Discussing Finances With Your Partner: How to Talk About Credit as a Couple


Fixing your own bad credit is hard enough, but adding another person to the mix can just make things even more complicated. On the one hand, working on financial issues as a team can help you both stay dedicated and allow you to assist and support each other. On the other hand, money can be a sensitive subject, and the last thing you want is for your money situation to negatively affect your relationship.

But not talking about your credit and your finances, in general, could lead to even bigger relationship issues down the line. Just imagine if a financial emergency comes up, and neither you or your partner can qualify for a good loan because of bad credit. Better to have these difficult conversations now, before things are bad because it’ll only be more stressful if you try to kick the credit can down the road.

So how can you have the credit conversation without hurt feelings? We spoke to the finance experts as well as the relationship experts to bring you all the advice you need.

Put the credit reports on the table.

Relationships are built on trust, but you can’t share something you don’t know. That’s why your talk about finances should start with both of you finding out your current credit scores. Here’s what Kristin McGrath, editor of CreditCardForum.com (@CreditCardForum), had to say on the issue:

When you’re ready to have the credit talk, both parties should go to AnnualCreditReport.com and pull their credit reports. You can get one free report per year from the Big 3 credit bureaus. Then sit down and show each other your reports. This is a great starting point because credit reports don’t lie. One partner can’t fudge the amount of their outstanding student loans. The other can’t ‘forget’ to mention that they have been carrying a credit card balance that’s $5,000 and growing. It’s all out there on the credit report. It can be difficult and embarrassing to say out loud that you have more debt than you’d like—so pulling your report and handing it over to your partner does the work for you.

“I suggest meeting in a neutral, public location, like a coffee shop, for this reveal. Finding out your partner has more debt than you thought can be shocking, and admitting you have a lot of debt can be difficult emotionally. Meeting in public can help mute any unhealthy knee-jerk reactions and keep the conversation civil and focused.”

And what do you do once it’s all literally and figuratively on the table?

“Once you have the numbers in front of you, you can start prioritizing debts to pay down. Schedule regular credit check-ups at the coffee shop going forward. I suggest putting an end time on these meetings, just as you would with a business meeting. Have plans immediately following the meeting to enforce the end time. This helps ensure you make productive use of your time and prevents these credit check-ups from becoming emotional and drawn out. Put the work in and then enjoy the rest of your day together.”

Remember that you’re on the same team.

Talking about finances can require some hard truths, so it’s important you and your partner do everything you can to make sure no one’s feelings get hurt.

Whitney Shayo (@WhitneyShayo), writer and editor at Live Your Best Marriage, suggests a couple “attack the issue as a team and to agree that it’s not ‘his money, his mistakes’ or ‘her money, her mistakes.’ It’s about the two of them attacking the problem, not one another.”

Brett Graff (@BrettGraff), The Home Economist and author of “Not Buying It,” urged couples to think of financial conversations as discussions about their futures and shared desires: “A couple shouldn’t look at money as though it’s a tacky subject or a business matter. Money is what you need to achieve your goals in life—do you both want to lay roots and own a home or does one of you want to rent and be mobile, moving around the country and exploring new lifestyles. Do you want to have an early retirement or work into old age? These are lifestyle goals that involve your hopes, your dreams, and your credit. So discuss them as you would any other matter.”

Justin Lavelle, chief communications officer and editor of PeopleLooker.com (@PeopleLooker), had this to say: “Review spending patterns and correlate those spending patterns with items and the person that buys most for the two of you, i.e., groceries, laundry, medical, etc.. This type of skewed spending needs to be identified so as not to unfairly allocate excess to one person. After ‘necessaries’ have been removed, do an audit of what is left. Each person should justify why they spend what they spend. If this causes a fight or some pushback, you have probably identified wasteful spending.”

Bola Onada Sokunbi, finance expert and founder of CleverGirlFinance.com (@CleverGirlCGF), offered her own set of tips:

“Tip 1: Be honest with each other about your finances. If you are in a serious relationship, you want to be honest with each other about your finances and financial situation so it doesn’t come back as a problem later on. Talk about your overall financial picture including your credit and your debt and lay things all out so you are both aware of each other’s financial obligations. It’s also important that in your conversations you talk about your goals and ambitions, particularly around improving your finances together as a team. This will help you guys develop a joint focus on where you want to get to with your finances.

“Tip 2: Remember it’s not a fight. Talking about money is not synonymous with getting into a fight, so don’t make it one. Plan a nice dinner, go for a long walk… basically, create a comfortable environment where you can both talk about your finances. Discuss your future plans and dreams together. Set goals for how much you intend to save and how soon you want to pay down debt or improve your credit together. Keep in mind that you don’t need to talk about all your entire financial situation in one conversation. You can talk about one topic over dinner and save the other topics for a separate occasion. This way things don’t get too overwhelming or stressful. Remember, it’s a conversation so be sure to listen to your partner’s perspective, ideas, and thoughts as well.

“Tip 3: Budget and set goals together. Put some time on the calendar once a month to budget as a team. This could include talking about your spending for the next month, any major expenses coming up and your savings and investment goals. You can also create fun money challenges to do together each month. Remember your significant other is on your side (they are basically your built-in support person) and planning out your finances together will help you accomplish your goals faster.

“Tip 4: Don’t get on each other’s nerves about every single cent. You don’t have to be on top of each other for every single penny that you each spend. This can be really annoying especially if you were used to doing your own thing with money before you got into a relationship. One way to get around this is to set spending limits with each other and decide that if you intend to go over that particular limit then you both need to talk about it and agree on things”

Watch your language.

If you’re having to constantly watch your language around your partner, you may have some relationship issues to work on. But when it comes to sensitive subjects like finances, even the closest of couples can risk hurt feelings if they aren’t expressing themselves in the best way possible. That’s why certified financial expert Maggie Germano (@MaggieGermano) gave us a crash course on how to choose the right words when you’re talking cash as a couple:

“It’s so important for couples to talk about money, especially early on in their relationship. It’s just as important as whether or not you want to have children, so couples definitely need to be on the same page.

“If you’re going to understand and be understood by your partner, you both need to know where you’re coming from regarding money. You need to know if there’s debt, avoidance, differing savings goals, or confusion around money. You need to know each other’s financial hang-ups and dreams.

“Whether it’s splitting the bill, spending less on activities, or saving for the future, making money demands inside a romantic partnership still feels taboo and awkward for many people. But a ‘money talk’ is the only guaranteed way you’ll understand your partner’s—and your own—needs better! Mutual understanding is a double win.”

Here are Germano’s top tips:

“1. Be honest: It’s really hard to be vulnerable. Money can come with so much baggage and shame, but it’s essential that you’re honest with your partner. This is presumably the person you love and are committed to being truthful with. Ask them to listen to your money story without judgment, and tell them about any hang ups or negative history you have with money. Tell them about your financial dreams. This will help them to understand you better, and hopefully be more open to what you need financially.

“2. Use ‘I’ statements: I’m sure you know how easy it is to feel defensive during difficult conversations. If the conversation is about your partner’s money habits, you want to take extra care to avoid accusatory ‘you’ statements; they’ll tune you out right off the bat. Awkward conversations tend to go better if you approach them in terms of what your own needs are, rather than what the other person is doing wrong. Simply put, use ‘I’ statements.

“3. Frame the conversation around your goals: Instead of just saying that you want to ‘spend less in order to save money,’ be specific. Explain that there is a true end goal (or several!) in mind. Are you trying to save money so that you can fulfill your dreams of traveling abroad? Do you want to save so that you can buy a house some day? Do you want to avoid interest rates by paying down your credit card debt? Explain these things to your partner! When you talk about your goals (instead of your failures or insecurities), you’re living in an abundance mindset, rather than in a scarcity mindset. Not only is that better for you, but it will make your partner more receptive to what you’re saying.

“4. Ask what your partner’s goals are: Your partner might not have concrete financial goals yet. But everyone should! Once you have defined your goals and written them down, it becomes much easier to create a plan and work towards reaching them. If you encourage your partner to set their own goals, then the two of you can support each other on your plans and accomplishments. Just like it’s easier when you have a workout buddy, it’s easier when you have a saving buddy. Creating and comparing goal lists will reveal how compatible your goals are and help you determine whether you can work towards your financial dreams as a team.”

