7 Bad Money Habits That Lead to Bad Credit

Bad Money Habits

If you want a healthy credit score, you need to save more, spend less, and be patient.

Having bad credit can sometimes feel like a curse, like it’s something entirely beyond your control, something that’s utterly impossible to fix.

But even though it can feel that way. We all know that’s not the case.

While there are certainly many instances where bad luck or misfortune—incidents that are entirely beyond your control—can contribute to financial woes and send your credit score down the tubes, there are just as many times where bad money habits are the real culprit.

Even when it comes to instances of bad luck, there are good money practices that can leave you much better prepared to deal with them. Having a real, sizable emergency fund, for instance, means that you don’t have to turn to personal loans in a time of financial need.

If you want to fix your bad credit, you need to fix the bad money habits that cause it. Here are seven bad credit habits to fix today!

1. Making only the minimum payment on your credit card.

While paying your bills on time represents a big portion of your FICO credit score, another big factor in your credit score is your amounts owed, and your credit utilization plays a big part in that,” says Stephen Slaybaugh, a consumer analyst with DealNews (@DealNews).

“If you’re only making the minimum payment, your credit utilization will be higher and it will take longer to pay off your debt. Try to pay as much of your balance off as possible each month.”

This is great advice, and it bears repeating. Credit experts generally say that you should keep your credit utilization ratio at 30 percent of your total credit limit or below. Paying off your entire balance month to month means that you are maintaining a ratio of zero percent.

Carrying a balance from month to month on your card also means that you are paying interest on that balance, which is cutting in your budget and costing you more money in the long run.

Even if you can’t pay off your entire balance every month, avoid paying only the minimum.

2.    Not having an emergency fund. 

Carla Dearing is the CEO of Sum180 (@mysum180), an online financial wellness service. She says that “The single worst money mistake you can make is to fail to maintain a cash cushion for emergencies.”

“Eventually, an event like a job layoff or a medical emergency will happen to most of us. Without an emergency fund, this can trigger debt that gradually spirals out of control. Give yourself the security that comes from knowing unexpected expenses will not derail you.”

Being saddled with debt like that is going to be very bad for your credit score. Here are two steps that Dearing suggests you take to build up an emergency fund:

  • “Increase your monthly savings and deposit as much of that as possible into an easily accessible savings account until it reaches about six months’ worth of expenses.”
  • “After that, build up another 18-24 months of cushion to weather more serious emergencies.”

Unsure where you can find money to save? Dearing has a wonderful suggestion for that, too:

“If you’re not sure where or how to cut back on expenses in order to increase your savings, try this exercise: take a “No Spend Month.” Eliminate all non-essential spending for a month. The simple act of sorting your expenses into “wants” vs. “needs” for one month can be eye-opening and liberating.”

“You’ll find it easier to sacrifice luxuries like expensive dinners or a vacation when you understand what you stand to gain: security and peace of mind.”

Krista Neeley, Managing Vice President of Appreciation Financial (AppreciationFin), a retirement services company, has some great insight into why some people have difficulty with saving.

“Most savings habits are difficult for people because they perceive it as a loss, rather than a replacement. We have too many of us who seek instant gratification rather than long-term longevity benefits,” she says.

“When we think of savings as someone or something taking away from us rather than a gift we are giving to ourselves, it can make it harder to save. We have so many bills to pay or financial responsibilities to meet, sometimes we forget to get ourselves onto that list!”

3. Being Too Casual About Saving.

If you don’t have an emergency fund or retirement savings, it means that you aren’t putting any thought towards saving money. You’re just living your life, swiping your card, and hoping that things will take care of themselves.

But saving money isn’t something that just happens. It requires making a plan and then sticking to it—which is a lot harder than it sounds. It definitely won’t “take care of itself.”

“Saving is a habit, and the same way it took us multiple attempts over time to learn how to correctly, then effectively, then quickly tie our shoes, the same principles apply when seeking how to improve or build habits of financial abundance and stability,” says Neeley.

“Starting young means building a healthier relationship with money and a high expectation of the goals and life money can create should you choose to create it. Money can be one of the most empowering tools and one of the most frustrating, but it’s determined 100% by us! Saving for long-term goals while you are young is also vital when remembering interest and accounts build up over time which is only on your side before age 40. After that, long-term savings (like retirement) become increasingly expensive!”

In order to build up your savings, you need to be deliberate. You need to make a plan and then stick to it—which can be harder than it sounds.

With that in mind, here are some great savings tips from Ashley Feinstein Gerstley, money coach and founder of The Fiscal Femme (@TheFiscalFemme):

  • Automate. I love making our financial lives as easy as possible, and automating is a great way to do that. It also ensures that it will happen. When we set our savings up to transfer automatically we treat our saving like an expense. It’s not about what’s left over or what we’d like to save, it’s about paying ourselves first and making it a priority.”
  • Separate. It’s very hard to save money in a savings account that’s with the same bank as our checking account. We see it every time we check our balance and it just feels available to us to use. We end up transferring money over bit by bit to our checking and then there’s no money left in our savings. When we open up a separate savings account, the money feels less available to us. Out of sight and out of mind. We also can earn some interest. Online savings accounts get about 1 percent interest vs. our brick-and-mortar banks that give about 0.01 percent.”

Neeley has some spot-on advice as well:

“You can use a third-party app like Digit to help you save each month also. This is a great tool when saving for a trip or something fun that’s a few months out, you will surprise yourself with how much you can save in small increments.”

[Oh, and speaking of apps to help improve your financial life, why not check out our Finance App Directory? There, we review money apps for everyday needs like savings, budgeting, transferring money and more.]

“You can still go out to dinner and enjoy life, maybe just remind yourself that the $10 movie popcorn or $8 dessert when at dinner would feel better in your bank account instead of in your belly. Instead of giving into that $7 Starbucks run, take the cash and put it into savings for your future goals (maybe that’s a future Starbucks run).”

No matter how you decide to do it, you need to get serious about saving. Lacking an emergency fund is how you end up putting emergency expenses on your credit card or turning to bad credit loans and no credit check loans to get cash in a hurry.

And behavior like that is how you end up hurting your credit score in the long run.

4. Living Without a Budget.

Fixing this bad habit can fix a lot of other spending woes.

Going without a budget means that you aren’t tracking your spending, and you’re not making the hard choices on where to cut back. It means you’re probably racking up too much credit card debt and making only your minimum payments.

Living without a budget means living without awareness of where your money is going. And your credit score is going to pay the price.

“It’s important to have a budget and stick to it, says Slaybaugh. The best way to do that is to examine your spending habits. That means writing it all down.”

He says that “the simplest way to get started is by using an app like Mint or Level, which connect to your bank account(s) to see what you make and what you spend. These apps can build budgets for you based on your existing spending patterns, and keep you on track by letting you know when you’re going over budget and when bills are due.”

Gerstley notes that the rising popularity of mobile payment makes it even easier for us to ignore our finances:

“We have a tendency to avoid paying attention to where our money is going, and technology has made this that much easier. We can hop in and out of Ubers without paying and we can buy things with a click of a button or swipe of a credit card.”

“I have each and every one of my clients manually track their spending via an actual notebook or notes on their phone,” she says.

