Secured Credit Cards: 3 Ways to Use One to Rebuild Bad Credit

secured credit cards
Secured credit cards are available for folks with bad credit, and using one responsibly can help fix your credit score.

There’s a saying in sports that “the greatest ability is availability.” Basically, if you aren’t available to play—usually because you’re either injured or suspended for fighting/using PEDs/refusing to like your coach’s Instagram posts—then you’re not of much use to your team!

The same feeling can hold true for folks who have bad credit and are trying to apply for a loan or credit card. Who cares if this American Master Double Obsidian Super Card gives you 10,000 miles for every dollar spent? If your credit score won’t let you get approved for it, then it’s pretty much useless.

Meanwhile, being able to use credit responsibly is an important part of fixing your credit score. Making payments on time on a loan, credit card, or utility bill will show up on your credit report, which will, in turn, be reflected on your score. In fact, your payment history makes up 35 percent of your total score—more than any other factor!

That’s where secured credit cards come in! They are a much more limited product than your traditional credit card, but you’re much more likely to qualify for one—even with bad credit. The best ability is availability, and secured credit cards are available as all heck.

What is a Secured Credit Card?

A secured credit card is like a combination of a credit card and a debit card. Whereas unsecured credit cards approve you for a credit limit based on your creditworthiness, a secured card has you make a cash deposit to back up that limit. If you deposit $500, you get a $500 credit limit, etc. Many cards simply link to your savings account to use those funds as your deposit.

These cash deposits allow lenders to make these cards available to people with not-so-hot credit. Remember, a low credit score means that you have a history of using credit irresponsibly. By using your deposit as collateral, a lender is able to greatly reduce their risk in approving you. If you fail to make a payment, they can just take the payment out of your deposit.

“When you’re shopping around for a secured card, don’t expect to see lots of rewards or other benefits,” says John Ganotis, founder of (@CardInsider). “A secured card serves a very specific purpose: to help you build credit.”

“A secured card won’t help you build credit faster than an unsecured card or vice versa, but a secured card may be a good option if you can’t get an unsecured card.”

And if you want to use a secured card to improve your score, there are three things you need to do

1. Make your payments on time

Rod Griffin is the director of public education for Experian (@Experian), one of the three major credit bureaus. These are the companies that create and maintain your credit reports.

According to Griffin, “A secured credit card can help you improve your credit scores by giving you a chance to demonstrate that you can manage credit responsibly. By making all your payments on time, you will be able to start building a positive payment history.”

“In time,” says Griffin, “your lender may be willing to convert your secured card to a traditional credit card account.”

While a secured card can help you build up your credit score, Grifin says that the rate at which your score improves will depend on how much negative information is already on your report:

“Just how much a secured account will impact your credit rating depends in part on your unique credit history. If you are just starting out and this is your first credit account, it will be easier to establish a positive credit history than if you have had credit difficulties in the past.

“If your report shows negative credit history such as delinquencies, collection accounts, or bankruptcy, it could take longer to see substantial improvement in your credit scores.”

2. Keep your credit utilization low

Remember, when you get a credit limit on a card, it’s not an invitation to spend up to that limit. You don’t have to spend that much. In fact, it is highly encouraged that you do the opposite.

According to Ganotis, “The percentage of your credit limit that you’re currently using can have a big impact on your credit scores.”

In order to maximize your score, Ganotis recommends that you maintain a credit utilization no higher than 10 percent:

“For example, that means if you have a $1,000 credit limit and you want to maximize your credit scores, make sure you don’t have a balance of over $100 when your statement period closes. You could achieve that by either not spending more than $100 over the statement period or by paying down part of your balance early.”

People who practice strong financial discipline are able to spend a lot on their credit cards and then pay off the whole balance immediately before any interest is due. They never spend more on their card then they have in their bank account. They just use their card to rack up points and maintain their high credit rating.

Someday, you might be able to be like them. But until then, it’s best to focus on keeping your credit utilization ratio low—if not paying off the card entirely.

3. Make sure your payments are being reported

Your credit score is based on the information in your credit report. Any time you missed a payment, took out a new loan, or got sent to collections, those actions got reported. Similarly, every bill you paid on time and every credit card you paid off got reported as well.

If you have a secured card with a company that doesn’t report to the credit bureaus, then it won’t matter how many on-time payments you make and how low you keep your balance. None of that will end up on your credit report, so none of it will help your credit score.

“If you are considering opening a secured account,” says Griffin, “first make sure it will be reported to at least one of the national credit reporting companies. While most lenders do report secured accounts, you may come across some that do not. If the account is not reported, it won’t help you build a credit history.”

And before you get too clever, it doesn’t really work the other way around. While late payments might not be reported to the bureaus either, an extremely delinquent account will likely end up getting sold to a debt collector… a collector who will then report you to the credit bureaus, hurting your credit score even further.

Secured credit cards can be a great tool for fixing a bad credit score, and they’re a much better option than bad credit loans. But that’s all they really are: a tool. Just like a hammer that can’t work without someone to swing it, a secured card can’t fix your credit all by itself. It’s still up to you to use the card responsibly.

Have you used a secured credit card to improve your credit score? 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.

John Ganotis (@CardInsider) is the founder of John comes from a diverse background of software development, web publishing, and personal finance. He knows firsthand what it’s like to accumulate credit card debt, pay it off completely, and then start using credit to his advantage. His passion for technology and attention to detail have made Credit Card Insider one of the premier credit resources on the Internet, and he is eager to help others tackle debt and use credit as a powerful tool rather than fear it.
Rod Griffin(@Experian) is Director of Public Education for Experian. Rod oversees the company’s financial literacy grant program, which awarded more than $850,000 in 2015 to non-profit programs that help people achieve financial success. He works with consumer advocates, financial educators and others to help consumers increase their ability to understand and manage personal finances and protect themselves from fraud and identity theft. He works to help all consumers be better prepared to get the credit they need, at the time they need it, and at rates and terms that are favorable to them.”


Subprime Lending News 8/1/17:

How your spouse’s credit could affect your financial life, why banks are stressing about late credit card payments, and the ongoing fight over the Consumer Financial Protection Bureau.

By Caroline Thompson

Today’s subprime news roundup includes a potential threat to banking profits, a tale of unfair lending practices for workers in the legal marijuana industry, and a primer on why you should always know your partner’s credit score.

Banks fear major losses from late credit card payments.

According to Fitch Ratings, credit card charge-offs, or the percentage of outstanding consumer debt that banks deem unlikely to ever be collected, have risen to their highest level in four years, currently sitting around 3.29 percent. While this is still relatively low compared to the 10 percent charge-off rate hit in 2010, this trend is causing trouble for big banks. These losses mean suppressed bank earnings, and, if they continue going up, it will increase the potential for stunted corporate growth and profits. The increase in late payments is partially due to a switch in lending policy, which happened in 2014. After the losses garnered by the 2010 charge-off rate, most lenders lent only to people with good credit. But in 2014, many lenders began making riskier loans to people with bad credit, as subprime borrowers tend to bring in higher yields. This move boosted credit card spending overall, but also led to a spike in late or missing payments, which may never be collected.

Workers in the legal marijuana industry denied loans based on employment.

While marijuana has been legalized by several states, it still remains an illegal substance in the eyes of the federal government. This can make things difficult for the 20,000 Americans currently working in the industry in states where marijuana is either medically or recreationally legal. Regardless of their credit scores, their debt-to-income ratios, or their borrowing history, many workers in the legal marijuana industry are finding it difficult–if not impossible–to take out loans in their everyday lives. From car loans to mortgages, the vast majority of banks will simply refuse anyone working in the marijuana industry for fear of getting wrapped up in a messy fight with the federal government. This puts employees of this industry at a net disadvantage, forced to either lie about their employment on a loan application, or being unable to finance things that would normally be easy to attain. There’s a non-partisan effort in Congress to address these kind of banking issues in states where marijuana is legal, but it may not pick up much steam unless the federal government reverses its policy on marijuana, something which seems unlikely given the current political climate.

Trump advisor suggests gutting the Consumer Financial Protection Bureau.

Republicans have been battling with the Consumer Financial Protection Bureau since its inception in 2011. In recent weeks, they’ve pushed back against a rule issued by the Bureau, which would have banned banks and credit card companies from using fine-print arbitration clauses to stop consumers from filing class-action lawsuits. Now Corey Lewandowski, an advisor to the president, is calling for Trump and his new chief of staff to fire Richard Corday, who oversees the CFPB and is currently running for governor in Ohio. “It’s my recommendation to the president of the United States to fire Richard Cordray, and if he wants to run for the governor of Ohio, go do it, but my concern is, you’ve got an unelected bureaucrat sitting in an office right now, and I hope that the new chief of staff looks at him moving forward and saying it’s time to act decisively,” said Lewandowski on a recent episode of NBC’s “Meet the Press.”

Your spouse’s bad credit could affect you more than you think.