First comes love, then comes…

Marriage isn’t for everyone. But if it is in the future (or present) for your relationship, then it’s all the more important to have your shared finances in order. Better to have some awkward talks with your significant other now than to find yourself having an awkward (and expensive) talk with a lawyer one day.

Susan Trombetti (@Exclusive_Match), matchmaker and owner of Exclusive Matchmaking, offered up some advice for anyone who might be married or looking to get married and needs to have the finance talk:

As a matchmaker, clients want financially sounds matches. This is an issue as a matchmaker and relationship expert that I have clients come to me frequently about. From taking on someone else’s debt, to wanting to know if a new partner is financially okay, to discussing your own issues, it is a touchy subject. But with the right tools, you can make sure it ends up being a topic to bring you and your partner closer together.

“Prenups address financial issues at times and have nothing to do with a split. A prenup when you are getting married helps discuss your finances to make sure you and your partner are on the same page. It doesn’t need to mean that you are planning on a divorce; it can just be a step in the marriage to make sure your financial situations are on the right track.

“It’s a necessary part of becoming a couple when you are merging bank accounts to discuss your credit issues and financial issues. Their history is important because it affects your current financial pic. Higher interest rates mean less money to fund your lifestyle. So be open with your partner if you have some issues and be open to asking your partner about their issues! By asking and accepting their issues you will establish an even deeper trust in the relationship.

“Sometimes if you feel too awkward asking, see a financial advisor, take some financial workshops, and make sure you totally agree on how the money will be spent prior to marriage. For example, if you have leftover money after paying your bills, is it going to savings or is one of you going to be buying a boat? Your expensive handbags can add up as well. These can be huge arguments if they aren’t discussed prior to marriage or living together. Make sure you are on the same page when it comes to saving and paying off the debt you have prior to getting together. Is your partner going to help with your debt? Or is your own paycheck just going towards that? Being on the same page from the start is vital.

“A financial advisor is a neutral third party that can spell it all out and help you make educated decisions. It’s a touchy subject, but ask a couple other friends what they do that works for them! Hearing other’s ideas might help!

“I see many people come to me after first marriages break up over money and not being honest about money issues. You don’t want to be fighting over money. This is a huge topic so don’t skip over it.”

These aren’t fun conversations to have, but they’re conversations any serious relationship requires. So as our experts said, stop putting them off, get through them together, and you’ll be even stronger for it.

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Maggie Germano (@MaggieGermano) is a Certified Financial Education Instructor and financial coach for women. Her mission is to give women the support and tools that they need to take control of their money, break the taboo of discussing debt and income, and achieve their goals and dreams. She does this through one-on-one financial coaching, monthly Money Circle gatherings, her weekly Money Monday newsletter, and speaking engagements. To learn more, or to schedule a free discovery call, visit MaggieGermano.com.
Brett Graff (@BrettGraffhas been seen writing and reporting on money and personal finance in The LA Times, Yahoo! Finance, Cosmopolitan, The New York Times and the Fiscal Policy Institute, to name a few. Brett also provides her insight in the column, The Home Economist, which is nationally syndicated and published in newspapers all over the country. Her book “NOT BUYING IT: Raising Happier, Healthier & More Successful Kids” is now available!
Justin Lavelle (@PeopleLooker) is the Chief Communications Officer and blog editor for PeopleLooker.com. PeopleLooker 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. PeopleLooker allows individuals to find more information about people, phone numbers, email addresses and property records.
Kristin McGrath (@CreditCardForum) is the editor of CreditCardForum.com, a one-stop resource for and by consumers seeking in-depth information, opinions and advice on credit cards. CCF features an active discussion forum as well as card ratings, expert interviews and credit-building guides.
Whitney Shayo (@WhitneyShayo) is a writer/editor for liveyourbestmarriage.com and provides encouragement for couples as they go through the ups and downs of life. You can find her podcast on: iTunes and SoundCloud
Bola Onada Sokunbi (@CleverGirlCGF) is a Certified Financial Education Instructor (CFEI), finance expert and founder of clevergirlfinance.com, a platform that empowers and educates women to make the best financial decisions for their current and future selves and to pursue their dreams of financial independence in order to live life on their own terms.
Susan Trombetti (@Exclusive_Match) is a leading celebrity matchmaker, relationship expert, and CEO of Exclusive Matchmaking. Susan has helped discerning singles across the country discover long-term relationships and partnerships that are both rewarding and fulfilling. Susan also specializes in assisting the rich, famous, and Hollywood’s A-Listers in their romantic life and has been seen on Fox, ABC, NBC, ABC, Cosmopolitan, Shape, and as a guest contributor of The Wall Street Radio, to name a few.

The Journey to Turn Your Credit Around


Improving your credit score is like building Rome. It isn’t going to happen overnight and you probably don’t want to do it alone. That’s why you have to see improving your credit as a journey, and why you should get help from friends, family, and your buddies over here at the OppLoans Financial Sense Blog.

In order to give you a sense of the steps you’ll take on your credit score voyage, we spoke to Courtney Sanders (@thinkngrowchick), an entrepreneur and speaker who overcame her own bad credit problems, and friend of the blog Jeanne Kelly (@creditscoop), one of our favorite nationally recognized credit experts.

Lace up your shoes, because your credit journey is about to begin.

Start paying off your bills on time.

This can be the simplest, and sometimes, the most difficult step. But according to Sanders, it’s an important first step: “Pay your bills on time every month, even if you have to call the credit card company and negotiate a lower minimum payment. The important thing is that you establish regular, on-time payment history.”

Your payment history is 35 percent of your credit report, making it the single largest factor in determining your credit score. That’s why it’s the first place to start fixing things up. It can take real sacrifice and dedication to get your bills in order, especially if you’re far behind. You shouldn’t hesitate to ask friends and family for help if you need it. Having a better credit score might mean you’ll be in a better position to help them out if they ever need it.

Look back at old loans.

Just because you’ve forgotten about old loans, that doesn’t mean those loans have forgotten about you. Those old loans can impact your credit score now. You should review your entire financial history early on your journey to fix your credit. According to Kelly, one of the big examples of past loans deserving of review are student loans:

“Review all your student loans after graduation. You might have old emails or old home address, as your parents possibly moved after you graduated high school. If you do not get notices once payments are due, that will drop your credit score if they are not paid on time. It’s very important to check on what loans you have outstanding and when payments are due. Often students do not realize that each semester the loan was taken out is another account on your credit report. So, if you happen to go to college for eight semesters and needed loans for each, that would show up as eight separate loans on your credit report. Miss one payment and that is eight loans in the negative section of your report showing that missed payment. You might want to look into consolidating the student loans into one loan after graduation.”

Start managing your credit card properly.

It isn’t enough to just pay your bills on time. The next step of your credit score journey is using your credit card in a smarter way. That’s why Sanders recommends you: “Manage your credit card utilization ratio. Don’t carry a balance higher than 30 percent of your available credit at any one time.”

Your credit mix might only be 10 percent of your credit score, but you want all the help you can get. Even if you’re paying all your bills, having too much racked up on your card doesn’t look good to the credit bureaus who calculate your credit score.

Don’t close other cards.

Although having too high a balance on your credit card is bad, that doesn’t mean that no balance is better. It might seem counterintuitive, but closing old credit cards can actually make your credit situation worse. Here’s how Sanders explained it:

“Keep credit lines open. I know when people are trying to get out of debt they think they should pay everything off, close all of those credit card accounts, and that will improve their credit score. While paying things down is definitely great for that credit card utilization ratio, if you close the account it could actually hurt your credit score because you want to establish credit history. So the longer that you have credit lines open and you can demonstrate that you have a good track record in paying your bills every month, the better it is for your credit score.”

The length of your credit history is 15 percent of your credit score, so again, not the biggest part, but not nothing either!

The promised land of better loan rates.

It won’t be an easy journey, but the destination makes it worth it. You can learn more in our recent blog post “How Fixing Your Credit Can Fix Your Future.” Whether it’s getting better rates on a loan, a car, or even a job you might get turned away from if your credit was worse, it’ll all pay off in the end.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

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!
Courtney Sanders (@thinkngrowchick) is an entrepreneur, speaker, and rising authority on women’s empowerment. Through her training and development company, Think & Grow Chick, LLC, Courtney provides online & in-person education, mentorship, and community for millennial women. After educating herself on the “ins and outs” of personal development, money management, and entrepreneurship, Courtney climbed her way out of debt in a few short years and went on to successfully launch Think & Grow Chick.