“It’s a new practice so it will take time to get the hang of it. It’s important that we are kind with ourselves as we build the new habit. And the more we don’t want to do this, the more we have to gain from doing it!”

5. Spending Outside of Your Means.

There are two main planks to the “out of control credit card spending” platform.

The first is using your cards to pay for emergency expenses because you lack a savings account. It’s using credit cards to buy consumer goods that you want but can’t you couldn’t otherwise afford!

This doesn’t mean that you can’t afford to go out to a nice dinner once in awhile, or buy that new PS4, or paint those sweet jet flames on the side of your Honda Civic.

It just means that you can’t do all of those things at the same time. And it means saving up the money to pay for them up front.

“If your spending is higher than your income, it’s time to rethink things,” says Slaybaugh. Look at your spending numbers and figure out where you could cut back.” Do you need that pricey cable package? Could you skip a few nights out every month?”

“Sometimes even relatively small changes, like carrying your lunch or not picking up coffee on the way to work every day, can add up over the month to make your budget work. Keep tweaking your budget numbers until what you’re spending is less than what you’re making.”

Another option is taking on a side gig. That way, you can earn extra money to pay for all that great stuff. (We’d be remiss if we didn’t tell that at least some of that should go towards your savings.)

To learn more about picking the perfect side hustle, check out our list of 10 great side hustles that are perfect for quick cash.

5. Ignoring Your Credit Score.

Failing to pay attention to your credit score and then wondering why it’s so low is like failing to pay attention to your dog and then wondering why it misbehaves.

And while your credit score won’t eat your couch or poop in your shoes, ignoring it can have incredibly dire consequences for your life overall.

“Figure out where you stand with your credit score,” says Gerstley.  “The first step to increasing your credit score is to figure out where you stand. How will you get where you want to be if you don’t even know where you’re starting from?”

Here are her three tips for keeping on top of your score, as well as your larger credit history:

  • Pull your credit report for free each year at AnnualCreditReport.com. Your credit report is the source of information for your credit score. In the report, you should find all of your credit accounts, including credit cards and loans as well as your limits, balances and payment history.”
  • Review this information each year to make sure it’s all correct. The quickest way to increase your score is to remedy errors from your credit report. A delinquent loan on your report that isn’t yours would be weighing your score down incorrectly. Having that removed will move you up immediately!”
  • Your credit score can range from 350-850, 850 being perfect. The most widely used credit score is the FICO score and many credit cards are now reporting that score on monthly statements. You can also pull your FICO score from MyFICO.com. For a fee, you can see a breakdown of your score along with action steps to improve it.”

By federal law, the three major credit reporting agencies—Experian, TransUnion, and Equifax—all have to make one free copy of your credit report available to you per year. In order to really keep track of your finances—not to mention your identity—we recommend that you request one report every four months.

6.  Skipping out on insurance.

Another way to deal with unforeseen expenses, especially medical costs and home or car repairs, is to have insurance cover the majority of the tab.

Even if insurance premiums mean that your budget is a little tighter than normal, it beats resorting to costly payday loans or title loans during an emergency.

When it comes to the benefits  insurance coverage, Dearing is chock full of good advice:

“When we think about our taking care of our ‘finances,’ we often think of growing our savings, retirement or investment accounts. But the truth is, your money is so much more than your savings or your investments.”

“Protect your assets and your future from liability by getting property, casualty, and perhaps umbrella insurance coverage, as well as health insurance, disability, and other specialized coverage you may need to have due to your circumstances.”

Identity theft has become increasingly common recently, so you may want to consider this as well. For a small premium ($25-$60 per year) you can purchase credit monitoring and reimbursement for the costs associated with repairing your credit history if you become a victim.”

“If you are a homeowner, be sure to update your coverage yearly. Have you had an addition built onto your home in the past year? Did you completely renovate your kitchen or install a full-feature home theater? Reviewing and adjust your coverage to reflect the current value of your home will save you a lot of money in case the unexpected happens.

7.  Not daring to hope.

No, wait. Here us out.

One of the worst things you can do when you’re financially struggling is to give up hope. That kind of mindset leads to self-destructive choices, which then make you feel even more hopeless.

If you have bad credit already, it’s going to take a while to pull your score up out of the gutter. But that doesn’t mean it’s impossible.

(Read more about this in our blog post: Want to Raise Your Credit Score by 50 Points? Here Are 4 Great Tips.)

Granted, it’s going to take some planning, some discipline, and a whole lot of patience. (A little luck doesn’t hurt, either.) But it is the farthest thing from impossible

On the other hand: giving up? That’ll guarantee your score stays bad. Heck, it will probably make it get even worse.

Dearing has some fantastic insight on this topic:

“Three out of four Americans live paycheck to paycheck, says Dearing.  In this situation, it takes a leap of faith to imagine that a better financial situation for yourself and your family might be possible. But hope is an essential ingredient to building a better financial picture. You don’t have to know how to get there; that can come later. For now, just allow for the possibility of making things work. “

“Then, tune in. Instead of avoiding the things that stress you out – credit cards debts, student loans, etc. – confront them. If you need it, get help from a good financial planner. You may be surprised to discover that things aren’t as bad as you imagine.”

“Set aside time to deal with your money on a regular basis, so you can deal thoughtfully with questions that come up and address problems before they become crises. If dealing with money has been stressful for you in the past, creating a schedule to handle money questions regularly can defuse the anxiety. Eventually, it will just be another part of your routine.”

Think about your finances the same you’d think about your health. If you don’t take care of it every day, your finances will end up getting sick. Really, really sick.

“Our financial health and strength are just as important as our mental, emotional, and physical health and strength,” says Neeley. “Taking time to better understand and empower yourself financially can be the backbone to creating the freedom, flexibility, and peace of mind your desire for your future. Having a strong, stable foundation for your finances is the easiest way to create a bright future in all other areas of your life.”

How have you conquered your bad money habits? We want to know! You can email usor you can find us on Twitter at @OppLoans.

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CarlaDearing-2_2015-1Carla Dearing is CEO of SUM180, an online financial wellness service designed to be simple and affordable. She is also CEO and Managing Director of IMC, a marketing services agency. Previously, Carla held senior executive positions with at the University of Louisville, Community Foundations of America and Investors Capital Services. Earlier, she worked at Morgan Stanley and American National Bank & Trust Company. She holds an MBA from The University of Chicago Booth School of Business and a BA from the University of Michigan, Phi Beta Kappa.
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.
KristaNeelyKrista Neeley is the proud mother of three amazing girls, passionate about finances and helping others, and is blissfully married to her sweetheart. She’s been in financial services for 5 years and enjoys supporting people in achieving financial liberty. She enjoys traveling, photography, reading, and Disneyland trips during her free time.
stephenslaybaugh2Stephen Slaybaugh has been writing for such national and regional publications as The Village Voice, Paste, The Agit Reader, and The Big Takeover for 20 years, and has been covering consumer electronics and technology for DealNews since 2013. Stephen lives in New York, and is a native of Ohio.

Can Consolidating Debt Help Your Credit Score?


Consolidating your loans and credit cards can definitely improve your credit rating—but you have to be careful.

You know you need to be careful about taking on too many loans but it already happened and now you’re not sure what to do. You’re wondering if there’s anything you can do to fix your debt problems and improve your credit score. You don’t want to start missing payments and end up with bad credit or turning to payday loans and no credit check loans.

