley Feinstein Gerstley, money coach and founder of The Fiscal Femme breaks down her ideal method for holiday shopping preparation here:

Map out your paychecks. How many paydays do you have from now until you plan to make each of your holiday purchases? Considering your overall earnings for the rest of the year will help you to figure out your budget.

Make some calculations. Going to need $500 for your holiday plans and have five paychecks until it is time to spend? Start by putting away $100 per paycheck. How much do you want to put aside per paycheck to hit your holiday spend plan?

Create a holiday fund

Gerstley says the best way to way to save for the holidays is to keep the money separate from your regular accounts. If possible, create a separate account in your online savings accounts that is dedicated specifically for holiday spending. You can also set up an automatic transfer, so the amount you calculate per paycheck automatically moves to your holiday fund every time you are paid. Spread out your shopping year-round.

Justin Lavelle, chief communications officer at BeenVerified, agrees with the concept of saving and spending for the holidays over time, as he says it’s easier to budget if you give yourself more time versus trying to pay off a single large credit card bill after the holidays.

“Start shopping now. Spreading out the gift buying will allow you to spread out the cost of shopping,” he says. “Do a little gift shopping each month and you can even out the bills, so you avoid that big shock in the New Year.”

Save money by shopping smarter

Starting early means you’ll have a lot of time to keep an eye out for the best deals. No one on your list will appreciate a gift more just because you had to spend additional money on it, so why should you?

Gerstley suggests maximizing your dollars to work in your favor by purchasing on-sale items now instead of later. “Perhaps you can snag a deal in November for a gift you’re planning on buying anyway,” she says. “Look through your holiday expense plan and estimate when you want to make each of the purchases.”

Natasha Rachel Smith, financial expert at TopCashBack, provided us with some tips for saving:

Shop smartly. Do research prior to going shopping. Identify the items you need to buy, head online, and check out where you can score them at the cheapest price. It is senseless to pay more for the same item at a different store.

When shopping online, make sure you get free shipping. Competition online is fierce during the holiday season, so plenty of retailers will be offering free shipping that you can take advantage of. Remember, every dollar counts when budgeting.

Shop for deals on Groupon. Groupon has awesome deals – at least 50% off the standard price – on goods, pampering, and local experiences. Providing someone with an experience or service can be cheaper than a traditional gift. Consider shopping for discount massages or tickets to a concert, show, or museum.

Use cashback sites. In addition to shopping during sales, use a cashback rebates site to stack savings … Cashback sites have holiday sales too, including double cashback days, so keep your eyes peeled for additional shopping incentives to sweeten the savings.

Use your credit card reward points. Don’t forget about your credit card rewards. If you aren’t going to redeem your rewards for travel options, tap into your accrued points to score gift cards to stores [where you plan on shopping] or for gifts.

Hit the dollar store. Don’t splurge on expensive wrapping paper, cards, or holiday decorations. Visit your local discount dollar stores to purchase decorative holiday items. You will save more money in the long run and your wallet will thank you!

You could also think outside the gift box.

Dashing through the snow with unique gift ideas

There are all kinds of alternative ways to get your shopping list handled without expensive purchases. It’s a bit cliché, but it’s the thought that counts.

Amy Maglia, a personal finance consultant with Take Charge America, gave us a list of alternate ideas for gifts:

Make handmade gifts. There’s something meaningful about a gift with a personal touch. Try decorating a picture frame and printing a photo of you and a family member or baking a sweet treat. Pinterest has great ideas for DIY gifts. You’ll save a few bucks and may discover your hidden crafty side!

Give the gift of time. Gifts don’t always have to be material things. Volunteer your time to cook dinner, babysit, or take a loved one on a hike.

Secret Santa. If your family or friends are also on a budget this holiday season, suggest a Secret Santa gift exchange. Each person draws a name and purchases a gift for that person within a set amount of money. This way you’ll all save — and the secrecy adds to the fun!” You can read more about being the office hero in our blog How to Win at Office Secret Santa.

Check out thrift stores. Gifts don’t have to be brand new to be well received. Thrift stores and antique shops often have unique goods for a fraction of the new cost, and can be a great place to locate hard-to-find items.

Stay disciplined

Once you have a plan, the most important part is sticking to it.

“Prepare yourself for temptation,” Gerstley warns. “With Black Friday, Cyber Monday, and other holiday sales, it is easy to get caught up in the madness. Make a plan and stick with it to avoid impulse purchases and things you don’t need.”