In 2015 she authored the book, Get What You Want: The Ultimate Guide to Figuring Out + Getting What You Want in Life which has since served as a catalyst for several related trainings and programs.

7 Things You Didn’t Know Could Impact Your Credit


Credit scores are sort of mysterious, aren’t they? It’s tough to be sure what gives you good credit, what gives you bad credit, and what exactly the difference is.

First of all, let’s establish what it means to have good credit: it’s any FICO credit score above 680. Bad credit is any credit score below 550. The worse your credit, the worse rates you’ll be looking at for any kind of loan, and the fewer lenders will be willing to offer you a loan at all.

You probably know that failing to pay your bill on time is a big no-no when it comes to keeping a good credit score, but there are multiple factors you might have not even considered. Here are some of those factors!

Cosigning on a loan.

You’re a responsible person and a good friend. Someone you know is having trouble qualifying for a loan and needs you to sign on with them. It’s just a signature, right?

Wrong! You’re leaving your credit future in their hands. As nationally recognized credit expert Jeanne Kelly (@creditscoop) told us:

“Many people do not understand that the loan they just cosigned is just as much their responsibility as the other person they signed for. The loan and payment history goes on both of their credit reports. If the other person pays late, it will get reported on both their reports. If the other person lets the loan go into default, the cosigner is responsible for the balance. I wish lenders stopped using the word ‘cosign,’ as for some reason people do not realize the full impact. I wish they would just call it a joint loan.”

Closing old credit cards.

You know acting irresponsibly with your credit cards will mess up your credit score. But some behavior that seems responsible may actually hurt your credit.

Per certified financial educator Maggie Germano (@MaggieGermano): “There are many things that can negatively impact your credit score, and some of them aren’t what you’d expect. For example, closing your old credit cards can hurt your credit score, because it shortens your credit history. So if you have old cards that you don’t really use anymore, keep them open. Another thing that can hurt your credit score is if something is sent to collections. Is there an old electric bill you never paid? Perhaps a medical bill that you couldn’t afford? Track those bills down! Pay them off before they go to collections and get reported on your credit report.”

A hard credit check.

Most legitimate lenders will want to perform a credit check before determining if they’ll lend to you. That’s because your credit score is seen as an indication of your likelihood to pay back the loan you take out. But not every credit check is equal! There are both soft and hard credit checks.

Trent Hamm of The Simple Dollar (@thesimpledollar) wrote an article explaining the difference. As Hamm says, hard credit checks are “ones where you’ve granted permission, they indicate that you’re actively seeking credit, they show up on your credit report for everyone to see, and they tend to have a slight negative impact on your credit score.”

“A soft credit check, on the other hand, doesn’t require your permission, doesn’t indicate anything about your interest in seeking credit, only shows up on the credit report you see, and has no impact on your credit score,” Hamm explains.

If you need a “bad credit loan” from a lender who will consider you even if you have less than ideal credit, it’s better to apply to lenders who perform a soft credit check, so that your credit score isn’t harmed further. And it’s much better to consider a lender who performs a soft credit check than no credit check at all, as that can be a red flag that they don’t expect you to be able to pay back the loan and might be trying to trap you into a cycle of debt.

Receiving a “charge-off.”

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

How does that work? According to LaToya Irby (@latoyairby) in an article she wrote for The Balance (@thebalance): “Once your account is charged-off, you will no longer be able to make purchases with the account. However, you still owe the charged-off balance.

“The creditor will report a charged-off account status to the credit bureaus. This status will remain on your credit report for seven years from the date you first went delinquent. In the future, when creditors and lenders pull your credit report, they’ll see you once were late enough to have a charge-off.”

Irby goes on to explain how this impacts your score: “Your credit score will drop after a charge-off. Payment history weighs heavily in the calculation of your credit score. An unpaid charge-off will affect your credit score more when it first happens. As time passes, your credit score can improve if no additional negative entries are placed in your credit report.”

Missing a payment is bad for your credit score, but missing multiple payments should be avoided at (nearly) all costs.

Having a high credit balance.

Last time we wrote about managing your credit score, we asked author and debt expert Gerri Detweiler (@gerridetweiler) for advice. She told us about the importance of having a good credit balance.

It’s not enough to just pay your credit card bill each month. According to Detweiler, you want to make sure you keep your balance at around 20-25% of your credit limit.

She also warned that most issuers report balances before your payment is received, so even if you’re paying your bill back in full, you’ll still want to keep that balance from getting too high or risk negatively impacting your credit score.

Not having a credit balance at all.

Alright, so if racking up too many charges on your credit card can hurt your score, wouldn’t it be better not to have a credit card at all?

Nope! That’s also bad for your credit. In a Forbes (@Forbes) article presented by Rent.com (@RentDotCom), the authors caution against having too few kinds of credit: “having just a single type of credit can decrease your score. That means even if you’re building credit by paying student loans or in some other way, a credit card can still help you make your credit history more diverse.”

If you don’t think you’ll be able to qualify for a credit card, you can consider a secured credit card. A secured credit card requires you to put down some money as collateral, but it will allow you to start building up your credit score so you can qualify for a regular credit card one day, should you choose to do so.

Paying for a rental car with a debit card.

That same Forbes article offers another quirky way you can hurt your credit score. Apparently “For some car rental companies, when customers use a debit card it causes them to order a hard inquiry on their credit.” That’s why they advise you “Pay with a credit card or check the rental application to keep this from happening.”

It’s hard enough just paying your bills on time without worrying about the sneaky ways you can hurt your credit score without even realizing it. You can learn more about credit in our eBook Credit Workbook: The OppLoans Guide to Understanding Your Credit, Credit Report and Credit Score. Hopefully, we’ve helped you to remain ever vigilant and get that score moving in the right direction. Up!

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

Maggie Germano (@MaggieGermano) is a Certified Financial Education Instructor and financial coach for women. Her mission is to give women the support and tools that they need to take control of their money, break the taboo of discussing debt and income, and achieve their goals and dreams. She does this through one-on-one financial coaching, monthly Money Circle gatherings, her weekly Money Monday newsletter, and speaking engagements. To learn more, or to schedule a free discovery call, visit maggiegermano.com.
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!

How Fixing Your Credit Can Fix Your Future


Bad credit. As the name suggests, it’s not a good thing. But you probably already know that. You might not realize; however, just how badly bad credit can impact your future. The flipside of that is, of course, that fixing your bad credit can be a big boost for your future!

While fixing bad credit isn’t always easy, it can be done. It’ll mean finding the money to pay your bills on time, diversifying your sources of credit, and possibly using a credit counselor. (For more on this, check out our previous credit counseling blog post.)

But instead of just focusing on the difficulties of fixing your bad credit, we spoke with The Experts to find out all the ways that a better credit score can lead to a better life. Just think of this as the vision board you can keep your eye on while you get that credit score to a better place.

Enable you to get a car or a house.

If you’re planning on getting a house or a car, you’re going to need a loan. Unless you’ve got tens of thousands of dollars of cash weighing down your pockets, in which case you should find a bank or a really large mattress to deposit those fat stacks.

“Think of a credit score as something that can make or break a chance to buy a house or car in the future,” leadership coach Elizabeth McCourt (@ecmccourt) told us. “A bad score can be prohibitive for financial independence.  I’ve seen people struggle from mistakes with money via their credit score for years. The simple lesson is to pay your bills.”

Help you get a job.

One of the hardest parts of improving your credit score is overcoming the chain reactions that make bad credit scores worse. If you’re behind on your bills, your credit score will drop, which means you’ll have worse rates if you need a loan to pay those bills and… you can see where this is going. It can even keep you from getting a better job. Here’s what Jeff Altman (@TheBigGameHuntr), life coach and “big game hunter” told us:

“One of the saddest things I have had to do is to tell someone who put in so much time and effort trying to get a job that they were rejected based upon their credit score. It happened frequently during ‘The Great Recession’ and has happened to people I coach even now.

“A person has to pay attention to their personal financials as well as their professional skills in order to avoid the horrors of finding out that the offer you were hoping for was rescinded because of a poor credit score or reference check.”