You might have heard of debt consolidation, and you’re wondering if consolidating your loans and credit cards helps your credit score. You might even have found this article while searching online for an answer to that very question!

Well, we’re here to provide those answers, as well as explain what loan consolidation means in general. Read on, and consolidate your knowledge.

What is “debt consolidation” anyway?

On a basic level, debt consolidation means taking multiple loans and turning them all into one loan. (It can also work with credit cards.) There are multiple reasons you might consider debt consolidation, but on a basic level, you hope that paying off one big loan will be cheaper and more manageable than paying off all of the smaller ones.

To learn more about debt consolidation, check out our three-part blog series, Debt Consolidation 101.

So that’s the idea. But does it work out that way? And how does it impact your credit? Let’s find out!

Credit where credit is due.

One of the most common ways to turn many loans into one loan is to take out a new loan big enough to pay off all the other ones entirely. Then you’ll just be paying off that new loan. And it can be a good move for your credit.

“If you take out a personal loan from your bank to pay off your credit cards, you can see your score go up as the cards get paid down,” nationally recognized credit expert Jeanne Kelly (@creditscoop) told us. “This can help you pay the credit cards faster since the interest rate is lower, but you have to be careful not to rack up more debt on those cards now that the balances are low again or paid off.”

Katie Ross, Education and Development Manager for American Consumer Credit Counseling , also explained how debt consolidation loans can impact your credit:

“Consolidation can help improve your debt and credit situation. One way to consolidate credit is through a personal loan. This way you will pay off balances on multiple accounts, likely see lower interest rates, lower monthly payments, and a shorter payoff time.

“In turn, by consolidating with a personal loan, you will see a significant reduction in your credit utilization ratio, which accounts for 30 percent of your credit score. Credit utilization is the amount you owe on your credit cards versus the total amount of credit available.”

All right, so loan consolidation sounds like a great plan. Time to find the first loan consolidation place you can and get all your loans consolidated. Right?

But tread carefully.

Not so fast! Like with any kind of loan transaction, you’re going to want to do your research before getting your loan consolidated.

Jeanne Kelly stresses the dangers you have to watch out for: “If you sign up for a debt consolidation program, you do have to read the fine print as many do damage your credit if the accounts with your creditors get paid late and get noted as making partial payments. I see this often and most times the client never knew this would report as such. Again, be careful what you sign up for as you signed an agreement with the credit card company to pay on time.”

Natasha Rachel Smith, a personal finance expert at TopCashback.com (@TopCashBackUSA), gave an extensive overview of the cautious approach to loan consolidation:

“If you’re in debt, only four things – simultaneously – will help you avoid greater debt: changing your attitude towards money, putting the brakes on spending, throwing more cash towards outstanding debts, and getting the interest rates of your borrowing as low as possible. It’s essential to put all four points into action to avoid greater debt; not only one, two, or three.

“Regardless of how badly you are in debt, always make the minimum repayments on your credit cards and loans. This will preserve your credit score as best as possible. If you’re not able to meet even just your minimum repayments, you are spending more than you should and have to address that immediately. Write down a budget, pause any non-essential spending, and investigate getting a second job; that’s how serious not being able to cover your minimum repayments is.

Is debt consolidation a good option for you?

Smith continues:

“When it comes to getting the interest rate of your debt as low as possible, if your credit score has been affected because you haven’t been able to keep up with your minimum repayments in the past, you won’t be eligible to move balances to new credit cards that offer dirt-cheap introductory interest rates. Therefore, your call to action is to try to negotiate with your current lenders. See if they will lower their interest rates. If they won’t, look into how much the interest rate of a balance or money transfer and its fee would be with your existing cards to switch debt around.

“If that avenue doesn’t prove fruitful, possibly because you don’t have enough credit available or your providers aren’t offering you a lower interest rate for balance or money transfers, consolidating your borrowing to be with one provider might be something worth considering. Before you commit to the idea, call each of your existing lenders and write down the interest rate you’re paying for each debt. If you have personal loans, find out if there’s an early repayment charge attached to your agreements.

“If the interest rate is five percent or less, put that debt to one side and continue chipping away at it. If the loan has an early repayment charge, put that debt to one side and continue to repay it.

“For all debts that are charged more than five percent in interest costs, as a last resort for those with a very poor credit score, it could be worth considering combining them to be paid off with a reputable loan provider. It’s vital to find a loan provider that will lend to you with a poor credit score but that also doesn’t charge an extortionate rate of interest or makes you agree to a lengthy term or unfair penalties if you accidentally miss a repayment. Read customer reviews online to guide your decision.

“Sadly, it’s likely that the interest rate will cost much more than your existing interest rates, but it’s important to get to a point where you’re able to afford your minimum repayments again; for the benefit of trying to rebuild your credit score to aid your future financial worthiness. Check whether you can pay more than the set repayment amount each month without a penalty. Only take this consolidation route if you are confident you can remain disciplined and change your spending habits once you’ve combined the applicable debts.

“Never, ever switch debt simply to have it with one lender because you think it makes it more manageable; that’s a falsehood and will cost you so much more in the long-run. That attitude will lead you into accruing further debt, snowballing additional borrowing on top of the debt you’ve already consolidated, bringing you back to square one.”

If you already have not-so-great credit—and have taken out the bad credit loans to match—then you are going to want to think long and hard before pursuing debt consolidation. Lower credit scores mean higher interest rates, which means that finding a consolidation loan with a lower rate (and qualifying for it) might just not be in the cards.

But don’t let that get you discouraged. Follow all of this advice, and you should be able to figure out if loan consolidation is a good option for you.

What have your experiences been with debt consolidation? We want to know! You can email us or you can find us on Twitter at @OppLoans.

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J_BisestoJeanne Kelly (@creditscoop) After being turned down for a mortgage 15 years ago, Jeanne Kelly realized she needed to get her credit in order. Not only was she able to fix her bad credit, but she took the skills and knowledge she gained and decided to share it with the world. Now she’s a nationally regarded credit coach and expert, with multiple books and television appearances. She’s also been kind enough to share her insights with us on many different occasions. Follow her on Twitter and check out her site to get the credit help you need!
R_FaidaNatasha Rachel Smith (@topcashbackusa) is head of global communications 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.
PIGKatie Ross joined the American Consumer Credit Counseling management team in 2002 and is currently responsible for organizing and implementing high-performance development initiatives designed to increase consumer financial awareness. Ms. Ross’s main focus is to conceptualize the creative strategic programming for ACCC’s client base and national base to ensure a maximum level of educational programs that support and cultivate ACCC’s organization. Ms. Ross is certified by the Center for Financial Certifications as a Certified Personal Finance Counselor.

The OppLoans #MasterYourMoney Giveaway


Here at OppLoans, we’re committed to giving our customers (and everyone else, for that matter) the resources they need to take control of their money. That’s why we created OppU, a free online curriculum that teaches financial literacy. For a lot of people, healthy money habits come later in life than they might like. But this is through no fault of their own—only 17 states require personal finance classes for their K-12 students. When did you learn about finance outside of school? Tell us what age it was and enter in our #MasterYourMoney #Sweepstakes.

