Have No Credit Score? Here’s What You Should Do

Have No Credit Score? Here’s What You Should Do

Have you ever heard of the expression, “No credit is worse than bad credit?” Like most people, you’ve probably thought the complete opposite. After all, isn’t it better to have no credit at all than to walk around flaunting a lousy credit score? However, this rationale is just not true. Yes, it’s true that possessing poor credit can severely damage your financial standing, but if you are ever seeking a loan to purchase a car or new home, lenders will want you to demonstrate that you have a solid credit history.

If you’re wondering how you begin to build your credit and what measures you need to take to get there, you’ve come to the right place. Many people avoid building a credit history altogether, worried about falling into the pitfalls of being brandished with a bad credit score. The good news is, there’s plenty of positive actions you can take to move your credit standing in the right direction.

Examine How You Got Here

For starters, it’s best to gain a strong understanding of why you don’t possess a credit score to begin. For instance, maybe you just graduated high school or college and haven’t had the opportunity to engage in credit-related activities. This can be attributed to the fact that you have yet to accumulate any student loan debt. Or perhaps, you never needed to apply for your own credit card. Similarly, you may have just relocated to the States and therefore, have to build everything up from scratch. Whatever the case may be, not having any credit can work against you as you navigate through your life and career. It’s time to start working on eradicating this.

So, what should you do to build up your credit?

Get a Credit Card

The most comfortable place to start is to obtain a secured credit card. A credit card may seem like a frightening item to possess because of all the stories floating around about people submerged in credit card debt, which can quickly cause your credit score to plummet. However, owning a credit card means exercising financial responsibility. The critical thing to remember is if you’re going to make non-essential purchases, like grabbing yourself a shiny new flat-screen TV, and you don’t actually have the means to pay for it, then you are putting yourself at risk for falling into credit card debt. Instead, you want to leverage your credit card for things you usually budget for, like groceries or gas, to ensure you never miss a payment.

Unsure of what type of credit card to get? First, you’ll want to look for a credit card that doesn’t carry any annual fees, as this additional expense could be more than you can afford. Another thing to consider is applying for a credit card at a store you typically frequent, like TJ Maxx. A majority of major retailers offer credit cards, and it’s a great place to start if you know you purchase goods from one particular place consistently.

build your credit

Spend Wisely

Using credit cards for gas is also a smart investment. Say every time you go to the gas station, you usually hand the cashier a twenty-dollar bill. If you use a credit card instead and immediately pay off the money you used for fuel, it’ll help you begin building your credit and help boost your score in a positive direction. It’s imperative to keep in mind that if you’ve given yourself a $500 spending limit, that you adhere to that maximum. Otherwise, you will find yourself overspending and unable to pay owed funds, which will quickly get you into trouble.

If you are just now starting, it may be a good idea to enlist the help of your parents. If they possess good credit, they will be able to co-sign for you. Having this work alongside your own application will help as well.

Another highly recommend tip to boost your credit is to lease a car. Now, you may have heard that owning a car is the way to go. Alternatively, you may have certain preconceived notions about leasing, but if you lease a car, it opens up a line of credit and allows you to demonstrate your ability to make monthly payments on time. By doing so, it’ll have a direct impact on the strength of your credit score.

Make Payments on Time

If you are a student who had to take out a loan to get through college, you are not alone. Due to the cost of American education, many young adults are forced to apply for government assistance to afford to obtain their degree. Although loan services do not require any payment while you are still pursuing your education, you’ll typically begin receiving monthly bills between six months and a year of graduating. Making steady payments to your student loan is essential for not only building a credit score but improving a poor credit score. If feasible, try to pay more than the minimum balance on your bill each month. This will help you avoid racking up an astronomical amount of interest and paying back double what you originally borrowed from the loan institution.

Another tip for those looking to build their credit is to make utility bill payments on time. You probably see a trend here, but it’s important with all bills to ensure you pay them on time. Whether it’s your car, student loan, rent, or medical bills, anything that you neglect to pay or underpay will hurt your credit score. Also, considering you are trying to build up your credit from scratch, you want to condition yourself to form good habits.

Don’t Stress, Learn as You Go

If all of this makes you a tad nervous, don’t be. You may feel like you are setting yourself up for failure, but that’s not the case. You do not need to worry about getting credit cards and putting yourself in debt. By making a plan and budgeting accordingly, you’ll ensure that your financial picture remains in a healthy state. If you get a credit card, recognize that you are going to use it only with money that you already have to pay for things. What you don’t want to do is use your credit card responsibly on outrageously expensive items that you know you will not be able to pay off quickly. This will set you up on a bad path where you find yourself opening more credit cards just to be able to compensate for your everyday necessities. Then you will get to the point where your credit is so bad, that you won’t be able to apply for loans or mortgages. Be smart with your journey to good credit!