Of course, you can also flip this around and try to see it from the positive light. Fixing your credit can help you get a better job, and that job could get you more money to pay your bills on time, which will improve your credit further, and now you’re not stuck in a downward spiral anymore. You’re stuck in an upward spiral!

We believe in you.

We’re trying to give everything with a positive spin since we think it’s easier to accomplish something when you’ve got good things to look forward to, rather than just bad things you’re trying to avoid.

Before you go off and fix your credit, we’ll leave you with these words from financial literacy educator Doris Belland (@DBelland):

“In the past ten years, I have seen countless people pretty much give up after getting into financial trouble that affected their credit report. The general population knows very little about credit scores, including how to repair them. Perhaps they try to get on track for a bit, but when their efforts don’t yield quick results they give up and persist in behaviors that harm their credit.

“We’ve been able to turn people around by educating them about small actions that make a big difference, including paying all bills on time, all the time. We’ve also helped them to understand that credit repair doesn’t happen overnight. It takes time. The good news is that all credit issues can be repaired given the right, consistent actions and enough time.”

Belland recently published a book designed for women who want to get their financial life in order called Protect Your Purse, so give that a look.

As Belland said, it may take a while to get your credit in a good place, but just keep thinking about all the benefits, and we know you’ll be able to make it happen!

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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.
Doris Belland, (@DBelland) is a Financial Literacy Educator, a credit repair specialist, speaker, and author of the newly released book Protect Your Purse, Shared Lessons for Women: Avoid Financial Messes, Stop Emotional Bankruptcies and Take Charge of Your Money. She works in Ottawa, Canada.
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.

How Bankruptcy Leads to Bad Credit

How Bankruptcy Leads to Bad Credit

Filing for bankruptcy doesn’t always lead to bad credit, but only if your credit is very bad to begin with.

There are many, many different ways that you can lower your credit score. You can take out too much debt, especially high-interest credit card debt. You can also pay bills late or not pay them at all. And the more frequently that happens, the worse your score gets.

A lot of these behaviors can also lead you to file for bankruptcy. This is a legal process wherein a person (or business) admits that they can’t pay all of their debts. The process allows them to settle those debts with their creditors (aka, the parties to whom they owe money), oftentimes for less than what they actually owe.

However, filing for bankruptcy isn’t all sunshine and debt-free kitty cats. It can mean losing your house, car, or other valuable property. It can also mean having a portion of your income earmarked for debt repayment.

And then there’s what it does to your credit score…

In short, it’s not great.

The only way bankruptcy wouldn’t hurt your score is if high debt load and late payments have hurt it badly already.

Think about it like this: If the kinds of financial problems that cause bad credit are a train ride, then bankruptcy is the final stop on the line.

How bankruptcy affects your score

“Bankruptcy does negatively affect a credit score at first, but less so as time increases from the filing date, says Randall R. Saxton (@SaxtonLaw), founder of Saxton Law, PLLC. “However, for individuals who already have negative items on their credit report, the initial drop is not as much as it would be for someone with excellent credit that files a bankruptcy petition, which could range from 160–220 points.”

A drop of 160–220 points could be enough to take you from a great score to a downright bad one.

According to Tracy Becker (@tracybecker), President and CEO of North Shore Advisory, Inc, a leading credit restoration, education and monitoring company, the fact that bankruptcy could so drastically lower a high score, “is one reason it is so important for an individual to be aware of their credit scores, so they can make an educated decision before moving forward with a bankruptcy.”

On the other hand, someone whose score is already quite low would have little to lose, credit-wise from filing for bankruptcy.

“Many individuals do not realize that by having many late payments, collections, and defaults, their score may be almost as low as they would be if a bankruptcy occurred,” says Becker.

“Once they find out their credit is already poor they can move forward with the bankruptcy process with an understanding that their scores will not see a tremendous impact.”

When it comes to bankruptcy affecting a person’s score, one overlooked factor is the number of accounts that are included in the filing.

According to Saxo, “An individual who has fewer accounts with amounts owed will have less of a drop than someone with many accounts.”

The different kinds of bankruptcy

Before we moving on, we should talk about the different kinds of bankruptcy.

Chapter 7: This is the simplest and least expensive form of bankruptcy, but that simplicity comes with a price. Under Chapter 7, a person can quickly discharge their debts by surrendering their assets: aka, their car, their house, and other valuables. Those assets are then used to compensate creditors.

Chapter 13: Under this form of bankruptcy, a person repays all or part of their debts according to a repayment plan—a plan that cannot last longer than five years. The bankruptcy court must approve the repayment plan before it begins, and the debtor actually makes their payments directly to the court, who then pays the creditors in return. In order to qualify for Chapter 13, a debtor must meet certain income and debt-load requirements.

Chapter 11: This is a form of bankruptcy that’s most commonly used by corporations and businesses. However, it can be used by individuals as well. Chapter 11 involves a restructuring and reorganization of a person’s debt and assets. It is much more complicated—and thus much more expensive—than either Chapter 7 or Chapter 13. It can allow for a debtor to repay their creditors over time according to a court-approved repayment plan and can be a good option for someone who does not qualify for Chapter 13.

When it comes to your credit score, the main difference between these Chapters 11, 7 and 13 comes down to how long they will affect your score.

How long does a bankruptcy hurt your score?

“All personal bankruptcy types have a major impact on scores (unless they are already poor). Some bankruptcies remain on credit for seven years while others remain for ten,” says Becker.

All the accounts that are included in the bankruptcy are marked as such on a credit report. They do not disappear once the bankruptcy is finalized and they can remain for seven years. Every year from the date of the original delinquency (bankruptcy) scores will improve but not dramatically.

“Usually after the first 5–6 years from the bankruptcy, credit scores are impacted minimally,” she says.

But when it comes to just how long a bankruptcy can affect your credit, the type of bankruptcy filing does make a difference.

According to Becker, “Chapters 7 and 11 remain on a person’s credit report for ten years, regardless of whether it was discharged or dismissed.” She also says that Chapter 13 bankruptcies “can remain on file for ten years from the date filed but, if discharged, will remain on file for seven years from the date filed.”

“Debts remain active during a Chapter 13 bankruptcy plan, which lasts between three and five years,” says Saxton.

“Thus, the removal of discharged debts from the credit report which occurs after seven years can take three to five years longer for a Chapter 13 bankruptcy than a Chapter 7 bankruptcy.”

However, while the effect on your score might become minimal, the bankruptcy filing itself still remains on your credit report.

After seven years, items such as debts, judgments, and foreclosures that were discharged by the bankruptcy are removed. However, the record that a bankruptcy was filed remains on the credit report for ten years,” says Saxton.

This means that a lender who pulls your credit report during a loan application might still be wary of lending to you—or might insist on raising your interest rates—even if your credit score has recovered.

How can you improve your score post-bankruptcy?

“To improve your credit after a bankruptcy a person can apply for specific cards that gear towards those with poor or no credit,” says Becker. “These cards are “secured credit cards”.  It’s important to make sure the credit issuer reports the history to the credit bureaus.”

“Once they gain approval they need to use the card responsibly. After using the card for a year they can check their scores and see how they have increased. At that point, they may have access to approvals on better non-secured cards. They can build upon their responsible use of the new credit and time passing.  At the third year seeking out a highly qualified credit expert for advice on credit improvement can also help boost the scores prior to the five or six year wait,” she says.

“If consumers file for bankruptcy due to mismanagement of finances they should learn from the mistakes they made that led to the problems and set up a budget/financial plan that will help them to rebuild their financial standing.”

Do you have a story about how you recovered from bankruptcy? We’d love to hear about it! Let us know on Twitter at @OppLoans.

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Tracy Becker 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 of businesses and individuals to have the most opportunity and savings great credit can offer.
Randall R. Saxton (@SaxtonLaw) is the founder of Saxton Law, PLLC, and practices in the areas of bankruptcy, tax, business formation, and estate planning. Randall also serves as the JAG for the Mississippi State Guard, President of the State Guard Association, as a Director of the Madison Chamber of Commerce, and is the author of the fictional thriller, Red Sky Warning. He does volunteer work as a Mediator for the Jackson Municipal Court and as an Emergency Response Team member.

Bad Credit Helper: Do You Need Credit Counseling?