OppU features 11 short, fun videos with tips on how to save, improve your credit, and get out of debt. The lessons are aligned to national standards and perfect for a range of ages, including adults. If you ever wanted to know how your credit score is calculated, or what happens if you miss a payment on a credit card, OppU has the answer for you in a way that’s easy to understand and put to use.

To celebrate the launch of OppU, we’re giving away $100 on Twitter and Facebook. To enter the contest, follow the instructions below and let us know at what age you learned to master your money. If you’re selected, the $100 is yours with no strings attached. But hey, after watching a few OppU videos, an emergency fund just might make a lot more sense than a shopping spree. 

Enter the #MasterYourMoney #Sweepstakes! Follow @OppUniversity and tell us what age you learned to #MasterYourMoney!

How does it work?

Enter once on Facebook and once on Twitter!

Click here to enter on Facebook

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Sweepstakes Guide

The sweepstakes begins Wednesday, September 13th at 12:00 pm CST, and you must enter by Friday, September, 22nd at 12:00 pm CST. The lucky winners will be announced by 5 pm CST on Friday, September, 22nd.

  • Winner chosen at random
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  • Must enter by Friday 9/22 at 12:00pm cst
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Teaching Your Children How to Use Credit and Debt Responsibly

Teaching Your Children How to Use Credit and Debt Responsibly

Teaching your kids how to handle money is one of the most important things you can do to prepare them for adult life and responsibilities. 

As a parent or guardian, you have the heavy responsibility of preparing your child for the big world outside the home. You have to show them the things they should put in their mouth and the far larger number of things they shouldn’t. It’s up to you to teach them the danger that strangers can present. And you’ll be the one to teach them about finance, especially about credit and debt.

There’s a decent chance they won’t learn about these topics in school, and it’s knowledge they’ll need for their adult life. Without it, they might themselves buried with payday loans, trapped in a never-ending cycle of high-interest debt. 

As Paul Vasey, founder of CashCrunch Games (@CashCrunchGames), told us: “Money habits are useful at any age and are basically the same whether you are 7, 17, or 70. Therefore, the earlier you learn something, the better you are at grasping your money and making smarter decisions.”

So how can you teach it to them? We’ve spoken to Vasey and other experts to learn exactly that. Read on, and educate yourself on how to best educate others.

(Oh, and by the way, if you’re looking for some financial education on the go, check out OppU—OppLoans’ free and easy online personal finance curriculum.)

Set your curriculum

Before you can start teaching your kids about finances, you have to know what you need to teach them. Other than “it’s good to have it,” what should you be teaching your kids about credit?

Katie Ross, Education and Development Manager for American Consumer Credit Counseling, outlined some of the important lessons kids should learn about finance:

  • Identifying Needs vs Wants – It is important that children learn the difference between wants and needs. Children should be taught to think and identify if what they are looking to buy is a need or a want, and if the purchasing can be postponed for when the money is available. As part of this process, children can be encouraged to assess their financial goals to determine if they are realistic, achievable, and worthwhile.
  • Save and Plan – Children should learn how to keep track of their spending so they can plan their financial future. If your child has a job, explain the importance of putting a portion of the check into a savings account. Working age children should learn how to choose a bank and prepare for their financial future.
  • “The Value of the Dollar – It is important that children learn the core concepts about money and finances early on. Children should be introduced to the concept of money during preschool. Learning about money can be fun. Take advantage of casual trips to the grocery store as an opportunity to introduce new money concepts.
  • How to Budget – Budgeting is key. Children must know that they cannot buy everything when they want it. They must plan out how they can save the money to make the purchase without causing a financial disaster. Parents can introduce a budgeting worksheet that shows income and expenses so they can learn what money is being earned and spent.”

The basics of credit and debt

Natasha Rachel Smith, financial expert at TopCashBack (@TopCashBackUSA), told us what you should tell your kids about credit cards and debt:

Teach your kids while they are young that credit cards aren’t just magical pieces of plastic that pay for things. Credit cards have due dates and, if you misunderstand the rules, you can be penalized by having to pay more money.

“My parents also stressed the importance of good debt versus bad debt. It is OK to accrue debt when it is good debt. Investing into a mortgage – provided the property was purchased at a reasonable, affordable price – is good debt. Where you can account for precisely and exactly where the money was spent is usually good debt. Frivolous spending is bad debt. Do not buy things you simply want, focus on the things you need alongside sometimes treating yourself to the items you want.”

Personal finance expert and motivational speaker Debbi King (@DebbiKing) offered her own take on what you should teach kids when it comes to debt and credit: “The first thing to let them know is that if they make positive financial decisions, their credit report will reflect that. Your credit score is your financial reputation. It shows others how you handle money.

“Then you need to make sure they know the difference between debt and credit. You can build credit without ever going into debt. For example, you can have a credit card and no debt as long as you pay it in full every month. Debt is owing more than you have. And credit is a form of payment. The best possible thing you can ever do for your finances is to build credit without debt. I know people who take out auto loans even though they have the money in the bank. They use the bank’s money at, say, 4% instead of using their money at an investment rate of 10%. Just because they have an auto loan doesn’t mean they are in debt. They have the money to pay the bill at any time that they choose.

“I would also suggest teaching your kids what makes up their credit report and how their decisions affect their score. Use a free website such as Credit Karma to look at this information. It will not only give you a free credit score, it will break down each category and how you fare in each one. Knowledge is power. You can also use this site or www.annualcreditreport.com to look at your credit report to find errors which can be disputed and help your score.”

Teach by example

“I learned about credit the hard way,” Michael Doane (@medoane) writer and marketing expert with CadmiumCD (@cadmiumcd), told us. “After college, I ate ramen every night for a year so I could put every penny to pay off my student loans. I lived in a basement with a cement floor and drove a car that barely ran. To me, the money I was making wasn’t mine, it was my creditors.

“It took about 15 months, but I eventually paid off my loans. I kept at it, living in the same conditions, until I had a decent chunk of change saved up to buy a house. The thing is, I didn’t have a credit card during that time and eventually my credit score dropped off entirely. I didn’t realize it until my then-girlfriend (now-wife) and I went to purchase a home. They told me I couldn’t get the loan because I essentially couldn’t prove my worth as a debtor. All my tradelines had disappeared.

“So, I had to start from the bottom — someone who valued paying off their loans far ahead of schedule, someone who proved that they had what it took to take and pay off a loan. 5 years later I have great credit (780+) simply buying gas every month on a single card and paying it off. I have a home with a very small mortgage for what it’s worth, and a car that’s paid off.

“My case is pretty radical, but I watched my parents lose everything during the recession and I told myself I’d never go through that again. I’d never put other people that depend on me through that.

“The point is, good or bad, your kids will learn through the example you set. Might as well set a good example and teach them through experience rather than observation.”