Love conquers all, but it still might be a good idea to ask your future spouse about their credit score. While it’s a myth that credit scores merge after marriage, couples who want to jointly buy a house, car, or take out a loan to start a business might find it more difficult when one of their credit scores is less than stellar. According to Katie Ross, Education and Development Manager for American Consumer Credit Counseling, lenders usually decide creditworthiness based on the lower of the two scores. “If one person has terrible credit, they more than likely will need to be left off the credit application, which can mean their income is not considered as well. This can be a real burden if the purchase in consideration is a large one, such as a home or car.”

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Did Your Bad Credit Score Just Go Up? Here’s Why.


New rules from the three major credit bureaus mean rising scores for millions of US consumers.

If you’ve got bad credit, then you know perfectly well how powerful a credit score can be.

Credit scores determines what kinds of loans, credit cards, and interest rates you qualify for, and they can affect where you live and work, as some landlords and employers check your credit before offering you a job or apartment.

Having bad credit means that you are shut out from financial opportunity, from affordable loans and interest rates, from credit card rewards and from owning your own home. It feels like no matter what you do, your score is never going to get any better.

Well, guess what? There’s a good chance that your credit score is going up.

Recent changes announced by the three major credit bureaus—Experian, TransUnion, and Equifax—will lead to millions of debts and liens dropping off people’s credit reports–causing their scores to rise.

According to Howard Dvorkin (@HowardDvorkin), CPA and Chairman of (@debtcom), “These changes are some of the best financial news for average Americans in quite some time.”

“Everyone likes talking about the unemployment rate and the stock market, but the sad truth is: If you don’t have a job, the unemployment rate is 100 percent. And you definitely aren’t playing the markets.”

“This is the best news that most folks don’t really understand,” says Dvorkin. “The Big Three credit bureaus—Equifax, Experian, and TransUnion—have a big say over your life. They create credit reports on you that affect your mortgages, auto loan, and maybe even your rent.”

Got that? Okay. Here’s what you need to know.

What’s changing?

One of the major changes that’s occurring is to how the credit bureaus enforce their rules regarding public records—a major source of financial information.

According to nationally recognized credit expert Jeanne Kelly, (@creditscoop), “The credit bureaus have to verify four points of consumer data in order to use a tax lien or judgment as part of a consumer’s credit score. If 3 of the 4 points don’t match up, they cannot use the negative item as part of your credit scoring.”

“They are now required to correctly have: 1. Name; 2. Address; 3. Social Security Number; 4. Birthdate. If they can not verify it will be removed from your report and you will see a score increase.”

Kelly adds, “If the item was entered years ago you won’t get as much of an increase as if it was recent… If it is still due, you want to still resolve.”

“Starting this month, if you have civil judgments or tax liens, they’ll be removed from your credit report,” says Dvorkin. “Moving forward, those two things will need to be updated every 90 days, which means if you settle those, they’ll get updated much faster.”

And those aren’t the only changes.

“Starting in mid-September, the credit bureaus will wait 180 days before including medical debt on their reports,” says Dvorkin. “This is a big deal because, in six months, you might be able to pay off or negotiate payment for expensive medical procedures, as well as dispute those charges with your insurance company.”

“Even better,” he adds, “those credit bureaus will delete medical debt from your reports when your insurer pays it off. So it’ll be like it never existed. The government says 15 million Americans have only one black mark on their credit report, and it’s medical debt. This will definitely help them.”

“The credit bureau changes are fantastic news for all consumers,” says attorney, author, and  advocate, Alexis Moore (@AlexisMooreLaw). “It’s one less piece of data that the credit bureaus can store and furnish which is great news, since the majority of Americans today experience inaccurate data on their credit report and never get it completely resolved even with litigation.”

“I know,” says Moore, “I was one of the persons victimized by inaccurate data. And even with litigation, there are still errors that remain and continue to be at issue for which I have to litigate again and again.”

Why are these changes happening?

These changes have been a long time coming. Consumer and government advocates have been pushing for years for the credit bureaus to be more accurate with the data they included on people’s reports.

Simply put: too many people were ending up with inaccurate information on their reports, needlessly damaging their credit.

“Inaccurate data being furnished became too common in this area, so the public officials finally got busy and said no more,” says Moore, adding that this is “exactly what needs to happen in other areas of the data that they store – way too many pieces of information are inaccurately stored and furnished by these agencies, jeopardizing consumers financially—which in turn wreaks havoc on their lives in all ways from employment, housing, insurance, credit lines you name it.”

“The credit bureaus control it and we need them to store and furnish less data.”

How will your score be affected?

It depends. Your score might not be affected at all if you don’t have any tax liens, civil judgements, or medical debt on your report.

But if you do…

According to Dvorkin, “All this can mean you might gain 10 to 20 points on your credit score.”

“That may not sound like a lot when those scores go up to 850,” he says, pointing out that, “in fact, it won’t make the difference between getting a low mortgage interest rate or a steep one.”

“But any move upward is the right direction,” he adds, “and depending on how it all shakes out, millions of Americans might benefit.”

Moore says that some of the clients she works with have seen even larger bumps:

“My clients have experienced 24-35 points since this change, getting better car loans and mortgages because of it—a win-win for consumers!

And consumers aren’t the only ones who will be seeing benefits. A rise in credit scores means a rise in qualified applicants for lenders nationwide.

“The lenders are loving it,” says Moore. “They can offer mortgages to clients that they perhaps couldn’t—so another way for them to cash in, especially in northern California where my office is located. There is a housing shortage here and lenders are more than happy to lend more money and be able to help more consumers than they otherwise would not have been.”

What that means for you is simple: be careful. There are lots of sketchy lenders out there who would be happy to sign you up for a mortgage, car, or personal loan that you actually can’t afford!

After all, your credit score just went up. The last thing you need is for a bad credit loan from a predatory lender to send it back down again. Learn how to protect yourself from predatory lenders in our ebook How to Protect Yourself from Payday Loans and Predatory Lenders.

Is your score going to be affected by these changes? If so, we’d love to hear about it! You can shoot us an email at by clicking here or find us on Twitter at @OppLoans.

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Howard S. Dvorkin (@HowardDvorkin) is a two-time author, personal finance expert, community service champion and Chairman of As one of the most highly regarded debt and credit expert in the United States and has played an instrumental role in drafting both State and Federal Legislation. Howard’s latest book “Power Up: Taking Charge of Your Financial Destiny” provides consumers with the detailed tools that they need to live debt free and regain their financial freedom. Howard has appeared as a finance expert on CBS Nightly News, ABC World News Tonight, The Early Show, Fox News, and CNN.
Jeanne 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. Follow her on Twitter and check out her site to get the credit help you need!
Alexis Moore (@AlexisMooreLaw) is an Attorney, Author and Advocate in El Dorado Hills, CA.  Part of her law practice is devoted to providing clients legal advocacy who have inaccurate data on their credit reports or that are experiencing debt collector abuse.  She also serves as a Risk Management Consultant worldwide for clients who are experiencing cyberabuse and stalking. Her upcoming book;  Surviving a Cyberstalker: How to Prevent and Survive Cyberabuse and Stalking is due out September 1, 2017.

Simple Steps to Help Your Credit Everyday!

Simple Steps to Help Your Credit Everyday
Fixing your credit isn’t as easy (or as fun) as breaking it. The worse your credit score, the more impossible it can feel to overcome it. If only there were small, simple steps you could start taking every day to get your credit back in order.
Good news! There are!
We spoke to the experts to find small habits you can start right now. The long journey begins with the first step, and better credit starts with these tips.

First, reflect.

The first step towards getting your finances to a better place is actually taking the time to look at them. You can’t make a battle plan if you don’t know where the war is happening. Or, for a more peaceful approach, you can’t bake a cake if you don’t have the recipe.

And this isn’t making mental notes you’ll forget in five minutes every time you spend too much. You might have to make some time in your schedule to find out about your finances. Here’s what nationally recognized credit expert Jeanne Kelly (@creditscoop) told us:

“If you do want to improve your credit, I do think you need to carve out some time from your already busy schedule. I say this because if you want to improve your credit, you need to learn more about it. Many times people have reached out to me for help, not because they had recent late payments or a collection, but because they saw a score drop and did not understand why, and usually it was before a major purchase like a home so they were freaking out. It can be as simple as opening up a new account, going over a credit card limit, closing credit card accounts or having too many companies pulling your credit. Whatever the reason has been, it was just because they did not know some of these things can drop their score. So, be in the know when it comes to your credit.”

It’s also important that you’re tracking your spending habits. Ashley Feinstein Gerstley, money coach and founder of The Fiscal Femme (@TheFiscalFemme), put it this way: “First, I think lack of awareness is one of the most common issues I see. Very few of us actually know where our money is going. I recommend that each of my clients keep a money journal where they write down or type out everything they spend and earn. This brings a consciousness and awareness to our spending that we wouldn’t have otherwise.”