If you’re drowning in debt, then you probably need a life preserver. That’s where credit counseling might help save your life—or at least your pocketbook.

Use whatever metaphor you want for debt: maybe you’re drowning it, maybe it’s crushing, maybe it’s like an incredibly persistent ghost haunting you wherever you go.

However you describe it, the fact remains that massive debt is a huge problem. It drives down your credit score, drives up your interest rates, and generally makes it impossible to get ahead.

There are many solutions out there for dealing with debt and fixing your bad credit, and credit counseling is one of the big ones. That’s why we reached out to three top industry experts to explain the basics.

Who knows? This could be the thing that takes your debt from [Insert Metaphor Here] to nothing more than a distant memory.

What is credit counseling?

Credit counseling is a financial service designed to educate consumers to pay off their debts and how to avoid debt in the future,” Katie Ross, Education and Development Manager, American Consumer Credit Counseling, or ACCC (@TalkCentsBlog).

“Credit counseling may involve analysis of a consumer’s financial situation, evaluation of debt reduction strategies for paying off or managing debt, and education about money management.”

Gary Herman, President of Consolidated Credit Counseling Services (@ConsolidatedUS), says, “It’s an invaluable service for anyone who is struggling to pay off debt on their own. Even when someone faces challenges, such as a low credit score or a limited budget, credit counseling can often help them achieve freedom from debt.”

How does the process work?

According to Herman, “the counseling process typically starts with a free debt and budget evaluation. The credit counselor gathers information from the consumer about their current debt, income and expenses. They also check the person’s credit to see where they stand.”

“Based on those results, the counselor can evaluate which debt relief will work best in that consumer’s unique financial situation. If it turns out that a debt management program is the best option, the credit counselor can help the client enroll.”

Mike Sullivan, a personal finance consultant with national nonprofit credit counseling and debt management agency Take Charge America (@TCAsolutions), says that “Typically, a consumer contacts a credit counseling agency due to personal concern about debt, or due to a creditor referring that consumer because they fit the profile of being financially distressed.”

“Of course, there are occasional calls from consumers who just want help with budgeting or advice on a topic like identity theft or reverse mortgages, but most consumers do not ask for help until they are in trouble.”

What is a Debt Management Plan and how does it work?

Hopefully, your initial consulting session with a credit counselor will end with your being able to pay your debt on their own.

But if not, there’s still another solution possible:

A DMP, or Debt Management Plan, is a service offered by most credit counseling agencies, says Sullivan. “A consumer having difficulty managing debt may be offered the opportunity to have the credit counseling agency make payments on some or all of their accounts.

“The consumer would send money to the agency, and the agency would negotiate with creditors to lower interest rates and/or re-age accounts (have them brought out of late or default status to save on fees) and make payments from the consumer’s funds.”

“There is typically a charge for this service, although the concessions gained and regular payments should still lead to savings for the consumer,” he says.

Ross lays out the steps through which a DMP is established:

“In an initial free credit counseling session, you collect all of your outstanding credit card statements and monthly bills, and we work with you to create a manageable budget.”

“Next we assess your credit card debts, and other unsecured debts, and create a proposal to send to your creditors. Creditors have been known to lower your monthly interest rates, accept a lower monthly payment, or re-age your accounts so they are current, instead of in arrears. The goal of a debt management plan is to get you out of debt in the shortest period of time, without going through bankruptcy or debt settlement, both of which are detrimental to your credit score.”

“Once a proposal is accepted, we set up an account for you, where you transfer funds directly to us via EFT, electronic funds transfer from your checking account. Each month, we make sure your bills are paid on time and keep you apprised of your status with a monthly statement of your account.”

Herman states that the lower interest rates negotiated through a DMP mean “that a person can get out of debt faster, even though their total monthly payments are typically reduced by 30 to 50 percent.”

How much does credit counseling cost?

The answer to this question is going to vary depending on your situation and the credit counselor with whom you’re working.

But overall, especially if you’re working a not-for-profit company, the cost of credit counseling should always be low. Sometimes it’s even free.

“The cost of credit counseling varies by agency,” says Ross. Nonprofit credit counseling firms will tend to cost less than for-profit agencies, and some may even offer free credit counseling services.”

“ACCC charges a one-time enrollment fee of $39.00 and $5 per account with a maximum monthly fee of $35.”

“The initial credit counseling consultation is free,” says Herman. There are setup and monthly administration fees for enrolling in a debt management program. The cost of these fees varies by state and is regulated by state law, but it should never”

“There are exceptions that can be made to the fee structure for financial hardship, as well as special cases such as military deployment.”

When should I seek advice from a credit counselor?

If you’re thinking about contacting a credit counselor, then, to be honest, you probably should. If your debt burden is at the point where you’re considering outside help, then your situation is already not too great.

For Ross, the need for credit counseling includes such signs of financial trouble as:

    • Paying your bills late
    • Missing payments
    • Paying less than the minimum
    • If you have been turned down for credit or for a loan

Herman says that “Consumers should also contact a credit counselor if they’re struggling to find an alternative debt solution on their own. If interest rate negotiation with your creditors fail or if a debt consolidation loan is not working, it’s time to contact a credit counselor.”

On this question, Sullivan has a slightly different, and very wise, answer:

“It may be a good idea to contact a credit counseling agency upon receiving your first credit card. A counselor will assist you with creating a budget a determining exactly how much you can afford to charge based on your available income,” he says.

“For most consumers, however, the time to call is the first time you have difficulty making the minimum payment due on any account. Most consumers wait until collectors begin to call but that is often too late.”

Do you have an experience with credit counseling that you’d like to share? Well guess what?! We’d love to hear from you! You can find us on Twitter at @OppLoans.

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Gary Herman, Consolidated Credit Counseling Services Inc. (@ConsolidatedUS), is a consumer credit specialist and a AFCPE Certified Credit Counselor. He has been a part of Consolidated Credit for over 20 years and his expertise in establishing operations and marketing policies, hiring, and training financial counselors, has been a crucial advantage in Consolidated Credit’s success. As an expert who examines consumer credit trends, causes and effects of financial over-extension, Mr. Herman has been able to predict the needs of financially burdened consumers and provide Consolidated Credit’s certified counselors with the tools and educational materials required to keep ahead of the public’s needs.
Katie Ross, joined the American Consumer Credit Counseling, or ACCC (@TalkCentsBlog), management team in 2002 and is currently responsible for organizing and implementing high performance development initiatives designed to increase consumer financial awareness. Ms. Ross’s main focus is to conceptualize the creative strategic programming for ACCC’s client base and national base to ensure a maximum level of educational programs that support and cultivate ACCC’s organization.
Mike Sullivan is a personal finance consultant with Take Charge America (@TCAsolutions), a national nonprofit credit counseling and debt management agency. He has more than 25 years of experience educating consumers about a wide range of budgeting, credit, debt and saving issues, and was instrumental in building Take Charge America’s financial education department and community initiatives. More at www.takechargeamerica.org.

How to Keep Your Bad Credit From Getting Worse

Keep Your Bad Credit From Getting Worse

Does it feel like your credit score is riding a greased-up Slip ‘N Slide…down a hill…toward a cliff?

Don’t panic! You can hit the brakes by avoiding all the things that can make your bad credit even worse. And what exactly are those things? That’s what we’re here to tell you.

Start paying your bills on time.

This isn’t always easy. There’s a good chance that getting behind on your bills is what landed you with bad credit in the first place. It can be overwhelming just paying rent, utilities, and not starving. You might be tempted to just start ignoring your credit rating, but as nationally recognized credit expert Jeanne Kelly (@creditscoop) told us, that would be a mistake. Here’s what she said when we asked about how people with bad credit can run into trouble: “I think by ignoring their credit they can make it stay bad.”

To improve your credit, Kelly recommends that you “open new accounts to build up credit history and start paying bills on time.”

If you have friends or family who can help you catch up on your bills, you should really consider asking them. It might be a little embarrassing, but if they can help you get ahead on your bills and start improving your credit now, you might be able to pay back the favor one day.

On the other hand, if your bills keep getting past you, your credit will just get worse, and you’ll have a tough time dealing with your own emergencies, let alone anything that comes up with your friends or family.

Avoid scam lenders.