April Lewis-Parks, Director of Education for Consolidated Credit (@ConsolidatedUS) also emphasized the importance of setting a good example:

It’s important to remember that no matter how old your children are that being a financial role model is an important part of parenting. Setting a good example can help kids be successful with their money.  Here are three tips I recommend:

  1. Don’t get swamped with credit card debt. Taking on too much credit card debt can lead to financial difficulty. You’ll be damaging your own finances and your children could be more likely to take on debt in the future because they saw their parents do it. To avoid credit card debt, make sure you practice the best credit card behavior – i.e. always paying on time – and teach the same things to your children.
  2. Allow your children to learn from your mistakes. While you may feel as though hiding your financial mistakes from your children is a good idea, it is better to let them learn from them so they don’t make the same mistakes when they are older, according to U.S. News & World Report. For example, if you find yourself falling short on some bills due to overspending, be sure to let your children know, as it could be useful information for them once they are in charge of their own finances.
  3. Sit down and talk with your child about money. Sometimes, a simple talk goes a long way in helping them. Many teenagers feel as though their parents don’t talk to them enough about budgeting and money, so don’t be afraid to sit your child down and have the talk. Be sure to touch on topics such as savings and long-term planning to help set your child up for a successful financial future.

Use real world experiences

At the end of the day, there’s nothing better than learning first-hand. You might have to toss your kids into the deep end of the financial pool so they can learn to swim.


“The reason I had strong financial discipline was because my mom let me fail with money at a young age,” explained Phil Risher, founder of the Young Adult Survival Guide (@yasurvivalguide).

“When I was 16 she gave me a debit card and would load $100 each month so I did not have to ask her for money. One day I was out to eat with my friends and my card was declined. Talk about embarrassing. I came home and complained that the card did not work. We looked up the balance, and I had overdrafted the account.

“This was a life lesson that I am glad I made in my teens when I did not have any real bills because I started to learn how to use self-control with money.”

“Part of financial education for kids is helping them understand the value of a dollar,” Ross told us. “The best way to do this is for them to earn their own money and learn money management skills through practice. Some parents choose to do this through allowance, while others have their children earn money outside of the house. You can also do a combination of both. Consider helping kids divide earnings into threes – one part for saving, one part for spending, and one part for a charity of their choice. This shows kids the valuable skill of saving and the importance of charity.”

Baby’s first credit history

Ross offers a guide for helping your kids build their own credit history:

Building a credit history is important. A consumer’s credit history can affect their insurance, ability to rent an apartment, get a job, or get a cell phone plan. Credit history is needed to get all types of loans, from mortgages to department store cards.”

“To start building a positive credit history, individuals should acquire and positively manage small lines of credit. The following are credit options for individuals who need to begin building a positive credit history:

  1. Make a child an authorized user on a parent’s card.
  2. Co-sign a credit card with your child. Co-signers on an account are equally responsible for the loan. Therefore, the loan is on their credit report as well, making a positive or negative impact depending on how the credit is managed.
  3. Have your children open a secured card. Secured cards and loans typically require a cash or collateral security deposit to ensure payment of the debt. The larger the security deposit or collateral, the higher the credit limit granted. The cash security deposit is returned when you close the account with the balance fully paid back
  4. Have your child establish a checking & savings account to build a good banking history.
  5. Make small purchases and pay off balances monthly (Do not apply for too many cards at once).”

If your kid is able to build a maintain a good credit history, this will mean steering clear of bad credit loans and lowers their chances of encountering a predatory lender. While it is definitely possible to fix a damaged credit history, avoiding one in the first place is always the better option.

Start small with household chores

As has been the case for a decade, chores can be something of a “starter job,” as Smith advised:

Start off simple with weekly chores. Pay your children based on chores they do around the house. Once they understand that money is earned, not given, you can start separating it into jars–one for saving and one for spending. It is important kids learn the fundamentals of saving vs. spending early on so understand saving is a normal thing to do.”

Vasey also suggests putting money into kids hands to practice with:

“If a parent buys them something, the child can work off their debt by doing extra chores and meeting certain expectations. For example keeping their room tidy, cutting the grass, washing the car etc. That, to them, would be working off debt.

“Parents can agree to ‘loan them money in advance’ if it is needed. This allows the child to understand that they have the money available to use if it is needed, but they need to be prepared to work the debt off. This can apply for nearly every trip to the shops, the latest product, or even as gas money for when they want to be driven around.”

Use everything in this guide and come up with your own tricks, and your kids will be financial whizzes before you know it. Teach them well enough, and maybe they’ll be supporting you down the line! You can also learn more about credit in our ebook Credit Workbook: The OppLoans Guide to Understanding Your Credit, Credit Report and Credit Score.

How have you taught your kids about money, credit, and debt? We want to know! You can email us by clicking here or you can find us on Twitter at @OppLoans.

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M-DoaneMichael Doane (@medoane) is an author and marketing strategist who learned how to manage money the hard way during his formative years in college at the University of Maryland. In his spare time he reads, hikes, and writes novels about ordinary people doing extraordinary things. He currently lives in Jarrettsville, MD, with his wife and 3 pets. Connect with him on LinkedIn or Twitter.
D-KingDebbi King (@DebbiKing) is a personal finance expert, motivational speaker, and the author of two award winning books, “The ABC’s of Personal Finance” and “26 Weeks to Wealth and Financial Freedom”. She is also the host of a weekly radio show, “The ABC’s of Personal Finance”. Debbi has been featured in numerous media outlets empowering others to win in the area of money. In addition to her work, she is the founder and President of Lovell Ministries and is happily married with a beautiful 19 year old daughter, 4 step children and 5 wonderful granddaughters.
AP-ParksApril Lewis Parks. Prior to joining Consolidated Credit (@ConsolidatedUS) Ms. Lewis-Parks was the public relations manager for a Boston based event firm and before that, she was employed by John Hancock Financial Services, Inc. where she counseled employees on 401K and IRA accounts. She holds a Bachelor of Science degree in Mass Communication from Emerson College in Boston, Massachusetts.
PIGPhil Risher is the founder of YoungAdultSurvivalGuide.com (@yasurvivalguide). Phil paid off $30,000 in student loans in 12 months making 48k. After, he saved up and bought his first place with cash at the age of 25. Phil now speaks with college students and young adults around the country about his 5-Step Guide to help them on their financial journey.
SammelKatie Ross joined the American Consumer Credit Counseling management team in ’02 and is currently responsible for organizing and implementing high-performance development initiatives designed to increase consumer financial awareness. Ms. Ross’s main focus is to conceptualize the creative strategic programming for ACCC’s client base and national base to ensure a maximum level of educational programs that support and cultivate ACCC’s organization.
RainbowNatasha Rachel Smith is a personal finance expert at TopCashback.com (@topcashbackusa). 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.
P-VaseyPaul Vasey is the founder of CashCrunch Games (@CashCrunchGames). Originally from the UK, he taught Business Studies for 12 years, and holds a Business Education Degree from Nottingham Trent University.  Since deciding to leave the classroom and start walking the walk, Paul has dedicated his time and energy to teaching personal finance concepts to kids and teens through active, engaged gameplay. He currently lives in California and is affiliated with Centsai.com.