There might even be credit issues you’re facing that aren’t your fault at all. Credit bureaus make mistakes, and it’s important to catch them. It’s hard enough to fix your own mistakes. You shouldn’t have to deal with anyone else’s. That’s why Kelly suggests you get your reports to look over:

“My #1 rule is to pull your credit report at least twice a year and now is a great time with it being mid-year. Get out a highlighter and anything that is wrong or does not make sense to you, highlight. Once you have completed that with each credit report, Experian, TransUnion, and Equifax, you can dispute the information. You could be walking around with an account on your credit report that is not yours and have no idea it is on your report. You know why? Because only you know what accounts belong to you or not. That is why I think if you get in this habit to review these reports twice a year, it can get easier and easier to make sure they are correct. You wouldn’t want to be paying a higher interest rate on a car loan because you never checked your credit and you had a lower score over an error, right? Invest into your credit and spend time to make sure you have the best score you can for the way you handle your finances.”

Once you know what the problem looks like, you’re ready to move on to the next step.

Create a plan you can stick to.

The most important part of any plan to turn your credit around is making sure you can actually follow it. You can promise yourself that you’ll only get takeout once a week, but if that’s not a realistic possibility for you, you might as well just claim you’ll start spending negative money that actually adds value to your bank account every time you buy something. After all, both may be just as likely to happen. That’s why it’s urgent you find the most responsible plan you know you’ll be able to stick to.

And whatever goals you set, it’s important that you don’t procrastinate them. “I also recommend that people put aside time every week or even every two weeks to deal with their financial to-dos,” Gerstley said. “I call them money parties. It’s a great time to check in on your spending, negotiate away any fees, look at your goals, etc. It’s easy to put our financial to-do list on the back burner but that creates more stress and hardship.”

Aaron Norris (@AaronNorris), vice president of the Norris Group (@thenorrisgroup), offered a metaphor for your daily financial growth: “Take a clue from those that succeed in diet and weight loss and plan. Don’t only focus on what you’re spending, focus on what you’re about to spend.

“A few moments in the morning or the night before can prepare you for the day ahead. What are your likely costs? How can you play the game to bring the cost of your day down? This will have you doing simple things like packing a lunch, breaking out that coffee mug that’s collecting dust and using it instead of paying for coffee out, or even just rummaging through seat cushions for loose change to deposit in your bank. Make it a game. How can I save $20 today? Then, place your saved earnings into a savings or investment account.

“Going through your mindless spending is a good monthly habit. It’s all tracked on your credit card statement. But, daily mindfulness on money creates habits that will make you wealthy.”

Change up your food habits.

So we already pointed out that you might not be able to get your takeout food down to only once a week, but you should still try and limit it as much as possible. It adds up pretty quickly! Aside from packing your lunch and making your own coffee, as Norris suggested, you should also consider meal planning.

We’ve covered meal planning before. Gerstley even contributed to that piece with a link to her meal planning guide.

You should check out our guide as well as Gerstley’s, but basically meal planning is taking a few hours of cooking to make all of your food for the rest of the week. That way, you won’t have to worry about getting stuck without food and being too tired to make something non-take out.

Keep up maintenance in your home.

No one likes chores. That’s why procrastination was invented, the very first time a caveperson decided they would put off sweeping up the cave until the following morning. But there’s a reason all the cavepeople went bankrupt, and it’s because keeping ahead on your household maintenance can actually save you money. Elizabeth Dodson, cofounder of Homezada (@HomeZada), explained why:

“Track the money you spend on your home, like in-home purchases and maintenance tasks. These areas of home management can add up before you know it. In fact, homeowners spend 31% of their income on household expenses, so staying on top of these areas can help save money. Even changing out a simple air filter could reduce the cost of electricity due to better operating HVAC units. Cleaning out a dryer vent can reduce the time it takes to dry clothes and also give your dryer a longer lifespan.”

All of this also applies to regular maintenance on your car. Any car breakdown is going to be expensive, and if you have bad credit, you might be tempted to turn to a payday loan. But don’t! Keep up regular maintenance instead. It’s much better for your credit.

There’s an app that could help you with that.

The cavepeople had another financial disadvantage: no financial apps. You, on the other hand, live in a golden age of financial apps! In fact, OppLoans recently launched an app database with a bunch of apps you could try out to take your savings game to the next level.

These tips should help you create a daily plan suited to your financial needs. Follow it consistently, and your bad credit will start looking a whole lot better.

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Elizabeth Dodson is the co-founder of HomeZada (@HomeZada), an online and mobile home management solution. HomeZada strives to educate and provide resources for homeowners in all areas of home management, including home inventory, home maintenance, home finances and home improvement projects.
Ashley 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.
Jeanne 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. Follow her on Twitter and check out her site to get the credit help you need!
Aaron Norris (@thenorrisgroup) is Vice President of The Norris Group, a California-based hard money lender specializing in flips, rentals, and new construction projects for real estate investors. You’ll catch him speaking at various real estate association conferences talking on technology (robotics, AI, IoT, and FinTech) and its effects on the future of housing and the real estate industry. Aaron is a Certified Specialist in Planned Giving (CSPG) and is passionate about philanthropy and giving back. You can find him on here on LinkedIn.

3 Identity Theft Warning Signs

identity theft warning signs

If you see a purchase on your credit card statement that you don’t remember making, you might be a victim of identity theft.

As cyber attacks and data breaches occur more and more frequently, the risk of losing your digital identity to theft increases. This is why you need to know both the warning signs, as well as the best ways to protect against it.

Otherwise, you and your credit score could be in for a whole world of hurt.

1. Denied credit.

Robert Siciliano, CEO of (@RobertSiciliano) says, “A sure sign of identity theft is when you are denied credit. Once a consumer checks their credit report and sees unauthorized accounts that means their identity has effectively been stolen.”

Sage Singleton, safety expert at Safewise (@SafeWise) agrees that a clear warning sign of having your identity stolen is “if you are denied [for a loan or credit card] and you know you have good credit.” A good credit score takes hard work and discipline to maintain, and yet a stolen identity could cause untold damage to your score.

In fact, seeing an abrupt drop in your score is another good reason to request a copy of your credit report and look for signs of theft. You can request a free copy of your credit report once a year from each of the three major credit bureaus: Experian, TransUnion, and Equifax. To order a copy of your report, just visit (Did we mention that it’s free?)

And if you have bad credit, well, you can find solace in the fact that your financial identity is not a prime target for scammers. It’s not much of a silver lining, but it’s better than nothing, right?

2. Unknown charges or statements.

If you’ve ever had your purse or wallet stolen, you’ve probably seen a bunch of charges immediately show up on your account. Thieves in those situations usually head straight to the nearest electronics or jewelry store and spend as much money as they can before the card is canceled by the owner.

When someone steals your identity, the results can be pretty similar. Not only will the thief use your information to apply for new loans and cards, they can also make purchases on the cards you already have. The only difference is that, unlike a pickpocket, they’ll probably be a little more subtle about it.

According to Siciliano, a person who “receives bills for products and services they did not order or they are called on by a lender or creditor for unpaid loans,” is very likely a victim of identity theft.

“If you notice an error on your bank statement, talk to your financial institution immediately. It may be a simple error or it could be a sign of identity theft,” says Singleton.

Likewise, it’s important that you keep an eye out for the statements that arrive in your email inbox and your actual mailbox. Singleton says that “If you receive any statement from an unknown account, your identity may have been stolen and the thief may have opened many accounts in your name.”

Now, of course, there’s always a chance that you made that purchase or applied for that credit card and simply don’t remember it. Who among us has not started a free trial of Tidal so that we could listen to the new Beyonce/Kanye/Jay-Z album and then forgotten to cancel it in time?

Still, it’s a good idea to keep on top of both your purchases made and the financial statements being sent to you. If fraud is being committed using your information, that’s where the evidence will likely surface.

3. Gone phishing.

No not that kind of phishing. The other kind.

According to lawyer, author, and identity theft expert Steve Weisman (@Scamicide), “One of the most common ways that we become victims of identity theft is by clicking on links in emails or text messages that contain malware that enables the identity thief to gain access to all of the information in our phones or computers and use it to make us a victim of identity theft.”

Weisman says that you should “Recognize the dangers of phishing and the more tailored spear phishing and never click on a link unless you have confirmed that the communication is legitimate,” adding that you should also “Make sure you have good security software on all of your electronic devices and keep it up to date with the latest security patches.”

Lastly, he has another recommendation that will deter hackers and identity thieves from targeting you in the first place:

“Limit the amount of personal information you provide on social media.  This information can be used by a clever identity thief to create a spear phishing email or text message to you that you trust and lure you to click on a link infected with malware.”

Ways to Protect Your Identity

Of course, what good are knowing the warnings signs of identity theft if you don’t also know how to protect your information?

Don’t worry. We’ve got you covered.

Store, Shred, and Protect

Someone looking to steal your identity doesn’t need to be a world-class hacker with five computer screens and a hard drive the size of a Buick. Lots of times, all they would need to do in order to nab your financial info is go through your trash

“It may seem obvious,” says Singleton, “but it’s important to keep sensitive documents secured in a fireproof safe. Never leave important documents in your car or laying on the counter of your kitchen. When you no longer need a document, make sure to shred it and dispose of it safely.”

She also recommends that you empty your mailbox daily:

“Utility bills often include personal information. As such, it’s important to empty your mailbox daily so thieves can’t scavenge your mail and steal your identity.”