We’ve written about bad credit loan scams before, because they’re one of the most surefire way to make bad credit even worse. Having bad credit means your loan options are limited, which is a big problem when an emergency requiring money (a common sort of emergency) comes up. And scam lenders (like payday and title lenders) know this. They’ll attempt to take advantage of your desperation and lack of choices.

Financial writer Jen Smith (@savingwithspunk) offered this warning about predatory lenders:

“Anytime a lender makes you feel pressured or rushes through documents is a bad sign. Good lenders want to take the time to make sure the client they’re lending to is capable of paying them back. This means they’ll want to answer your questions and they encourage you to fully read documents before signing them. Scam lenders will ask people to sign unfinished documents or suggest that there’s no need to read them.”

As Smith suggests, be sure to ask as many questions as you need. One good question to ask is if the lender reports your payments to the credit bureaus. If they do, and you make your payments on time, your credit won’t only not get worse, it’ll start getting better!

(Sorry we didn’t stop ourselves from using a double negative in that last sentence.)

Avoid hard credit checks.

One sign that a lender isn’t on the up-and-up is that they don’t care about your ability to pay at all. Any legit lender should either be performing a credit check or looking into your income. That’s why it’s important to find out what kind of credit check a lender is going to perform before you apply. Here’s how John Ganotis, founder of Credit Card Insider (@Cardinsider) explained the difference between hard and soft credit checks: “A hard inquiry happens any time you’re seeking new credit. For example, when you apply for a credit card or an auto loan.

“A soft inquiry happens anytime your credit is checked, but not as part of a credit application that you initiate. For example, your credit card issuer may check your credit reports periodically to make sure you’re still financially healthy or you might request a copy of your credit report, neither of which would be a hard inquiry since they do not result in a new loan.

“All inquiries remain on your credit reports for two years. Soft inquiries do not affect credit scores. Hard inquiries affect FICO scores for one year.”

Since a hard credit check can negatively affect your credit score, you’re better off only dealing with lenders that perform soft credit checks if possible. Especially if your credit isn’t looking too hot already.

Don’t let your credit card balance get too high.

In addition to paying your bills on time, the balance on your credit cards is an important factor in your credit score. Even if you know you’ll be able to pay the bill each month, you should try to keep yourself at 30 percent or under of your total credit limit at any given time. This will help make sure your credit score is heading in the right direction.

Inertia is a powerful force, and if you’re already stuck with bad credit, you might feel the impulse to just give up and let it slide further. But with these tips, dedication, and whatever help you can get, you’ll be able go from bad credit, to rad credit.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN

John Ganotis is the founder of CreditCardInsider.com 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.
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. She’s also been kind enough to share her insights with us on many different occasions. Follow her on Twitter and check out her site to get the credit help you need!
Jen Smith is a personal finance and debt payoff expert. She has been featured on Student Loan Hero, The Penny Hoarder, and AOL Finance. Her website is SavingWithSpunk.com

Can Bad Credit Keep You From Getting That Apartment?

Can Bad Credit Keep You From Getting That Apartment

Depending on your credit history, that sweet new bachelor or bachelorette pad might be out of your reach.

Say you get a credit card offer in the mail and you apply for it—but you get denied. You try to refinance your car loan—and the application comes back with a red stamp on it. You even try to rent a new apartment and, hey—did your security deposit just go up because of your bad credit?!

Yeah, it did. Or rather, it can. Bad credit affects a person’s life in dozens of different ways. Some large, some small, some obvious, others a bit unexpected.

One of the ways it can affect you is when you’re applying for an apartment or home rental. Even if a landlord isn’t directly looking at your credit score, the information they find on your credit report could greatly sway their decision.

A landlord might not check your credit score but they’ll still check your credit.

According Real estate investor and founder of idealrei.com, Eric Bowlin (@EricJBowlin),“It is pretty rare that a manager or landlord is actually looking at someone’s credit score. Instead, they may be looking for overall debt to income or currently delinquent accounts.”

So how would they do that? By pulling a copy of your credit report from one of the three major credit bureaus: Experian, TransUnion, and Equifax. That’s the document that companies like FICO use when they create your credit score.

It will contain pretty much everything that your landlord would want to know about you financially. And everything that you would want to keep a secret.

“Your credit report tells a lot about you,” says Shane Lee of Renthop (@RentHop), “like whether you plan things ahead, pay your bills on time, and if you are likely to be a good tenant or not.”

“Just because you have a bad credit, doesn’t mean that you won’t be able to rent an apartment,” says Lee. And that’s true. But what it can affect is what kinds of apartments you can get and how much you’ll have to pay for them.”

“A landlord cares about two things,” says Nathan Miller, founder of Rentec Direct (@rentec), “that rent is paid in full and on time, and that the property remains in good condition.”

“When a landlord reviews your credit and finds problems, they are going to assume that your inability to pay your current and past debts will also affect your ability to pay rent.”

According to Miller, “Medical collections can often be an exception as many landlords will overlook or discount medical bills.” Still, he advises that “the tenant should let the landlord or property manager know about them in advance.”

With bad credit, your rental options will be more limited.

He says that “There are some landlords today which still do not check a tenant’s credit, but those are typically private landlords with one or two homes,” adding that “As more landlords learn that they are allowed to pull credit reports on tenants, this opportunity gets smaller every day.”

This is why Bowlin says, “If for some reason all the major complexes in the area are rejecting the application due to credit, it would be better to find a small mom-and-pops type operation or a single family rental.”

“The owners for these are far more flexible and rely on personal relationships more than a systemized approach to filling vacancy. So, the tenant may be able to offer a higher deposit or to pay a last month’s rent in order to provide security to the landlord to compensate for the poor credit,” he says.

Bowlin also advises that certain classes of apartments might be unavailable to people with bad credit, low income, or a criminal history.

“For example,” he says, “an A-class may require 3 or 3.5x the rent for income and no criminal record at all while a C-class property may only require 2.5x the rent as income and will accept most crimes as long as they are 5 years or older with some exceptions.”

“So, it’s good for the tenant to ask the requirements before applying so they know what their neighbors will be like and they can also avoid paying the application fee if they don’t qualify.”

You’re likely to feel the effects in your security deposit and your utilities. 

According to Lee, it’s important for renters with bad credit to “Have enough cash ready in case the landlord asks for security deposit,” as those security deposits will likely be larger than they would be otherwise.

“In New York City, for example, a lot of the landlords and property managers will ask for security deposits, and if you have a relatively low or even bad credit score, you might put in up to six months of rent for the security deposit,” she says.

“While it sounds like a lot, most people with bad credit do find it helpful. Remember to go through your lease and make sure that the lease specifies how and when the security deposit should be returned.”

Lee suggests that, in order to get back as much of your security deposit as possible, you do the following:

  1. “Throughout your lease, make sure to report damages or appliance malfunctions that aren’t your fault immediately. Be sure to keep records including, photos, emails, or letters.”
  2. “Inspect the unit carefully and take pictures of damages prior to moving into the apartment. The results of your inspection, if anything, should be reported immediately to your landlord and you should get a written agreement from the landlord ensuring that you won’t be held liable. This way, the landlords have no reasons to withhold your security deposit.”

Miller also has a suggestion for recouping your security deposit ahead of schedule:
“When you are negotiating your rent and if a deposit is required, ask the landlord if they will consider doing a refundable deposit after six or twelve months of on-time payments. “That way you get those funds back provided you pay your rent on time each month.”

When it comes to utilities, Miller says that “Most utility companies will require a deposit if you have poor credit.”

“A deposit can be as little as one month worth of service, or as much as one year of service in extreme cases.”

He also says that “in extreme climate areas this can be as much as $2,500, but that is pretty uncommon.”

“In terms of utilities,” says Lee, “a landlord should not refuse to provide all the basic utilities based on the tenant’s credit score. As long as you can prove that you can afford the rents, your credit shouldn’t have an impact on utilities included in the apartment.”

“Of course, it might be hard to have the landlord provide electricity, wifi, etc., as a bad credit does make a difference when it comes to a person’s reliability,” she says.

But even if you have bad credit, you still have rights.

Having a bad credit might mean that you have fewer options as a prospective tenant, but it doesn’t give landlords the right to treat you poorly.

According to Miller, “A landlord is required by law to have a uniform set of standards for accepting an applicant.”