How to Finance a Medical Emergency

An OppLoans E-Book


Top 10 Must-Know Facts About Medical Debt

  • One in four Americans are currently struggling with medical debt.33
  • 8.8 percent of Americans, or 28.2 million people, don’t have any medical insurance.34
  • On average, the United States spends more than $10,000 per person on health care costs every year, the most of any country in the world with a similar average life expectancy.35
  • 63 percent of insured Americans with mounting medical bills still report using up all or most of their savings paying off their medical debt.36
  • Medical debt has driven 7% of the Americans who carry it to file for bankruptcy.37
  • The Affordable Care Act (sometimes called Obamacare) rollout actually decreased the amount of medical bankruptcies in the United States.
  • Getting your medical debt sent to collections can result in a 50-100 point drop in your credit score.38
  • 43 million Americans with medical debt say it’s hurting their credit.39
  • The average monthly insurance premium for individuals is $321. For families it’s $833 per month.40
  • More than 74 million Americans are currently enrolled in Medicaid and CHIP.41

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Want to Raise Your Credit Score by 50 Points? Here Are 4 Great Tips


These aren’t overnight solutions. But with a little planning and a lot of dedication, following this expert advice can help you rebuild your credit score.

Having a bad credit score is kind of like having a serious nut allergy. People wouldn’t know it to look at you, but there are a whole bunch of things that this condition is holding you back from doing.

With a nut allergy, it might be eating certain types of candy bars or a nice PB&J sandwich. With a bad credit score, it’s taking out a personal loan or a credit card that doesn’t require a cash deposit.

Either way, both these things put real limits on the kinds of decisions you can make. Luckily, while a nut allergy is something you’re pretty much stuck with, a bad credit score is something you can fix.

For someone who has a mediocre credit score—say it’s in the 670 range—raising their credit score is pretty easy. But if you have bad credit, like a score that’s 630 or below, rebuilding your credit is going to take a lot more effort.

But just because it’s hard, doesn’t mean it isn’t worth doing. Your financial well-being is worth it. If you’re looking to raise your credit score by 50 points or more, here’s what you should do.

1. Check your credit report and dispute any errors you find

This step is a lot like filling up your gas tank before going on a long car trip. It’s kind of a no-brainer, but it’s also absolutely necessary. Skip this step, and you’re not going to get very far at all.

Jeff Hunter is the Editor of Simple. Thrifty. Living., a personal finance site. He says that “More than 42 million people in this country have errors on their credit report, and 10 million of those have errors that affect their credit score.”

He recommends that you “Make sure you are regularly checking your credit report to make sure there are no mistakes and that you haven’t been a victim of identity theft.” You can read more about identity theft in our post 3 Identity Theft Warning Signs.

But who wants to spend money just to order a copy of your credit report? No one, that’s who. That’s why it’s so great that you won’t have to pay a dime!

“You are entitled to one free credit report per year from each of the three major credit reporting bureaus, so you should be able to order one every four months,” says Krystal Rogers-Nelson, a freelance writer and contributing Safety & Security Expert for ASecureLife.com (@ASecureLife).

“It won’t affect your score as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.”

To order a free copy of your credit report, just visit www.AnnualCreditReport.com.

2. Make your payments on time

There are five different categories of information that the FICO corporation uses to create your credit score. Of those five, the most important one is your payment history. It makes up a whopping 35 percent of your total score.

The most important thing to remember is to keep your credit report clean from here on out,” says Hunter. And if you’re serious about a clean report, paying your bills late is not an option.

First, this will mean automating as many bills as you can. If you can outsource the hassle to an e-bill, then go ahead and do it. Just make sure that you check in at least once a month to make sure everything is going smoothly.

Second, this will mean budgeting your money properly so that you always have the funds in your account when a bill comes due. An e-bill doesn’t do you much good if it’s zeroing out your account and racking up overdraft fees.

(Just make sure that your zeal for on-time bill payment doesn’t lead you to take out a payday loan in order to make ends meet. The potential debt trap that awaits you just won’t be worth it.)

When it comes to your credit score, improving your payment history is a bit of a long game. Most information stays on your report for seven years, so it’ll take awhile for the old bad info to drop off.

Don’t worry. though. The wait will be worth it.

3. Pay down your debt, and do it as aggressively as you can

When it comes to fixing your credit score, “Your “Payment History” and the “Amount Owed” categories make up 65 percent of your FICO Score calculation, so those are the categories you should focus on first,” says Rogers-Nelson.

Paying down your debt is critical to improving your score, but it can also feel like one of the most overwhelming obstacles to good credit. That’s why you should start small. Going too big too fast is a surefire way to fail.

Make sure you are paying the minimum balances every month,” says Rodgers Nelson, “then make adjustments in your budget to increase your payments, even if it’s only $5 or $10 per month. If you can, start making two payments per month.”

Once you get comfortable with your debt repayment, you can start getting more aggressive. Remember, the faster you pay down your debt, the faster you’ll see your score start to rise.

A truly aggressive debt repayment plan is going to require three things: a strict budget, an extra source of income, and a plan. Luckily, these are all subjects we’ve written about before:

If you need help starting a budget, try these five great budget apps or check out the OppLoans App Directory.

To start earning some extra cash, read these six expert tips for getting your side hustle going, then peruse our list of 10 awesome side hustles for quick cash.

Lastly, the two best debt repayment strategies out there are the Debt Snowball and Debt Avalanche methods. You can read about the Debt Snowball and the Debt Avalanche.

4. Use your credit cards responsibly

As you pay down your debt, it’s important that you try and use your remaining credit cards in a smart and strategic manner.

“Credit cards can help you build your credit, but the key is to show that you can manage them responsibly,” says Rodgers Nelson. “Keep your balances low on credit cards–set a limit for yourself on spending to make sure you are not going over budget–and pay your balance in full every month.”

The unique thing about credit cards is that they carry a one-month grace period before interest starts to accrue on any purchases that have been made.  Paying off your credit card balance in full every month ensures that you’ll get all the card benefits–like points and rewards–without paying any extra money.

Basically, never spend money on your card that you don’t already have in your bank account. So long as you always have the money to pay off your balance you’ll never be in danger of racking up additional debt.  

Rodgers-Nelson has some other great credit card tips:

“Make sure you’re not maxing out your credit limit every month; shoot for no more than 30% credit utilization ratio. 10% is even better. This means that if your credit limit is $2000, your spending would ideally be between $200 and $600 per month.”

The great thing about your credit utilization ratio is that, as old credit card debt is paid off, you should start to see those old cards slip to levels where your score will be positively affected.

Two last quick tips for raising your score

  • “This may seem counterintuitive,” says Hunter, “but canceling credit cards actually lowers your credit score. Part of your credit score is based on how much credit you utilize (your credit utilization score), so the more credit you have available, the higher your credit score.
  • Hunter has one last seemingly counter-intuitive tip: raising your credit limits. This is another way to try and improve your credit utilization ratio. Instead of only paying down the balances you already have, you could contact your credit card company and request that they raise your total credit limit. If you have a good history with the company, they’ll be pretty likely to agree!

Don’t let your bad credit get you down. Instead, get serious about fixing it. Raising your credit score 50 points is totally doable–even if won’t happen overnight.

Do you have a story about how you raised your credit score by 50 points or more? We’d love to hear about it! You can email us by clicking here or you can let us know on Twitter at @OppLoans.