The same principles hold true for your Social Security number. Keep it close to your chest and try to limit the number of documents that carry it. The more pieces of paper or computer files out there that carry your SSN, the greater the odds that a hacker can get their grubby little hands on your identity.

“The most important thing you can do to protect yourself from identity theft is to guard the privacy of your Social Security number which is the most valuable piece of personal information for an identity thief,” says Weisman.

“Don’t provide it merely because it is asked for by anyone for identification purposes unless absolutely necessary.  Your primary care physician does not need it although many ask for it.”

Keep on top of your statements.

“Check your financial statements regularly,” says Singleton. “Look for irregular transactions and notify your bank immediately if you see something suspicious. The sooner you catch an error, the easier it is to prevent identity theft.”

She also recommends that you “Enable security alerts on your financial accounts. Set up auto security alerts on your bank cards that notify you of any purchase. You will get a notification to your phone or email detailing purchases.”

“This is an easy way to keep track of your spending and be notified immediately if something is wrong.”

Consider a credit freeze.

According to Siciliano, “The most effective way to prevent this type of fraud is via investing in identity theft protection services and what’s called a credit freeze. A credit freeze locks down your credit report so lines of credit cannot be opened unless you thaw your credit.”

Weisman also suggests a credit freeze to prevent identity theft. He says that putting on a freeze will make sure that “even if an identity thief has your Social Security number and other personal information about you, he or she cannot gain access to your credit report to get credit or make large purchases in your name.”

If you want to place a freeze on your credit report, you will need to contact each of the credit bureaus directly and pay a small fee.

(For more information about credit freezes, you can read Weisman’s entry on his Scamicide blog.)

Protect Your Passwords

Another recommendation from Singleton is to “Keep passwords in a secure place and change them often. Don’t use the same password for every account and create strong, unique passwords.”

“Hackers are extremely tech-savvy and can crack weak passwords (like your maiden name, birth date or anniversary) and access your information easily. Don’t write your password down on a notepad near your computer.”

“If you must write it down,” says Singleton, “store it in a safe location.”

What to do if you have your identity stolen

“If you think you have become a victim of identity theft,” says Weisman, “you should file a police report and contact each of the three major credit reporting bureaus to inform them that they have erroneous information in your credit report and demand an investigation and the removal of the deleterious information from your credit report. Credit reports are critical documents because they are used not just by companies granting credit, but also by employers, insurance agencies, landlords and others.”

In cases where someone has used your identity to commit a crime, Weisman instructs you to “go to your local police department and District Attorney’s office to provide fingerprints and photo identification to show that you are a victim of identity theft and get a letter from the DA to keep with you in case you are ever stopped in the future in regard to a crime committed by someone in your name.”

Fixing a bad credit score is hard enough to enough to do on your own. You don’t need some cyber-criminal making it harder. Follow these steps and take care of your identity. It’s the only one you’ve got.

Have you had to deal with having your identity stolen? We want to hear about it! You can email us at or find us on Twitter at @OppLoans.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Robert Siciliano (@RobertSiciliano) is a #1 Best-Selling Author and CEO of which is funny, but serious about teaching you and your audience fraud prevention and personal security. Robert is a United States Coast Guard Auxiliary Flotilla Staff Officer of the U.S. Department of Homeland Security whose motto is Semper Paratus. His programs are cutting edge, easily digestible and provide best practices to keep you, your clients and employees safe and secure. Your audience will walk away as experts in identity theft prevention, online reputation management, online privacy and data security.
Sage Singleton (@SafeWise) is a safety expert for SafeWise. She enjoys teaching, individuals, families and communities about safe home and lifestyle habits. In her free time, she enjoys wedding planning, traveling and learning French.
Steve Weisman (@Scamicide) is a lawyer, college professor at Bentley University and author.  He is one of the country’s leading experts in identity theft.  His most recent book is “Identity Theft Alert.”  He also writes the blog where he provides daily updated information about the latest scams and identity theft schemes.

How to Use Credit Cards: 3 Basic Tips

credit card tips

Credit cards can be an awesome financial tool, but, if used incorrectly, they also become one heck of a trap.

If you have bad credit, then you probably have a love/hate relationship with credit cards. You love spending money on them, but you hate having to pay your bill.

And while maxing out your credit cards is a great way to tank your credit score, using your cards responsibly can also be a great way to help it!

Here are three credit card tips you should follow in order to use your credit cards responsibly.

1. Don’t carry a balance.

Here’s the thing about credit cards, they’re awesome as long as you pay them off every month. That way, you can avoid interest, rack up points, and help improve your credit.

But carry a balance month to month? That’s when things start to get dicey.

“There’s a long-running myth that carrying a revolving card balance is good for your credit score,” says Monica Eaton-Cardone, co-founder and COO of Chargebacks911 (@Chargebacks911).In fact, it’s exactly the opposite, and the sooner we put this myth to bed, the better.”

Justine Lavelle, Chief Communications Officer of (@beenverified), agrees:

“Some will say that you should carry balances on your credit cards so that it has a positive effect on your credit score. This is not a smart financial move as you will continue to pay interest on the balance you carry month to month.”

“While it’s good to wait a few days to allow a purchase to show up on your statement, maintaining a revolving balance from one month to the next costs you more in interest charges and actually damages your credibility,” says Eaton-Cardone.

“Your credit utilization ratio—the amount of debt you possess compared to your total line of credit—determines a considerable portion of your credit score. To have a revolving balance means that you’re using up more of your available credit, which creditors look at unfavorably.”

Lavelle advises that you shouldn’t “carry balances on your credit card if you can avoid it. If you do carry a balance due to a big purchase or an emergency, make sure to figure out the cost of carrying that balance every month. It may shock you and it will also motivate you to make a solid plan to get it paid off as quickly as possible.”

“Emergencies happen, and sometimes consumers simply can’t pay-off their total bill at the end of every month. However, it’s always best to keep your credit usage low enough to cover the entire balance with each billing cycle if at all possible,” says Eaton-Cardone.

2. Choose your rewards carefully.

One of the advantages that credit cards have over other kinds of loans is points and rewards. Spending money on your card can let you save on travel, groceries, or even get cash back.

The only problem is that worrying too much about your points can lead to you spending too much! It’s a tricky balance to maintain. When shopping for rewards, you’ve got to make sure you’re careful.

Benjamin Glaser, Features Editor for DealNews (@DealNews), says that you should “Find a rewards card that suits your purchasing habits. For example, if you’re already a big traveler (like, for business), then get a card that offers more points for travel-related purchases, like the Chase Sapphire card. If you are buying mostly gas and groceries while trying to save up for a family vacation, then the AmEx Everyday Preferred card might be better.”

When it comes to exploiting points or rewards through your card, Lavelle cautions that you must “make sure that you again do the math.”

Buying travel by using your credit card to gain points is not the most cost effective way to purchase travel, especially if you can’t pay the balance each month. Really the only way to make this a “deal” is to use the credit card to get the points, pay the card off each month to avoid interest, and then be able to redeem the points for travel without needing to add cash to the award.”

“If you don’t have large annual fees and reduce the interest, then at least the merchants you shop are the ones paying for your travel,” says Lavelle.

Glaser also recommends finding a card that has a good signing bonus:

“Don’t overspend to meet the minimum to get bonus points, but try to find a card with an easily attainable minimum. If you know your credit card bill is at least $1,300 every month, then spending $4000 in the first three months of having a new rewards card to get a bonus 20,000 points should be easy.”

“Know any additional perks that your card provides, and use them,” says Glaser. For example, lots of cards provide extended warranties when you make a purchase with the card. (It’s rarely a good idea to purchase an extended warranty, and this is more of a reason not to.)”

“Similarly, purchasing airfare and hotel bookings with your card could get you reimbursement if your trip is delayed. And before you purchase additional coverage for a rental car, see if your card provider will offer the coverage if you pay for the rental with your card,” he says.

3. Don’t get greedy!

The reason that credit cards are so dangerous is because it’s easy to forget that spending money on your card has consequences. Spending more than you can afford to pay off each month can leave you carrying a balance. And carrying a balance means that you’re paying interest.

A credit credit used properly can be a great asset. A credit card used poorly can be like an anchor, dragging your credit score down into the watery depths. And the best way to use a credit card properly is make sure you know your limits.

“As your credit history increases and you make payments on time, it is almost as if credit card companies set you up to fail by tempting you with ever increasing credit lines and tempting offers,” says Lavelle.

“Don’t fall into the trap. Carry one credit card and consider carrying only a card with a low limit so that you will not be tempted to make unwise purchase decisions. Using a card for day-to-day spending is becoming more and more common as cash is almost being phased out. It is easy to spend beyond your ability when paying with a credit card, so you may want to only carry a card that has a modest limit so this doesn’t become a problem. As with cash, a credit card with a low limit makes it easy to know when you are done. The money is gone.”

If the secret to using a credit card is to avoid interest, then always remember that there are more ways to avoid interest than just paying off your balance. As your credit improves, you might start getting card offers with low introductory rates—sometimes as low as 0 percent! If you have higher rates on older cards, you might be able to transfer your balances and save yourself some money.