“If their rules do not include reviewing credit, then they cannot review your credit either.”

“Additionally,” he says, “if you are denied acceptance based on your credit, you can request a copy of the report they used to deny you.”

“Once you sign the lease,” says Lee, “the landlord is responsible for everything that’s covered in the lease and certain rights as a tenant.” Those rights include:

  1. Right to livable premises
  2. Right to complain and organize
  3. Right to possession, privacy
  4. Right to receive services
  5. Right to fair, equal treatment
  6. Right to transfer rights, obligations

“Your credit should not have any impact on the rights you enjoy as a tenant!” says Lee, a sentiment with which we definitely agree.

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Eric Bowlin (@EricJBowlin) is a real estate investor and founder of idealrei.com, a website about achieving financial independence through real estate investing. He started investing in 2009 and was able to achieve his dream of financial independence in 2016 at the age of 30.
Shane Lee (@RentHop) is a communications strategist at Renthop, a national apartment rental site based in NYC, and regularly spends time speaking with renters, landlords, and real estate brokers to keep up with the ever-changing tide of the US rental markets. Her efforts have helped RentHop expand into new markets and better serve renters looking to find their new home.
Nathan Miller (@rentec) founded Rentec Direct in 2009 which is a cloud based software company that services the landlord and property management industry.  Today they work with over 13,000 landlords and property managers in the US by providing them automation software, tenant screening, online rent payments, and education to effectively and efficiently manage their rentals.

Are “Bad Credit” and “No Credit” the Same Thing?


Is this a “flammable” and “inflammable” situation, because we’ve been burned by that before. Literally.
Instead of doing that thing where a blog post asks a question and then makes you read like half the article before answering it, we’re just going to get to the point: No. “Bad credit” and “no credit” are not the same thing.

So what’s the difference?

“No credit history means you’ve never borrowed money from a financial institution. Bad credit means you have borrowed money from a credit provider but made some financial mistakes in the past. Either way, they are both not ideal,” says Natasha Rachel Smith, a personal finance expert at TopCashback.com. “No credit is typically seen amongst high school and college students, and also with people who have been misled to think all forms of credit are bad.”

Remember that FICO scores exist on a scale from 300 to 850. (The higher the number, the better the score.) Having bad credit means having a FICO score of 620 or below—all the way down to 300. Having no credit means you don’t even have a score at all.

According to Kerri Moriarty, Head of Company Development at Cinch Financial, “Having “bad” credit means you’ve demonstrated some kind of negative behavior in the context of your credit history—it could be anything from missing payments, to carrying a very high balance compared to your available credit, opening a lot of new lines of credit at once, or filing bankruptcy for example.”

Moriarty says that “Having ‘no’ credit means that there is no information available that a lender can use to evaluate your ability to borrow money and repay in a responsible fashion. Just because you have no credit, doesn’t mean you have bad credit – it just means that the bank doesn’t know anything about you in the context of credit and that’s a risk in itself, just like the risk of lending to someone with bad credit.”

Simon Zhen, a research analyst at MyBankTracker says that “All kinds of people can have bad credit but it doesn’t mean that they are bad people. You can be wealthy with high income and still have bad credit. Common reasons for bad credit include personal bankruptcy, identity theft, and missed payments. It’s very easy to forget a bill and that can lead to a significant drop in your credit score.”

Who has bad credit?

“Bad credit affects people that have had trouble meeting payment obligations in the past, whatever the cause,” says Liran Amrany, cofounder and CEO of Debitize. “There are typically people that have taken credit in the past, whether through a mortgage or credit card, and failed to pay their amounts due on time—though there are many other factors than can impact your credit as well.”

“In fact,” says Amrany, “some people struggle from bad credit simply because they use most of their credit line—and making more frequent payments or asking for a credit line increase can often help here.”

According to Moriarty, it’s an unfortunate reality that “those with lower incomes are most susceptible to bad credit because their financial situations often leave them with no other option to make ends meet than financing the purchase using credit if they can’t afford it today.”

She adds, “Those that need the financing options the most end up paying the most for them.”

Moriarty adds that “underbanked consumers also tend to fall in the lower income category which creates a terrible cycle of keeping them in the “no” credit category because they don’t have the assets today to establish credit that they can then prove they are responsible with.”

Who has no credit?

According to Ian Atkins, an analyst and staff writer at Fit Small Business, having no credit—also known as having “thin” credit—primarily affects three groups: young adults, those new to the US, and those who never utilized credit.

Here’s what he has to say:

“Young adults often have thin credit. Unless you have a parent who is especially clued in on how important good credit habits are, it’s likely that you graduate with no credit. After high school, though, you’ll typically have opportunities to start building credit. Credit card offers, cell phone plans, apartment leases, auto loans, student loans—they’ll all start building the foundation of your credit history.”

Studies have shown that Millennials who came of age during the housing crash and great recession have tended to be very wary of credit. While their reluctance to take on excessive debt should be applauded, their reluctance to utilize credit accounts could prevent them from establishing their credit—and those delays could cost them in the long run.”

“Those new to the US (immigrants, exchange students, etc.) will have no credit. Differences in national laws and reporting mean that credit scores essentially stop at the border. While that has little impact on tourists, it can be a real problem for those who will be staying in the U.S. for extended periods or for those who will be calling the U.S. home. Regardless of how creditworthy you are in your country of origin, the US credit bureaus will have you showing no credit. And that can mean big issues renting an apartment, getting approved for credit cards, and even getting cell phones.”

“Some folks just don’t ever really have a reason to utilize credit and therefore never really build up a credit profile. Sometimes this is a spouse who relies on their partner to handle all the finances and was never placed on joint accounts. Sometimes this is someone who has always preferred to deal in cash. You’d be surprised how many very successful, high net-worth individuals have thin credit simply because they’re “old school” and only deal in cash. This avoidance of credit isn’t really a problem, until it all of a sudden is.”

How can I build my credit?

According to Smith, “Thankfully, there is an easy solution to build a credit score. If you have no credit, you can apply for a secured credit card to start contributing data to your credit history. Secured credit cards require a security deposit that acts as all or part of your credit limit. They are the easiest form of lending to qualify for if you don’t have a credit history.”

Amrany says that “The steps to improving your credit if you have bad credit, or building credit if you have no credit, are actually not that different. The best way to do either is to get a credit card and use it responsibly.”

“Make sure you keep your utilization low and pay your bills on time,” he says. “If you can’t qualify for a credit card, you can always start with a secured credit card. Within six months, you should be able to qualify for a better, unsecured credit card. If you’re nervous about using a credit card, Debitize can help. Debitize covers your credit card purchases every day—just like a debit card—so you can build credit and earn rewards without worrying about debt, interest, or late fees.”

Zhen also recommends that folks with no credit can “be added as authorized users on the credit lines of other people. This links the strong account history to their credit reports until they can qualify for credit on their own.”

How can I improve my bad credit?

According to Zhen, the first step towards improving your credit “is to remove errors or dispute any inaccuracies that are leading to negative marks on your credit report. This could entail contacting banks, lenders, and credit bureaus to sort out the problem.”

Here’s some good news: You’re actually entitled to one free copy of your credit report per year from each of the three major credit bureaus. Just visit annualcreditreport.com to request a copy.

To remedy bad credit, Moriarty suggests that you take steps to establish a strong repayment history.

“With whatever you have available, like your current credit cards, you want to begin spending a little bit on them each month, so that you can pay off the balance in full, month after month, until you’ve demonstrated to the lender you are good at making payments on time,” she says. “35% of your credit score is determined by your payment history, and it’s the most important factor that the bureaus use to determine your credit score.”

Moriarty also recommends working on your outstanding credit card balances, as “30% of your score is based on your utilization–which means the amount you’re spending (and possible carrying as a balance) on the card compared to the total credit limit. “

“The rule of thumb is not to exceed 30% of your total credit limit, she says, adding, “This is tricky, because your total credit limit amount is more important than the actual amount of debt you owe. It’s not that the company cares how much you’ve spend, they just worry when it looks like you’re spending almost all of your available credit because it sends a signal that you are really strapped for cash.”

“Negative marks fall off your credit report after 7 years,” says Zhen. “So stay consistent with your good credit behavior and your credit will recover just fine.”