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KR_NelsonJeff Hunter is the Editor of Simple. Thrifty. Living. (@simplethrifty) and is an avid believer in personal finance education, especially for children and young adults. He started his career as a business journalist, where he decided to focus on personal finance. Since then, he has focused his overall personal finance education on all things credit and savings. As Editor of Simple. Thrifty. Living, he feels he can reach everyday readers who have questions about smarter ways to handle their money.
Krystal Rogers-Nelson is a freelance writer living in Salt Lake City, Utah. She is a contributing Safety & Security Expert for ASecureLife.com
(@ASecureLife), specializing in financial security, home security, and family safety. As a homeowner and mother, she is committed to empowering others with the knowledge and tools needed to live secure and comfortable lives at home and abroad.

How to Finance a Medical Emergency

An OppLoans E-Book

OppLoans: Paying medical debt with a credit card

Paying medical debt with a credit card.

In order to avoid taking out a high-interest loan from a predatory lender, you may feel compelled to use a credit card to finance a medical emergency. However, you still need to be careful. While most credit cards offer much lower interest rates than predatory lenders, credit card interest can still accumulate quickly, worsen your financial state, and eventually lower your credit score. Rob Berger, a contributor to Forbes, compared credit card usage to heroin because “they are both extremely dangerous and addictive.” 32 Rather than maxing out your credit card, consider applying for a safe installment loan to cover your medical debt.

Using personal installment loans to pay medical debt.

Predatory lenders are bad, that much is clear. But if you find yourself without savings or family to fall back on, what are you supposed to do about that emergency surgery? How are you going to pay to fix your son’s broken leg?

Here’s the good news: you don’t have to fall victim to predatory lenders. No, not even if you have a short-term medical crisis.

If you have good credit, you have you a number of options. You may qualify for personal loan from a bank, or a personal line of credit from a credit union. 33 These will typically have low APRs, which are sometimes even lower than credit cards. 34

If your credit’s not so hot, you might look for a safe personal installment loan from a loan company. Installment loans are paid back in fixed increments, typically monthly, over a set period of time.

This might sound a little like those troublesome no-credit-check loans we mentioned earlier. But most lenders who offer personal installment loans are a lot more careful than the no-credit-check guys. Your credit history will be scrutinized, and you’ll need to provide information about your income before you’re approved for a loan. Plus, they won’t push you to borrow more than you can really afford. APRs for these kinds of loans can vary, so you should shop around to make sure you’re getting the best possible rate.

Play your cards right, and taking out an installment loan could actually improve your credit score. If you make payments on time, your lender will report that information to the bureaus that calculate your credit score. Just six months of prompt payments on an installment loan could lead to a 35-point credit score increase. 35

If you’re a member of the military, you can also apply for emergency financial assistance through a service relief organization. Note that if you’re an active-duty service member, you are entitled to special protections under the Military Lending Act (MLA). Under this law, lenders can’t charge you APRs higher than 36 percent on most loans. The MLA also prohibits prepayment penalties. 36

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How to Money, Episode Three: Credit Scores

how to money video

Your credit score is just a simple, three-digit number, but it has a super powerful effect on your financial health. It determines what kind of loans and credit cards you can apply for, what sorts of interest rates you can get, and could even decide where you live or work.

For more on how these scores work—and what you can do to improve your own score—check out the video below.


What is a credit score?

Your credit score is a three-digit number that expresses your “creditworthiness”, or how likely you are to repay a loan based on your past borrowing behavior. Lenders use them to help judge whether or not to accept a person’s loan application and what kind of interest rates to charge them.

When it comes to your credit score, you don’t actually have just one. You have several. The most commonly used kind of score is the FICO score, which was created by Fair, Isaac and Company in 1989. (The company has since changed its name to FICO.) But even with your FICO score, you don’t have just one. You have three!

That’s because your credit score is based off information from your credit reports. The reports are compiled by the three major credit bureaus: TransUnion, Experian, and Equifax. The information on the reports can vary from bureau to bureau, which means that your FICO score can change depending on which credit report is being used to create it!

What do credit scores mean?

FICO scores exist on a scale from 300 to 850. The higher the score the better your credit.

The exact criteria for what makes a “good” credit score versus a “fair” or even a “bad” credit score will vary from lender to lender (check out our other resources for more information on bad credit loans). That being said, there are six basic ranges of credit scores:

  • 720-850 = Great Credit
  • 680-719 = Good Credit
  • 630-679 = Fair Credit
  • 550-629 = Subprime Credit
  • 300-549 = Poor Credit

If you have a great credit score, you are going to get approved for pretty much any loan you apply for–especially if you have a score of 750 or above. Not only that, but you’ll also receive the very lowest interest rates and the best credit cards perks and rewards.

The lower your score goes, the more likely you are to be turned down for a loan–especially if it’s an “unsecured” loan that isn’t backed by collateral, like a car or a house. You’ll also see your interest rates go up and the kinds of credit card rewards you’re being offered start to dwindle.

If you have a score below 630, that’s when you’re going to find real difficulty getting a loan from a traditional lender. In this range, you’re much more likely to fall prey to a predatory payday loan or title loan. Predatory lenders offer no credit check loans that can seem like a great solution for folks with bad credit–when in reality they can trap those borrowers in an unending cycle of debt.  

How are credit scores created?

In order to create your credit score, FICO first has to get a look at what’s in your credit reports. These reports are basically a history of how you’ve used credit (aka how you’ve borrowed money) over the past seven years.

After that period of time, information on your score usually drops off. This means that poor decisions you’ve made—ones that have lowered your score–will eventually drop off your report and stop hurting your credit. However, some information, like bankruptcies, can stay on your report for 10 years.

Your credit report contains information like how much money you’ve borrowed, how much of your total credit limit you’ve used, what kinds of credit you’ve used (like credit cards, mortgages or personal loans), whether you pay your bills on time, how long you’ve been using credit, whether you’ve recently applied for more credit, and if you’ve ever filed for bankruptcy.

FICO takes all that information and uses it to create a snapshot of your creditworthiness. There are five general categories of information, some of which are weighted more heavily than others:

  • Payment History – 35% of your total score
  • Total Amounts Owed – 30% of your total score
  • Length of Credit History – 15% of your total score
  • Credit Mix – 10% of your total score
  • New Credit Inquiries – 10% of your total score

As you can see, your payment history and your total amounts owed are the two most important factors.

How can you fix your credit score?

If you’re trying to improve your credit score, the two best things you can do are:

  1. Pay your bills on time.
  2. Pay down your existing debt.

Taking care of them will have the biggest impact on your score.

It’s a good idea to take a look at your credit reports to see what information is on there. Sometimes, the credit bureaus make mistakes that can impact your score! Luckily, the credit bureaus are all legally obligated to provide you one free copy of your credit report per year. To get a free copy of your credit report, just visit www.annualcreditreport.com.

Is there a financial topic you’d like to see us cover in a future episode of How to Money? Let us know! You can email us by clicking here or you can find us on Twitter at @OppLoans.

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Affordable Phone Plans to Avoid Bad Credit

Affordable Phone Plans

Smartphones are more essential than ever these days. You might even be reading this article on one right now! Unfortunately, they can also get pretty expensive.

And if you don’t pay your phone bill on time, it can actually end up making your credit score worse. So how can you get the vital phone services you need without risking bad credit?

Thankfully, there are likely affordable phone plans within your budget, but you have to be careful! Some potential providers may attempt to take advantage of your situation. That’s why we spoke to the experts to make sure that your phone plan isn’t a PHONY plan (sorry) (just kidding, we’re not sorry).