Lavelle says that you should “Absolutely take advantage of ‘low-interest rate offers.’ Be sure to check the fine print and the cost of the ‘transfer fee’ but this is a great way to get back at the credit card company a little.”

But this plan is not without its costs or conditions.

“However, good credit and good income are required, but if you have those it is relatively easy to move balances around so that you can really limit the amount of interest you pay on balances. Just remember the ‘transfer fee’ is interest so jumping too soon or too often can ruin the cost savings plan,” says Lavelle.

If you’re someone who’s recovering from bad credit, credit cards can be a dangerous temptation. you The more your bad credit improves, the more you’ll be tempted to borrow. Borrow too much and those high balances and interest payments could knock your credit right back down again.

So be careful, stick to a plan, and don’t get greedy. That’s the way to use credit cards responsibly.

If you have any credit card tips of your own that you’d like to share, please do! Let us know on Twitter at @OppLoans.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN


Monica Eaton-Cardone (@Chargebacks911) is the COO of Chargebacks911, a company located in the Tampa Bay area dedicated to helping merchants optimize profitability through chargeback management. She co-founded the company in 2011 after operating as an eCommerce merchant. Through her own first-hand experience, Monica identified the need for proactive chargeback mitigation services in the eCommerce industry. Today, Chargebacks911 operates across the globe with offices throughout North America, Europe, and Asia.
Benjamin K. Glaser (@DealNews) is Features Editor for DealNews, covering the intersection of culture, media, and technology. He joined the company in April 2013 and is based in Brooklyn. Responsible for long-form content ranging from product-buying guides to market-trend analysis, Benjamin maintains the DealNews brand’s distinctive, reliable voice.  In his free time, Benjamin loves binging on Netflix comedy series and finding the best burgers and pizza in New York.
Justin Lavelle (@BeenVerified) is a Scams Prevention Expert and the Chief Communications Officer of 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.

12 Tips for a Bad Credit Makeover (Part 2)

A hand mirror on a blue background with a dollar sign for bad credit repair

OppLoans’ two-part, credit advice blog post comes to a thrilling conclusion.

If it were as easy to makeover your credit score as it was to makeover your friends, then we probably wouldn’t be writing this post. Sadly, your score can’t just take off its glasses and change from a baggy sweater into a well-fitting shirt and be totally transformed. No, making your over score takes patience, determination, and financial discipline.

This is probably why nobody makes movie montages of people paying down their debt, creating a budget, and ordering their credit report.

But where Hollywood has clearly failed you, OppLoans is here to help! If you haven’t checked out Part 1 of this post, then you should totally do that! Once you’ve read tips one through six, you can rejoin us as we continue on with our plan to help you fix your bad credit…

7. Pay your bills on time. Really! 

We talked in Part I about how the amount of debt you have is the second most important factor in your FICO score. Can you guess which factor is the most important?

That’s right. It’s your payment history! This makes up a whopping 35% of your FICO score. (Your “Amounts Borrowed” makes up 30%.) If you can take care of those two factors, you’ll have three-fourths of your credit score on lock, and you’ll be well on your way to good credit!

And what’s the best way to make sure your payment history record is okeedokee? By paying your bills on time.

If you’re someone who has a habit of paying bills late, then you’re going to have to come up with a system. Maybe that means setting reminders on your smartphone. Maybe it means writing in the payment dates on your calendar. Maybe it means tattooing those dates into your forehead so you won’t forget!

(We really don’t recommend that last one. But if you do decide to go the “forehead tattoo” route, just remember to tattoo them backwards so that when you see them in the mirror they’ll read forwards. Don’t ask us how we learned that.)

Even better than just “remembering” your payment dates is to automate your payments as much as possible. Try setting up e-bills through your checking account’s online portal. That way, you can let your debtor’s computer system and your bank’s computer system do all the work for you!

If the reason that you’re having trouble with some of your bills is that they all come due around the same time, leading to shortage of funds, then call your lender or utility company and see if you can have your payment dates changed! This is a pretty common issue, so they’ll likely be able to work something out with you.

“The best way to maintain or build a credit score is to pay your bills on time” says Natasha Rachel Smith, personal finance expert for (@TopCashBackUSA). “Before the due date is even better than on the due date. Set reminders for yourself to pay at least the minimum once a month by the due date to avoid late fees or penalties. The more responsible you are with your debt, the better!”

8. Consider refinancing.

Now this is an option that might not work for everybody, but it’s definitely worth a try.

Refinancing a loan means that you take out a new loan to pay off the remainder of your old one. You get a new payment term with a lower interest rate and lower monthly payments.

There are several benefits to refinancing a personal loan. The lower payments certainly help if you have a budget that’s spread thin. That’s extra money that you could put towards important things like debt repayment. Plus, with a lower interest rate you can save money on your loan overall!

Tracy Becker (@tracybecker), President and CEO of North Shore Advisory, Inc, says that “Refinancing a loan can help credit scores since if the interest rates are lowered more dollars are freed up to pay down other debts.”

“High balances on credit cards and other types of lines can have a dramatic negative impact on credit scores.  Also if a refinance also has cash (cash out) that is being used to pay off debt that can dramatically help.”

(Cash-out refinancing generally only happens with mortgage loans. It can occur when a homeowner refinances the loan on a home that has substantially gained in value since the original loan was taken out. By refinancing for more than they amount they currently owe on the home, the borrower can free up extra cash to remodel, pay off higher rate loans, etc.)

Since making your payments on-time helps improve your credit score, taking out a new loan and making all those payments will give you a longer history of on-time payments, thereby helping to increase your score.

“The only negative is the new loan (or account) will reduce the average age of credit and drop the score for a year or so.  The balances being paid off (depending on how high) may offset the drop and even bring the score up much higher,” says Becker.

The reason that this option might not work for everyone is that people with bad credit might not have the option of refinancing. If you can’t get a lower rate on your new loan, it’s probably not worth refinancing. Since a refinanced loan often means paying your debt off at a slower pace, you might be better off paying down your debt more quickly and reaping those benefits instead.

9. Open balances are your friend.

Making your final payment on a credit card is a great feeling. Finally, you’re out from under that debt burden and one major step forward towards having good credit.

Here’s the thing though: Even though you might be tempted to close that card, don’t do it!

There’s a couple reasons why keeping those balances open can help your credit.

First of all, there’s something called your credit utilization ratio that’s an important part of determining your credit score. This ratio measures how much of your available credit you’re carrying over from month to month.

The less of your available credit you’re using, the better. It shows that you are using your credit cards responsibly and aren’t just spending beyond your means by maxing them out.

Let’s say you have two credit cards, one with a $6,000 credit limit and one with a $4,000 limit. That means that you have a total credit limit of $10,000. If you are carrying a respective balances of $3,000 and $2,000 on those cards, then you are carrying a total balance of $5,000. Since $5,000 is one half of $10,000 you have a credit utilization ratio of 50%.

Generally, it’s best to keep your credit utilization ratio below 30%. All other factors being equal, getting your ratio below that mark should lead to improvement in your score.

Now, let’s say that you have a third credit card that you’ve paid off entirely but kept open. This card has a credit limit of $5,000. This means that your total available credit is $15,000. All of a sudden, the $5,000 that you’re carrying on those other cards doesn’t equal 50 percent of your total limit. It only equals 33.3 percent.

By keeping the balance on that third card open once you’ve paid it off, you are improving your credit utilization ratio!

The second reason to keep cards open is that it helps improve the average age of your credit lines. The FICO formula likes to see that people have been able to maintain credit accounts over a long period of time. Take two identical credit cards, one of which is brand new, the other of which has been open for three years. The second card will be weighted more favorably than the card you just opened.

Of course, this doesn’t work if you keep that old card open and then spend a bunch of money on it that you can’t immediately pay down. So if you’re going to do this, it’s a good idea to cut up the physical card. That way, you’ll save yourself from temptation.

10. Squeeze every penny.

If you’re serious about paying down debt, sticking to a budget, and improving your score, then you’re going to have to get creative in terms of how you cut back your spending.

“If you’ve been overspending…don’t beat yourself up. It happens. But now, right now, is the time to tackle it,” says Smith. “I recommend sitting down and looking at the areas where you spend more money than you really ought to. If you notice a pattern, consider cutting back or looking for a cheaper alternative.”

“For example: People tend to overspend on food and going out with friends because they want to be social. You can brainstorm a cheap alternative and consider having friends over for a movie night or happy hour.”

And cutting back on spending doesn’t have to mean avoiding the things you like to do or the food you like to eat. It can also mean putting in the extra legwork to find those things for cheap.

Smith encourages people “to learn how to shop for discounted prices and NEVER pay full-whack for products. You can always find coupons and discounts if you do a little bit of digging. On top of sales and deals, sign up for a cash-back site such as to receive money back on your online shopping. If you’re going to purchase items online anyway, you might as well get paid for it.”

Lastly, you can always save money by avoiding unnecessary costs.

“Another area where money can drain away is in late payment fees. If you pay five bills past their due date each month, that’s more than $100 spent thoroughly unnecessarily. Adjust that bad habit and you’ll have more money in your pocket,” says Smith.