With proper budgeting, saving and deal-finding, you can steer clear of spending that will leave you singing the “holiday shopping debt” blues.

At the end of the day, though, the holiday season isn’t about the gifts. As Potter eloquently states:

“In a snow-globe’s whirlwind of cars with giant red bows on top of them, diamonds expressing Santa’s love for Ms. Clause, and otherwise constant holiday ads, it’s easy to lose sight of the most important part of the holidays. Time spent with loved ones is what the holidays are really about – not diamonds, or phones, or whatever else the TV tells you to buy.”

Get your holiday shopping done as soon as you can, and enjoy the extra time with your family.

From all of us here to you: an early happy holidays!

This blog was updated in October 2019; it was originally published in September 2017.

Contributors
J_BisestoAshley Feinstein Gerstley (@TheFiscalFemme) is a money coach and founder of the Fiscal Femme where she demystifies the world of personal finance and money in a fun and accessible way so her clients achieve their financial goals.
R_FaidaAs a stay-home-mom, Karen Hoxmeier took up couponing and bargain hunting to keep her family’s finances in order. She turned her love of frugal living into a blog in 1999. Over the last 18 years, she has helped her readers save millions of dollars with her tips.
S_HorowitzJustin Lavelle is a Scams Prevention Expert and the Chief Communications Officer of BeenVerified (@BeenVerified). BeenVerified is a leading source of online background checks and contact information. It helps people discover, understand and use public data in their everyday lives and can provide peace of mind by offering a fast, easy and affordable way to do background checks on potential dates. BeenVerified allows individuals to find more information about people, phone numbers, email addresses and property records.
A_MaligaAmy Maliga is a personal finance consultant with Take Charge America (@TCAsolutions), a national non-profit credit counseling and debt management agency. She specializes in educating consumers about a wide variety of financial lifestyle topics. More at www.takechargeamerica.org.
I_MeitisKendal Perez is the Savings Expert for CouponSherpa.com, a popular source for online, in-store and grocery coupons. Her money-saving tips are often featured on Bankrate, GOBankingRates, US News & World Report, Wisebread and more. Kendal can be found on Twitter @HassleFreeSaver.
Money_WizardSean Potter is the 20-something writer behind MyMoneyWizard.com (@moneywizardblog), a website where he shares his plans for reaching complete financial independence by his late 30s. His approach to saving over half of his income has been featured in several publications, including Forbes, Business Insider, and Yahoo Finance. When he’s not writing, Sean can be found cycling, skiing or traveling the country.
Natasha Rachel Smith (@topcashbackusa) is a personal finance expert at TopCashback.com. Natasha’s background is in retail, banking, personal finance and consumer empowerment; ranging from sales to journalism, marketing, public relations and spokesperson work during a 17-year career period. She’s originally from London, UK, but moved to Montclair, New Jersey, USA, several years ago to launch and run the American arm of the British-owned TopCashback brand; a global consumer empowerment and money-saving portal company.
RaiseRaise (@RaiseMarket) is an online gift card marketplace where consumers can buy discount gift cards or sell their unwanted cards for cash.

Retirement Alternatives to a 401(k)

By Andrew Tavin

Retire in something resembling style.

Throughout history, humanity has experimented with many different kinds of retirement plans. The earliest retirement plan was the “no-one-lived-past-their-30s” plan. While this had the advantage of not actually requiring any planning, it did not leave much time for relaxation.

Later, if legend is to be believed, putting the elderly out to sea on an ice floe gained some popularity. However, with arctic currently melting, this retirement plan is less viable than ever.

Since 1978 the 401(k) account has become a common solution for building retirement funds. 401(k) plans are investment accounts offered by employers as part of their benefits package. Employees can direct a small percentage of their pre-tax income into these accounts and their employer will match a portion of those funds.

But many jobs do not offer a 401(k). Perhaps your job does not. If that’s the case, how can you avoid being put out on the proverbial ice floe when you reach retirement age?

When you want something done right…

There are tax-advantaged retirement accounts you can open on your own that are separate from an employer-provided plan . You will not receive the benefits of that employer matching your contributions (unless you are remarkably persuasive), but it is likely better than nothing.