Consider lesser known carriers.

You probably see a lot of ads from the major cell phone carriers. Your Verizons and Sprints and AT&Ts, if you will. But what about the carriers that might not be able to afford massive advertising budgets? The ones who never had the chance to ask if you could hear them now. When comparing pricing possibilities, it can be worth looking at the carriers less often considered. That’s what Gabe Lumby of Cash Cow Couple (@CashCowCouple) did.

We really like Republic Wireless as a cheap phone plan option and have written a detailed review on our site about the service,” Lumby told us. “I’ve personally used the service for over 3 years and outside of some occasionally spotty coverage, I have no complaints. We only pay $31 and change for both my wife and I’s cell phone plans. Here is a link to their pricing page.

“Regardless of which carrier is chosen, it is smart to look at some of the new players in the space when looking to save money. Some other options include Straight Talk and Virgin Mobile.

“There are other competitors as well, but my advice would be to look at some of these lesser known options instead of your large carriers.”

Cut down on data usage.

This is a pretty obvious tip, but it’s still important. Unless you have an unlimited data plan, which can be a huge expense in and of itself, you have to be very careful about not going over your data or you’ll face grim punishment (in the form of higher fees). But you don’t need to take our word for it. Here’s what Lumby said: “Also, try hard to curb your data usage. Many people have large data plans when they could be using free wifi at their work, restaurants, etc. Data is the huge money drain.”

Beware the “free phone”.

There’s no price better than free, which is why you should be immediately suspicious of anyone offering you a free phone. We aren’t experts, but we’re pretty sure there are all sorts of expensive electronics and tiny computers that go into the creation of a phone, so no one is going to be giving you one unless they’re expecting to get something out of it.

Brett Graff (@BrettGraff), The Home Economist and author of “Not Buying It,” offered this warning: “If the phone is for an elderly person, you can apply to the FCC for a credit towards a landline or a cell phone. Otherwise, don’t fall for the free phone. God it’s tempting, I know. But prices for cell phone and wireless services are dropping constantly and you’re in a better position to negotiate without a contract.

“Many times, that ‘free’ phone isn’t free at all, it’s divided into monthly payments tacked on to your bill. What’s more, if you want to really save, you can buy an inexpensive phone that matches your plan almost anywhere. Then you must shop around to find the lowest prices but remember what those prices include and always—always—check your bill. Third party providers are excellent at slipping fees on, so look for anything unusual such as ringtones or horoscopes that you didn’t order. The most common cramming fee is for $10.99, so if you’re charged that amount for a service you don’t want, call and complain because you’ve likely been scammed.”

Curtis McCoy, CEO of BestCellular.com, (@BestCellular) had his own list of hidden dangers “free phone” providers can try and trick you into:

“In the United States, smartphone plans can range upwards of $100/mo. Many companies advertise a great price or ‘free phones’ but it has become almost an industry standard to charge hidden fees (on top of what the customer knowingly agreed to when signing the contract).

“Some of the common hidden fees can include:

  • Finance charges on ‘free’ devices.
  • ‘No contract’ cell phone plans that lock the customer into an ‘agreement’ when financing the new phone.
  • Many larger carriers charge up to $40/mo. in what they call a ‘line access fee.’ This is literally an additional fee to have a phone number (above and beyond the advertised price).
  • Many prepaid wireless stores are now charging a ‘Service Convenience Fee’ to pay your bill in-store with a live agent.
  • Other carriers and Mobile Virtual Network Operators offer, ‘Unlimited Data’ that is capped or throttled when you hit the LIMIT a.k.a. ‘Reasonable Usage Policy CAP.’”

McCoy also offered some additional tips for saving on your cell situation:

“Tips that can save you a LOT of money on your phone bill:

  • If at all possible, save up and pay cash for your phone instead of making payments. If you’re convinced that you must have a new phone but can’t afford it, even a high-interest credit card is cheaper than financing through a cellular retailer.
  • If you can make due with a used/refurbished phone, you can save a lot of money as well.
  • If you have a working phone from another carrier, some companies let you bring your own phone or activate online: https://BestCellular.com/Activate
  • Just connecting to WiFi when you’re at home, work, school or the local coffee shop can save you money!
  • Mobile Data is the most expensive part of your phone bill. Use these tips to Save Mobile Data and you can also save a lot of money: https://BestCellular.com/SaveData/”

You should also read about and see if you might qualify for the Lifeline Program, which offers subsidized phones based on need. Remember that getting some help is never wrong if you need it, especially if it keeps you from getting bad credit or turning to payday loans.

Take all of this advice together, and you’ll be talking on the phone, without losing your home!

Do you have some tips of your own for finding an affordable phone plan? We’d love to hear about it! You can shoot us an email by clicking here or you can find us on Twitter at @OppLoans.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Brett Graff (@BrettGraff), has been seen writing and reporting on money and personal finance in The LA Times, Yahoo! Finance, Cosmopolitan, The New York Times and the Fiscal Policy Institute, to name a few. Brett also provides her insight in the column, The Home Economist, which is nationally syndicated and published in newspapers all over the country. Her book “NOT BUYING IT: Raising Happier, Healthier & More Successful Kids” is now available!
Gabe Lumby is the CMO at Cash Cow Couple (@CashCowCouple) where he helps get the word out on how readers can build their best financial life. In his free time, he enjoys spending time with his family and crappie fishing the local waterways of Southwest Missouri.
Best Cellular (@BestCellular) is a Quad-Carrier Mobile Virtual Network Operator that uses Every Tower from Every Major Carrier in the USA. This allows us to offer the best possible prepaid wireless coverage to almost every customer in America. Extensive technical resources and cutting edge developments like these allow us to offer unmatched service to dealers and customers alike!

Know Money, Win Money! Episode One: Credit

opploans - know money, win money

We here at the OppLoans Financial Sense Blog want to make sure you have more money in your pockets by any means necessary. Normally that means giving you advice about saving money, but starting today, it also means running around on the street and asking you (or people like you) questions about money, and then giving you money if you get them right.

It’s called Know Money, Win Money, and it’s our hot new game show. The first episode is all about credit, and you can check it out right here:

The first question we asked was pretty simple: What’s the definition of a credit score?

Even though most people have some sense of why their credit score is important, they may not totally realize what it is. Simply put, it’s a measure of your “credit-worthiness,” or how good you are at taking on debt and paying it back. Your credit score determines what kind of interest rate you’ll get on your loans, or if you can qualify for a loan at all.

Our next question asked was what would be considered a “good credit score.”  If you’re wondering, it’s 680 to 719. Anything more than that and you’re golden but anything less than that… well, your interest rates aren’t going to be so hot. Or they’ll be too hot. The point is you’ll have high interest rates.

Finally, Most people are aware of the FICO company that creates the most common type of credit score. But we wondered if people knew what the company’s name actually stands for? For the most part, they did not. And we can’t blame them. Few people do! If you’re wondering, it stands for Fair, Isaac, and Company.

So we got to give away money, and teach people about credit. Hopefully next time we’ll run into you!

What financial topics would you like us to cover in future episodes of Know Money, Win Money? Let us know! You can email us by clicking here or you can find us on Twitter at @OppLoans.