11. Get a second job.

With all this talk about spending less, don’t forget that you can also help pay down your debt faster by earning more! Getting a side gig is a great way to increase your take-home pay and either put extra money towards your debt or build up an emergency fund so that you can steer clear of predatory payday loans. 

With the rise of the sharing economy–where people charge other people to use their stuff–there has been an explosion of opportunities to make money on the side. You can drive for Lyft or Uber on your weekends or off-hours. You could also rent out your car through service like Turo or your parking space through Spot. If you live in a city and own a car, there’s pretty much always ways to make some extra cash.

If you have extra clothes or clutter lying around, don’t forget that you could sell them online on sites like Craigslist or eBay. If you have tools lying around, you could rent them out through Zilok.

Love pets? Why not get some extra work as a dog-walker or pet-sitter through Handy at assembling Ikea furniture or other household tasks? Rent out your services through TaskRabbit. Those skills from your high school days as a pizza delivery man going to waste? Sign up for Postmates.

You can even make money (though not a ton) taking online surveys! And if you have creative skills, then creating an Etsy store and selling your wares could be just the ticket.

We could go on. The point is this: If you want to earn some extra cash, there are a ton of ways for you to do it.

12. Be patient.

Look. Short of winning the lottery, there’s no “silver bullet” solution for improving your credit score. It’s going to take some time, so you’re best off settling in for the long haul.

The information on your credit report, which is used to create your credit score, generally remains on that report for seven years. (Certain kinds of bankruptcies can stay on your report for 10 years.) As time goes by, old information drops off your report.

So as you pay down your debt and start making your bill payments on time, that new positive info is going to make up a larger and larger portion of the information on your report. As older negative info drops off, it will be replaced with better info, and your score will increase.

So don’t think you can fix your credit score in a month or even a year. Find some room in your budget to treat yourself once in awhile so that you don’t get discouraged or burned out.

If you follow the tips laid out in this post, your score will improve. But unlike a movie makeover, you can’t do it through a quick montage. This makeover is going to take awhile.

Thanks for reading! If you have any credit makeover tips of your own, we’d love to hear them! Let us know on Twitter at @OppLoans.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Tracy Becker (@tracybecker) is the President and CEO of North Shore Advisory, Inc., a leading Credit Restoration, Education and Monitoring Company specializing in Business & Personal Credit Services. Tracy is a FICO Certified Professional & Expert Credit Witness, she has been improving both consumer and business credit as well as educating professionals and individuals for almost thirty years. North Shore Advisory has helped thousands businesses and individuals to have the most opportunity and savings great credit can offer.
Natasha Rachel Smith (@topcashbackusa) is a personal finance expert at 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.

12 Tips for a Bad Credit Makeover (Part 1)


Even if you think your credit score is beyond repair—there are steps you can take to better your financial future!

If you watch any teen movie, there’s always that sequence where somebody undergoes a life-changing makeover. You know that montage of trying on new outfits, getting a drastic haircut and adding (or removing) bangs, and finally a scene where our main character removes their glasses and realizes that yes, they are in fact super hot?

Well, if you have bad credit—which means a FICO score below 630—then your creditworthiness could probably use a makeover too. That’s why we’re here! We’ve got some fantastic, detailed tips for how you can turn your bad credit from zero to hero. (Is that how teens talk these days. Is that appropriately fleeked?)

This post is only Part I of the list. It includes tips one through six. Keep an eye out for Part II dropping later this week!

1. Stay away from hard credit check loan and credit card applications.

When you apply for a new personal loan or credit card from a traditional lender, the lender performs a “hard check” on your credit. This means that they pull up a full copy of your credit report to assess your creditworthiness, and that inquiry or check gets noted on your credit history.

“Recent Credit Inquiries” comprise 10 percent of your overall FICO score. Searching for new credit can be a sign to lenders that you might be mismanaging the credit you already have. That’s why these checks can ding your credit score for up to two years after they appear on your report.

So unless a credit application is 100 percent necessary, you should stay away from applying for new loans and credit cards while your credit is already bad. If you’re really in a bind, you should look to get a loan from a “soft” credit-check lender. These checks won’t hurt your credit score, and soft credit check lenders are more likely to lend to folks with not-so-great credit.

2. Find a better credit utilization ratio.

Natasha Rachel Smith, personal finance expert for (@TopCashBackUSA) says, “Credit scores are largely affected by your credit utilization ratio (that is, how much of the total credit that’s available to you is in use) and payment history.

Since credit cards have become such a major part of modern personal finance, credit utilization is an incredibly important factor in determining a person’s creditworthiness. Unlike traditional loans, credit card borrowers are given a maximum amount of money—called a “credit limit”—that they can borrow up to with their card. Borrowing far below your credit limit is a good sign to lenders that you are using your credit cards responsibly.

“A good credit utilization ratio is less than 30 percent. Under ten percent is ideal,” says Smith. Once you exceed 30 percent, you may be seen as a risk to a lender and could potentially be denied a loan or credit card.”

“A great, speedy way to raise your credit score is to make sure you are spending within your comfortable means so you don’t slip over a 30 percent credit utilization ratio.”

3. Get rid of your debt with one of these methods.

If you have a bad credit score, then you probably have too much debt. Your “Amounts Borrowed” make up a 30 percent of your FICO score, which means that too much debt is going to have a much bigger effect on your score than most other factors.

So if you’re serious about fixing your bad credit, you’re going to need to pay down some of that debt. Easier said than done right? That’s why you should look at two of the most popular debt repayment methods: the Debt Snowball and the Debt Avalanche.

Both methods involve saving up a chunk of money beyond your monthly minimum payments and then focusing all that extra cash on one loan or credit card. One that debt is paid off, you then take that cash plus the monthly minimum for the now-retired debt, and putting all that money towards your next debt. With each debt that you pay off, you get more money to put towards your other debts.

The difference between Snowball and Avalanche methods come with how you decide to order your debts. With the Snowball method, you pay off your debt with the lowest balance first and then work your way to the debt with the highest balance. With the Avalanche method, you start with the debt that has the highest APR, and then work your way towards the debt with the lowest APR.

Both methods have their benefits and their drawbacks. To learn more about them, check out these OppLoans blog posts:

4. Cut back on your spending by starting a budget.

At its heart, having a bad credit score means that you have had trouble with managing your money. That’s how you’ve ended up with too much debt, failing to make your bill payments on time, or having to take out a bad credit loan. That’s why a lot of the advice we’ve doled out already is really just advice for how to better manage your finances.

So if you are trying to fix your bad credit, one of the best things that you can do is take control of your financial situation through starting a budget. Budgeting will allow you to plan for how your money gets spent; it will let you see areas where you can cut your spending back; it will help you pay your bills on time, and it will help you put money aside to start tackling your debt.

“Sit down and take a hard, deliberate look at your finances and plan your month’s expenses,” says Smith. “Budgeting will allow you to pay down debt while saving smartly.”

She recommends, “Minimize your spending habits by budgeting your costs in three categories that are the most important: bills, savings and living expenses such as rent and food. Cut your spending by not buying things you simply want; focus on the things you need.”

If you want to start a budget but aren’t sure where to begin, then Smith has a good strategy. It’s called the 50/20/30 rule:

“You should spend only up to 50 percent of your after-tax income on essentials, such as housing and food; 20 percent on financial priorities, such as debt repayments and savings; and 30 percent on lifestyle choices, such as vacations. Don’t splurge in other categories as costs can add up quickly!”

Stephanie Stewart, Digital Marketing Strategist for Best Company (@BestCompanyUSA) also has a great piece of budgeting advice:

“A great budgeting tip I have found is to take out all your grocery money for the month in cash, when the cash is gone you have to get a bit creative in the kitchen. This helps with overspending on food every month. This money could then be applied towards paying off your debts to help improve your credit score as well.”

You can also learn more about setting and meeting your budgeting goals in OppU, our online finance course.

5. Check your credit report for blemishes.

If you want to fix your credit score, then you pretty much have to get a copy of your credit report. After all, all the stuff that’s dragging down your score is stuff in that report. You can’t fix your score without knowing what factors are dragging it down in the first place!

However, there’s another reason why it’s good to request a copy of your credit report, and that’s because it might have errors on it that are unnecessarily lowering your score. Credit reports are compiled by the three major credit bureaus—Experian, TransUnion, and Equifax—a process that involves getting information from thousands of different businesses on hundreds of millions of different borrowers nationwide.

So yeah. There are going to be some mistakes.

Don’t worry though! Here’s the good news: you can access your credit report for free and dispute any errors that you find directly with the bureau. Under federal law, the three major bureaus have to provide you with one free copy of your credit report per year upon request. Just visit to request a free copy of your report.

If you find an error on your report, you can check out this online resource from the Federal Trade Commission (FTC) for a guide on how to dispute it:

FTC Facts for Consumers – How to Dispute Credit Report Errors

And even if you don’t find any errors, checking your credit report is something that you will want do regularly from now on. That way, you can stay on top of your financial reputation.