Are you having trouble with your credit score? Check out our other blog posts on this subject, and tell us if there’s a question or topic you’d like us to answer in a future piece! You can find us on Twitter at @OppLoans.

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Liran Amrany (@LiranAmrany) is the co-founder and CEO of Debitize, a personal finance app that gives users credit card perks without the risks of debt, interest, or late fees. Debitize (@Debitize) is compatible with any credit card and works by automatically paying off your purchases every day – just like a debit card. Liran has a Masters in Financial Engineering from UC Berkeley and, prior to founding Debitize, spent 9 years as a derivatives marketer at JPMorgan.
Ian Atkins (@FitSmallBiz) is an analyst and staff writer for Fit Small Business. He covers small business finance with a focus on traditional and alternative small business lending. Ian has over 9 years working in personal and small business finance.
Kerri Moriarty (@CinchFinancial) is part of the founding team at Cinch Financial, a Boston-based startup building autonomous fiduciary software. Prior to Cinch, she worked as a financial advisor helping individuals plan their financial lives in the long and short term. Being one of those mysterious millennials, she manages most of her life across 5-6 apps on her phone and recognizes no such technology exists for her everyday financial decisions. Big companies have CFO’s working for them – why shouldn’t you? That’s where Cinch comes in.
Natasha Rachel Smith (@TopCashBackUSA) a Personal Finance Expert at TopCashback.com, is based in Montclair, NJ. 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.
Simon Zhen (@SimonZhen) is a research analyst for MyBankTracker (@mybanktracker), a website that focuses on helping people find the best banks and financial accounts based on their unique relationship with money. He is knowledgeable in consumer banking, deposit accounts, credit cards, and general personal finance topics.

How Does Checking Your Credit Affect Your Score?

How Does Checking Your Credit Affect Your Score?

Uh-oh. Your car got rear-ended by some college kid who was driving and Snapgramming (or Tindrbooking or something). You’ve taken the car in for repairs but the kid didn’t have insurance and the bill is pretty steep. And it’s not like you can go without your car—how else are you going to get your kids to school and yourself to work?!

You’re thinking about taking out a loan to pay for the repairs, but you’re not sure about your credit score. In fact, you’re pretty sure you might have to take out a bad credit loan. It would make sense to check your credit score, but … that will hurt your credit, right?

What’s the deal with that anyway? What’s the point of having a credit score if every time you check it your score goes down?!

Whoa. That’s a lot of questions. Let’s get this all sorted out, shall we?

Hard Checks

To start off, there isn’t only one kind of credit check. There are two: “hard” credit checks and “soft” credit checks. (You’ll also hear them referred to as credit “pulls.”)

Hard credit checks return more information than soft checks. This is because a hard check (or a hard pull) actually involves pulling up a copy of your full credit report. Hard checks are the ones that will affect your credit score. Don’t worry though, the effect is usually minimal.

According to Nerdwallet (@NerdWallet) personal finance expert Liz Weston (@lizweston), “Most applications for credit trigger hard pulls, which means they ding your scores a bit—typically 5 points or less, and even that minimal damage starts to fade pretty quickly and is gone within a year.”

How long before the effect of that hard pull goes away? Weston says that “Inquiries can stay on your credit reports for two years but it’s a factor in the FICO formula, which is the leading one, for only one year.”

“Hard inquiries are defined as credit checks performed by a financial institution, such as a mortgage lender or credit card issuer, to review your report when making a lending decision,” says Natasha Rachel Smith, personal finance expert at TopCashback (@TopCashBackUSA).

So why is it that hard credit pulls negatively affect your credit?

“Hard inquiries are used for major financial decisions,” says Smith. “Points are taken off your score through hard inquiries since too many in a short space of time can be interpreted as an indicator that you need financial help.”

Soft Checks

Soft credit checks, on the other hand, don’t usually return as much information as a hard check. They provide a broad overview of your credit history. This category of credit check includes checks made by non-financial institutions as well as those instances where you decide to check your own credit score or credit report.

“It is a common misconception that checking your personal credit score will hurt it,” says Smith. “When a person or non-financial company, such as an employer or landlord, checks your credit score it is considered a ‘soft inquiry.’ Soft inquiries allow you to monitor your score as often as you’d like and it will not be negatively impacted.”

So if you’ve ever wondered why checking your credit score would make your score go down, there’s your answer: it doesn’t.

“A soft pull doesn’t affect your credit,” says Weston. (Seriously, we can’t emphasize this enough.)

Weston also cautions that “If you ask your friend at the car dealership to pull your reports or scores, it likely will be coded as a hard pull.” On the other hand, “If you order your reports or scores from the bureaus or a site like NerdWallet, it will be a soft pull.”

“Some online lenders also promise soft pulls,” she continues, “so that you can see if you’re approved without damaging your score.”

“That’s helpful, because it’s smart to shop around when it comes to loans. One inquiry might not be much to worry about, but a bunch of inquiries can take their toll.”

How does credit check “bundling” work?

You might have heard of this phase, “bundling”, in regard to credit checks. What does it mean?

Don’t worry. It’s pretty simple.

When you’re shopping around for a loan, each lender is doing a separate hard check on your credit. To make sure that all those different hard checks don’t add up—and discourage people from shopping around for the best loan—all these inquiries get bundled together into a single inquiry on your credit report.

“You can shop for auto loans and mortgages without fear, as long as you do it within a relatively short period of time such as two weeks, although some credit scoring formulas give you longer,” says Weston.

“With FICO scores, all auto-related inquiries made within that window are aggregated together and counted as one. The same goes for mortgage-related inquiries. VantageScore, a FICO rival, offers similar treatment for hard inquiries made by utilities as well as those made for mortgage and auto loans.”

Understand, though, that these different types of inquiries aren’t all added together,” she warns. “In other words, if you apply for one credit card, two auto loans and five mortgages within a two-week period, the scores will count three hard inquiries.”

Checking your credit is very important.

Now that you know you can check your credit score and credit report without hurting your credit, you should go ahead and do it!

“It’s smart to check your credit reports at least annually, which you can do for free at the federally-mandated site AnnualCreditReports.com,” says Weston. “Make sure to enter the URL, www.annualcreditreports.com, directly into your browser, since clicking on links in search engines can send you to look- or sound-alike sites that aren’t the real deal.”

But she makes clear that “Your reports from the site don’t come with a free credit score. To get free scores, you’ll need to look elsewhere.”

Luckily, there are many ways for you to do that.

“You can access your own credit score free of charge,” says Smith. “Certain credit cards companies, such as Capital One and American Express, will provide their customers with their credit score at no charge, or you can use CreditKarma to access it.”

“CreditKarma is a great site to use, as it offers a free, ongoing ability to see your credit score with credit reports from TransUnion and Equifax, two of the major credit-reporting agencies.”

Weston says that “Many sites, including NerdWallet, offer free VantageScores from one of the three bureaus. (Ours is from TransUnion.) You can get free FICO scores from Discover and from Experian’s FreeCreditScore.com. You may also get free scores from your bank or credit card issuers.”

“Here’s what you should keep in mind about free scores: they probably won’t be the exact ones lenders would use,” says Weston. “The FICO 8 is the most commonly used score and it’s the one offered by Discover and Experian. Some lenders may use older versions of the FICO, or versions modified specific industries. There are various generations of FICOs for credit cards, car loans and mortgages, for example. If you want to see a much wider range of your FICO scores, you would need to pay about $60 for FICOs from all three bureaus at MyFico.com.”

“If you just want to monitor your credit over time, though, free FICOs or VantageScores will help you do that,” she says.”

Do you have any other questions about credit scores, credit reports, or hard and soft checks? Let us know! We’d love to give you the answer. You can find us on Twitter at @OppLoans.

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Natasha Rachel Smith, Personal Finance Expert at TopCashback.com, is based in Montclair, NJ. 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.

Liz Weston, is a NerdWallet Columnist and Certified Financial Planner® whose goal is to help you get smarter about money so you can get on with your life. She’s the author of five books including the best-selling “Your Credit Score” and has appeared on a bunch of TV shows, including CNBC’s Power Lunch, Mornings with Maria on Fox Business, NBC Nightly News, the Today Show—and Dr. Phil, where she advised a would-be ghost hunter to get real about his finances. She lives with her husband, daughter and co-dependent golden retriever in Los Angeles.