“Individual retirement accounts give anyone the option to save for retirement outside of an employer plan,” offers Sam, who writes about early retirement with her husband at How to FIRE. “You could open one at a brokerage firm like Fidelity or Vanguard. However, the IRS does have income requirements and contribution/distribution limits that you should be familiar with. Roth IRAs grow tax-free and traditional IRAs grow tax-deferred. If you are married and one of you does not work outside the home, you may even have the option for a spousal contribution.”

Property possibilities

If you want your retirement investments to be more tangible, you could consider putting money into property. Unfortunately, this will require you to have quite a bit of money already saved up. There are a few upsides if you can manage it, however.

“Rental properties complement stocks and more traditional retirement accounts extremely well,” says Brian Davis, co-founder of SparkRental.com. “To begin with, they generate ongoing passive income … Rental returns adjust for inflation automatically, as well. Not only do rents rise alongside inflation, they are a primary driver of inflation, and often rise faster than the broader inflation rate.”

While the money you put into the property will likely be subject to taxes, property ownership has its own sets of carve outs.

“They offer tax benefits, with every conceivable expense deducted from your profits,” Davis explains. “Even some paper expenses like depreciation are deductible. Taxpayers do not have to itemize their deductions to take advantage of these deductions, either – they come off your rental income before it is added to your adjusted gross income.”

Getting into the franchise game

Have you ever fancied yourself a business owner, but you just are not able to do it full time? Well you may be able to get into the franchise game as an investor.

“Most investors are unaware that you are able to invest in a full-time or semi-absentee franchise tax free and penalty free with the Rollover for Business Startups (ROBS) program,” says Kenny Rose, founder and CEO of Semfia. “A semi-absentee franchise investment can be owned while working full time and can both build equity and produce a significant income. These are an out-of-the-ordinary investment that can also be paired with with a [U.S. Small Business Administration] loan to leverage pre-tax funds.”

Rose says the best way to approach this type of investment is to selectively pick your marketplace and do your research to vet different brands. “Although most people hear the word ‘franchise’ and go straight to food, the best way to reduce market risk is to look into recession-resistant industries like haircare, automotive, and fitness,” he says.

One caveat to be aware of is the time commitment. Even though it may not require your full time attention, investing in a franchise is not a completely hands off endeavour.

“Unlike other typical 401(k) investments, franchises are not passive money earners,” Rose warns. “Even for a semi-absentee investment you will need to manage a manager for 5 to 15 hours per week. Newer trends for semi-absentee are for nonworking spouses and recent college graduates to handle overseeing the management with the franchise structure.”

One other risk of note about small business loans: Know that your personal credit may impact your ability to get a small business loan, and a small business loan can impact your credit report, as well. Always make sure you understand the ins-and-outs of taking out any type of personal loan or business loan before moving forward with a money-borrowing decision.

If all else fails…

You may not have access to a 401(k) through your job. You may not meet the requirements for individual tax-free accounts. You may not have the money to invest in property or a franchise. But you can still do your best to put away money for retirement.

“Saving for retirement can be intimidating when you know that there are penalties for distributing the money before you are eligible,” Sam says. “If you would like more flexibility with your money, consider opening a taxable account. You can still earmark the money for retirement, but also use it without penalty before your golden years. Just be mindful that you won’t have the same tax advantages that retirement accounts offer. Any option to get you saving is better than not saving at all.”

It is not easy to think about retirement while you are dealing with so many daily expenses. But if you can make it a habit to regularly put aside retirement money, it should make a big difference later on.

Contributors

Leslie TayneG. Brian Davis is a landlord, personal finance writer, and co-founder of SparkRental.com, which provides free video courses and rental investing tools for landlords. He spends most of the year overseas, splitting his time between Abu Dhabi, Europe, and his hometown of Baltimore.
Sam blogs about personal finance and financial independence at How To FIRE. She uses her Bachelors in Finance and MBA degree to help others get control of their finances through budgeting, saving, investing, and side hustles. For more information, visit her @HowToFIRE.
Kenny Rose is the founder & CEO of Semfia, a franchise brokerage to provide education and guidance on investing locally through semi-absentee franchise ownership. Rose founded Semfia after working in finance at Merrill Lynch and also spending time in the franchise industry. He realized that people want to hold a franchise business as an investment and not a full-time job, but they can’t get past that pesky F-word. A graduate of San Diego State University’s Top 10 Financial Services program, he has appeared on ABC, in the Amazon Best Seller “More Than Just French Fries,” and has been a featured speaker for the U.S. Small Business Administration, Small Business Development Centers of America, and SCORE. Follow him @InvestLocally.