Lastly, here’s a credit-monitoring pro tip from attorney and best-selling author of The Plastic Effect, Stephen Lesavich, PHD (@SLesavich):

“Since you are entitled to one free credit report from each credit reporting bureau, consider ordering one of your credit reports from one of the credit reporting bureaus in each four-month period during a calendar year. This way, you can monitor your credit for free throughout the year.”

6. Run from predatory payday loans!

The road to fixing your bad credit can be a pretty narrow one. Walking it successfully means taking a lot of positive steps, but it also means avoiding a lot of negative ones. One wrong move and you can find yourself right back where you started.

Taking out a payday loan could definitely undo all the hard-won progress you’ve made.

These are short-term loans, often meant to be repaid with a single payment only two weeks after they are issued. As these loans are primarily aimed at people with bad credit, the interest rates are high.

How high? Try an APR of 400 percent!

Beyond those ridiculous annual interest rates, payday loans have another problem, too, and that’s their lump sum repayment structure. Instead of paying the loan off in a series of small, manageable payments, payday loans require you to pay the loan off all at once.

Add lump sum repayment up with short terms and high interest rates and it’s no wonder that so many payday loan customers have trouble paying their loans off on time. Instead, they are forced to roll the loan over, receiving another repayment period at the cost of an additional interest charge (read more in our article The High Cost of Payday Loans).

It’s all too easy for payday loan borrowers to end up getting stuck in what’s called a “Cycle of Debt.” This means that they keep extending their payday loan or they pay the loan off and then taking out a new loan immediately after to help cover their costs. They never get close to paying their debt off, they simply pay more and more interest every time the loan comes due. It’s like the loan is slowly bleeding their money dry.

And guess what? Being stuck in a payday debt cycle is not going to help your credit! Either it’s going to be sucking away money that you could put towards better things, or you could default on your debt entirely and get sent to collections! That collections agency would then likely report your unpaid account to the credit bureaus, and they might even take you to court to have your wages garnished, another action that would get recorded on your credit report.

If you have bad credit though and need a loan for emergency expenses, consider looking for a more reputable bad credit lender, like OppLoans, that will offer you lower rates, more manageable payment terms, and better customer service than your typical payday lender.

That’s it for Part I! Keep a look out for Part II dropping later this week to help make your credit makeover complete! In the meantime,  follow us on Twitter at @OppLoans.

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Teaching Your Kids About Finances and Credit: A How To Guide


Kids aren’t usually the greatest money experts. Depending on how young they are, they might even prefer coins to paper money and, in their defense, coins are shinier. But if you want your kids to grow up with good financial habits, you’re going to have to teach them.

And good financial habits are important. How else can you make sure your kids won’t end up with bad credit or trapped by payday loans? Obviously, it’s a lot to ask that you be a financial educator in addition to whatever other jobs you have (unless one of those jobs is a financial educator, in which case you probably have this covered). That’s why we spoke to some experts to get you the tips you’ll want to give your kids.

You can’t always get what you want.

For young children, one of the first financial lessons to learn is a lesson they’ll have to learn anyway. When little kids want something, they make it clear, and when they don’t get it, they get upset. If you have or have had young kids, you’ve (hopefully) learned to say no when necessary.

Financial coach Brad Kingsley (@maximize_money) told us how you can show your kids that when it comes to finance, you can’t have everything: “One of the best ways to teach financial values to your kids is to help them understand you can’t buy everything you want. We set our daughter up with an allowance rather than buying things for her (outside of birthdays and Christmas). She would save her money to purchase things she wanted, but occasionally was short yet wanted something right away. Not coming in and paying the difference was a great lesson on delayed gratification. It helped her understand that sometimes you just don’t have enough money—and it’s okay to wait. Quite a few times she realized by the time she had the money, that she didn’t want to spend it all on that item she thought she previously wanted! Great lessons learned!”

Do as I say…. AND as I do!

They say “monkey see, monkey do” and below a certain age, what are kids really, but less hairy monkeys? You should tell them good financial habits, but it’s also important that you set a good example.

At least that’s what Howard Dvorkin (@HowardDvorkin), CPA and chairman of (@debtcom), believes. “Children learn by example. You don’t want your children to smoke? Don’t smoke in the house,” Dvorkin advised. “Don’t want them to text and drive? Don’t do it yourself. Want them to be financially responsible? Don’t run up huge credit card bills buying items you don’t really need. Don’t buy a more expensive house or car than you can afford just to look good to the neighbors and friends. The best thing you can do for your children is lead by example.”

Hands-on education.

In addition to listening and watching, kids can also learn by doing. That’s why it’s important to give them assignments or tasks that will allow them to learn on their own.

“Have them open a bank account,” counseling psychologist Dr. Stacy Haynes (@Dr_StacyHaynes) suggested. “Teach saving and spending habits early. Have them play games like Life and Monopoly that still teach children to purchase items, pay for college and buy real estate. The classic board games are great learning tools for money. Have them pay for things. Many children have no idea what items cost as they never buy things. And use cash, not cards, so children learn what money is and how fast it can go.”

Dr. Haynes even offered a personal example: “An Impact project my 5th grader had to do for school actually had them create a business and sell a product at a trade fair. They had to figure all their costs and profits from the experiment. Great learning tools to have hands on real life application.”

Leadership coach Leslie Elia, of Life Leadership (@LifeLeadrship) found multiple opportunities to teach her kids about finance:

“When our children were about 11, we got them checking accounts with a debit card and savings accounts. Although they did not get an allowance, they always found ways to make money like, marking up pop and candy and selling it at the annual garage sale or squirreling away some birthday gift money. Two of them had opportunities to travel with the People Student Ambassadors, and they had to come up with ways to do their own fundraising. We did everything from selling homemade soaps, to chocolate bars. They raked leaves and even had an ice skating party to raise funds. They understood that money is a privilege and must be earned.”

Elia also told us about a literary lesson she gave them: “As they got a bit older, we used one book that was from the Life Leadership organization that I work for. It was quite instrumental in my own teens’ lives. Financial Fitness for Teens is a book that teaches the offense, defense, and playing field of finances and goes way beyond telling a teen how to mow lawns to make extra cash.

“I purchased the book for each of my teens and gave it to them at Christmas with a $20.00 bill as the bookmark. I told them if they were able to read it during Christmas break and have an intelligent discussion with me about the book, I would gladly give them another $20.00. What a great incentive, and what an interesting way to see just who would benefit the most from the book.

“My entrepreneurial son read it first, and truly blew me away the following summer, by adhering to some of the principals. With each lifeguarding paycheck, he gave me 20 percent of the check and would alternate if he wanted it in his Roth IRA or his Mutual Fund account. He also paid mom and dad up front for his portion of the car insurance for the year. Wow.

“My oldest daughter was second to discuss the book with me as proof that she read it. She has the most expensive taste of the three kids, but I know that she manages her money well as she lives alone off the campus of her law school. I peek at her checking account from time to time (as she never got around to removing my name off of her account when she was a minor) and I see that she is always in the black.

“My middle child was the last to read the book, right under the wire of Christmas break being over. She is the child who is thrilled to wear big sister’s previously worn formal wear to school dances and walks straight back to the clearance rack of any store she shops in. She impressed me the most one day when she was checking out at the register. The sales lady was trying hard to do an upsell or at least get her email information. Katie simply said, ‘Na, I don’t shop much.’ That was truly a parent’s dream.

“Other things we had done as parents included never paying for our children’s cell phones, never giving an allowance (although we occasionally rewarded good grades with some cash when we had some to spare), and always letting our children know where we were financially.

“When all three applied to colleges, they applied to several, so that they could weigh the best deals, even barter with other schools for a better scholarship offer and get the best bang for their buck.

“Finances are nothing to hide from and because schools generally don’t teach anything about finances, we had to teach it at home.”

Entrepreneur and founder of Skubes (@SkubesEd) Bryan Wetzel told us about his personal experience preparing his teenagers and college-age kids for their financial lives:

“First of all, too many parents these days pay for everything their kids get even while they’re in college. I’m astounded by how many kids these days didn’t have a part time job when they were in high school and some while they were in college. So they are entering the real world with no understanding or value for what they’ve earned or what they are spending. My kids were helped with the purchase of their car and they have to pay $100 towards their insurance each month.  This means they are required to maintain a part-time job in order to cover their expenses. One of my kids needed a new car and I bought it for them and they make the payments to me. I’m not doing this to hurt them or be greedy, I’m doing it to teach them responsibility.

“The second thing I did and will come back to occasionally is I had my teenagers sit down at the kitchen table with a notepad as I spouted off all the monthly and yearly bills my wife and I pay.  Then I had them add up the total with their phone calculators. When they were done I told them this is what it takes to have a house, two cars, food and the basics. NO entertainment or savings was added to the list. I wanted them to have a number in their heads that was realistic.  I had watched them be excited about having a $1,000 in savings or that their paychecks were $300 for two weeks work and realized that they don’t have a realistic idea of what kind of money they will have to make to have a comfortable life.

“Bottomline, I’m in the education industry and I feel like kids are not being educated on finances or the value of money enough. Especially where credit is concerned. The fourth month that my daughter was paying her car payment to me she wanted to push back the date that she paid me by four weeks so she could go on a vacation with her friends. I told her that the bank I was paying would not be good with that and in fact, would ding my credit and I would in turn have to take her keys. She rationalized how unfair that was but she’s getting an education about how the world of money and credit work. I have pitched ideas to several school systems about a program that would be ongoing through the high school year that taught about finances and credit but very few administrators have this on their radar. They are too focused on the scores for math and science.”

Through a mix of clever solutions and tough love when necessary, you can make sure your kids are financial masters. Teach them well enough, and maybe they’ll be lending you money one day!

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Leslie Elia (@LifeLeadrship) and her husband have been married for over 30 years. Her careers have included teaching figure skating, using her Health Coaching Certification to teach people to make healthy food choices and most recently working with a Direct Sales Company called Life Leadership. Most of the Life Leadership products are all geared toward getting people out of consumer debt. She began using the principals in her own home and passed them along to her children as well. A former Ironman triathlete, she still enjoys swimming and biking. When not working her Life Leadership business she also enjoys writing and spending time with her husband.
Howard S. Dvorkin (@HowardDvorkin)  is a two-time author, personal finance expert, community service champion and Chairman of (@debtcom). As one of the most highly regarded debt and credit expert in the United States , Howard has played an instrumental role in drafting both State and Federal Legislation. Howard’s latest book “Power Up: Taking Charge of Your Financial Destiny” provides consumers with the detailed tools that they need to live debt free and regain their financial freedom. Howard has appeared as a finance expert on CBS Nightly News, ABC World News Tonight, The Early Show, Fox News, and CNN.
Dr. Stacy Haynes (@Dr_StacyHaynes), Ed.D LPC, ACS is a counseling psychologist who specializes in the needs of children, families and parenting concerns. Dr. Haynes has over 15 years experience in the treatment of every day challenging family concerns. She believes in making a difference one person at a time.
Brad Kingsley (@maximize_money) is a certified financial coach helping people create a plan for their finances to achieve big goals like becoming debt free, paying for college, and preparing for a comfortable retirement. Visit his site at
Bryan Wetzel (@SkubesEd) is an entrepreneur who has started multiple companies. Two of those companies were acquired as a turnkey solution to a larger companies needs, the third was a production company, which he managed for 14 years. The fourth company is Skubes, founded in 2012, which is currently in operation and growing in the education industry today and was recognized by Dig South as one of the best education startups in the country.

Can Bad Credit Keep You From Getting a Job


You had trouble keeping up with your bills, and it led to bad credit. Now you want to fix your financial life by finding a better paying job.

Unfortunately, we’ve got some bummer news. That new job you’re applying for to help you fix your bad credit? Your bad credit could keep you from getting it!

Is that fair? Not at all. It’s a terrible, vicious cycle. But you’re better off knowing the obstacles you’ll face so you can be prepared. We spoke to the experts to bring you the truth about how your credit can affect your job prospects and what you can do to overcome it.

How big is the risk?

We know that potential employers CAN check your credit history when determining if they want to hire you, but WILL they? According to the experts we talked to, it’s certainly a factor that employers may consider, but isn’t necessarily a standard hiring practice.

Leadership coach Elizabeth McCourt (@ecmccourt) told us that a potential employee’s money situation has always been a factor in her particular sector of experience:

“As a recruiter in the financial services industry, I can tell you that having a clean financial record is very important. If there is a bankruptcy in your past or other credit issues, there is a high probability that this will affect the chances of getting a job offer. Particularly in the financial services business, there are strict compliance rules and firms see credit or finance issues as a potential red flag for problems down the road. Financial issues or bad credit score are almost always a road block into this particular industry.”

Outside of the finance sphere, it’s an issue you’re somewhat less likely to run into. Roy Cohen (@RoyCohen), career coach and author of The Wall Street Professional’s Survival Guide, could only recall one client running into an issue like this: “Only once in my (very long) career has a client been rejected for a job because of a bad credit report. We later discovered that the firm was about to announce a reduction in force. So, we were actually uncertain if, under different circumstances, he could have successfully talked his way out of losing the job offer.”

Cohen did acknowledge, however, that it’s more likely to be an issue when applying for jobs that require money handling. He told us “the only exception” is “jobs in which the employee handles money, has credit authority, or makes decisions about the disbursement of funds.” He went as far as to say “When clients with credit problems reach out to me I typically discourage them from pursuing an option where I know they will be rejected. It simply makes zero sense. So failure and rejection have been mitigated.”

Consumer rights attorney Larry P. Smith (@LarryPSmithLaw) explained that even if a potential employer isn’t looking at your credit history specifically, they may still pull your credit report: “A credit score can affect your job chances by getting you denied employment. There are limited reasons why someone can obtain a credit report or consumer report about a person. One of those reasons is to review an employment candidate. In most instances, employers obtaining reports about employees are not obtaining credit information. Rather, they are obtaining other background information–such as arrest or conviction records. Those reports are similarly governed by the Fair Credit Reporting Act. However, some employers do seek out credit information about job candidates. In some industries, employers are concerned about having employees with a solid credit background. If someone is being hired to handle money or will be around money, then an employer may be concerned that the person is responsible with money or not desperately broke where they can be a danger of stealing. In those instances, an employer can review a credit report, note a low score, and deny them employment based upon that. Note that there are certain legal requirements that come with rejecting a potential employee based in whole or in part on information contained in a credit report.”

Smith did assure us, however, that there are states in which a potential employer is restricted from rejecting you based on your credit: “Some states have enacted laws to cover this and provide that it is illegal to review credit information of a potential employee before hiring. However, there are some caveats to those statutes. First, most of those statutes also provide for an exception to the rule if the person is applying for employment in the financial sector or at a job where money is being handled. Second, the federal FCRA preempts any state law. That is, if it is inconsistent with the federal law, then it is a null and void law. Many states have come into conflict with the federal law, and as such, we caution to rely on the federal law. The FCRA allows potential employers to review credit reports and make employment decisions based thereon.”

How can you protect yourself?

No matter how small or large the risk might be, it pays to be prepared. You’d rather have a strategy in case your credit comes up than try to explain how you didn’t think they would check.

Here’s what Cohen recommends: “Disaster planning is effective. When you anticipate the very worst that could happen and prepare various likely scenarios, you are in a better position to either present the problem up front or offer up a reasonable explanation. Most credit problems have a legitimate origin, like a medical problem or divorce. Many of the companies that use credit reports are willing to overlook the issue as long as it doesn’t appear to be a pattern of behavior. Besides, in at least 10 or more states it is illegal for companies to request or use credit history in making a decision to hire a prospective employee.”

Life coach Jeff Altman (@TheBigGameHuntr) told us what you should do if you’re worried your bad credit might keep you from a job:

“If you know there is a risk of a problem (for example, if you are interviewing for a job with a bank or a financial institution that you know will do a review of your credit score), it is better to be proactive with HR during your interviews to see whether or not the impact of having a poor credit score is, ‘terminal.’

“After all, why go through so many interviews and the heartache of rejection at the end if you will be turned down no matter what you do or say?

“You can talk about how your wife/husband/partner had a business fail and how it affected the two of you. You can talk about how the two of you have been working to get out from under. You can speak about the effects of medical bills, being unable to find the job for a lengthy period of time, or any other cause that has resulted in poor credit showing up on a report.”

And if they don’t listen?

“If a firm is going to be heartless at the beginning, I can assure you they will be heartless at the end.” (You can also read more of Jeff’s thoughts about credit and job hunting in our previous blog entry “How Fixing Your Credit Can Fix Your Future“.)

You can’t repair bad credit in a night. But you shouldn’t let it stop you from trying to get a better job if you’re aspiring for one.

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Jeff Altman(@TheBigGameHuntr) The Big Game Hunter, has helped organizations achieve their objectives by hunting down leaders and staff as employees or consultants since 1971.
Roy Cohen (@RoyCohen) is a career counselor and executive coach, and recognized as one of the country’s leading experts in Wall Street career management.  In addition to numerous media appearances including The Today Show and CBS This Morning, he serves on the advisory board of Men’s Fitness Magazine and he was selected in 2013 as the official career coach for the movie, Lee Daniels’ The Butler.  He is also the author of the best-selling career book, The Wall Street Professional’s Survival Guide.
Elizabeth McCourt(@ecmccourt) JD, MFA, CPCC, ACC is the President of McCourt Leadership Group.  She has been a financial services recruiter for 17 years and is also an executive coach, certified by the Coaches Training Institute (CTI), in addition to certifications in the Hogan Leadership Assessment and in Systemic Team Coaching. Prior, she was a trial lawyer in New Mexico with a JD from Loyola University and an undergraduate degree in Finance from the University of Maryland.
Larry P. Smith (@LarryPSmithLaw) is a consumer rights attorney, concentrating his practice in the areas of Fair Credit Reporting Act and Fair Debt Collections Practices violations, as well as consumer fraud claims and lemon law.  He is the Managing Partner at SmithMarco, P.C. in Chicago, Illinois.