How Your Student Loan Can Affect Your Credit Score

How Your Student Loan Can Affect Your Credit Score

What kind of effect can a student loan have on your credit score? Does this question pique your curiosity? You’re not alone. Many people often wonder how taking out a student loan will influence their credit standing. Will it boost their score? Hurt it? As with any loan or credit card, the healthiness of your financial picture will be contingent upon whether or not you make payments on time. Also, student loans are subject to specific federal rules and regulations that can have an impact on your overall creditworthiness. Here’s a look at how student loans can affect your credit.

Loan Deferment and Forbearance

Contrary to popular belief, student loan deferment and forbearance will not hurt or negatively impact your credit. While it will be noted in your credit report, it will have no bearing on your score unless you miss or make late payments before receiving approval for your deferment request.

There are certain circumstances where deferment and forbearance can actually improve the likelihood of getting a loan, such as a mortgage, approved.  For instance, if you can adequately demonstrate to your bank that you are (or will be) in forbearance, they will likely factor that into their decision-making process when examining if your discretionary income is enough to pay back borrowed funds.

Installment Loans

When your student loan is reported to credit bureaus, they are treated as installment loans rather than revolving credit, which means you’re making a fixed number of payments. When it comes to your credit score, installment loans carry less weight than an item that’s classified as revolving credit, like a credit card. By properly managing your student loan payments and credit card balances, reporting agencies like Experian, TransUnion, and Equifax will use that as a strong indication that you are fiscally responsible. Debt management is an essential part of ensuring your credit score remains in good standing.

Building Credit History

The bulk of individuals who apply for a student loan are just entering college or grad school and have yet to build a strong credit history. Qualifying for a loan or new credit line can sometimes prove to be difficult when you are unable to demonstrate a strong credit history – especially if you’ve just graduated and have yet to gain employment. This is where a student loan can prove beneficial. Federal student loans do not require you to have a long-standing credit history to qualify, and they’re a high starting point to begin building your credit.

Adding Credit Diversity

One of the criteria used to calculate your credit score is the types of credit you have and how diverse those credit sources are. By adding an installment loan, such as a student loan, to your repertoire, it can help improve your credit standing. As long as your making payments on time, the more types of credit you possess, the more significant impact it’ll have on boosting your credit score.

A Good Investment

When you are borrowing funds for a student loan, it’s seen as a good education investment in your future. In other words, you aren’t applying for a loan for a luxury vehicle or something extravagant that isn’t an essential need and could likely be purchased using a credit card. Because student loans are considered smart investments, it could be used in your favor if a bank is determining whether or not to approve a loan you’re requesting.

Account Delinquency

Let’s say your credit score is negatively impacted because your account is considered delinquent. If this happens during a time when you are awaiting deferment approval, federal student loan lenders usually correct the delinquency reporting automatically by properly backdating your deferment once it’s approved. You can encounter this issue for several reasons.

For example, maybe you are back in school, pursuing your degree, but accidentally dropped the ball on mailing in your deferment form. Because of this, your account transitioned into “past due” territory. This can quickly be eradicated by sending in your deferment form and backdating the paperwork date to when you originally qualified for the deferment. Once this is processed, the lender should remove the negative report from your credit history and fix any similar issues that ensued as a result of the delinquency.

Past Due Reporting

It’s easy to start panicking when you realize you missed a student loan payment. There’s some good news. Most federal loan lenders have a 60-day policy in place where they will not report past due balances to credit bureaus before the 60-day mark. If it’s only been a few days or weeks, there’s no need to feel alarmed. There is a strong likelihood that it will not impact your credit score. While it’s never good to miss a payment, if you have a clean track record of making payments on time, one slip up won’t blemish your credit standing. Just make sure to remit payment to your lender as soon as you realize the payment was missed.

Resolving Delinquency

If your account has rightfully moved into delinquency, it will negatively affect your credit standing. However, if you focus your efforts on making your student loan account current, bringing it out of “past due” territory, it’ll help raise your credit score and help paint your credit history in a more positive light. There are options available for federal student loan borrowers with delinquent accounts, repayment assistance, to help bring your account current. And, once your account is current, you can see an increase in your credit score in as little as a few weeks.

Having a good understanding of your credit and how your student loan can impact your standing for the better or worse is extremely important. Maintaining a healthy credit score will play a critical role in things like your ability to procure loans and gain employment. Because of this, you need to take every step possible to take good care of your student loan.

Everything You Need to Know About National Credit Systems

Everything You Need to Know About National Credit Systems

Headquartered in Atlanta, Georgia, National Credit Systems is a third-party collection agency that operates independently. Initially founded in 1991, the agency specializes in recovering money for apartment owners and managers that is owed to them by consumers who have failed to fulfill their lease obligations.

If you happen to be someone who is on the receiving end of round-the-clock phone calls and aggressive letters urging you to pay owed funds to National Credit Systems, it’s essential first to educate yourself on your consumer rights. A common mistake that consumers make is to pay off their debt in collections, believing that this, in turn, will improve their credit standing.

According to FICO, the scoring system used to determine your credit score, having collections added to your credit report can negatively impact your credit score, docking the number by up to 100 points. It’s logical to think that by paying off collections, it’ll be removed from your credit report. However, the collection listing will remain on your credit report, changing from an owed item to a paid collection.

Showing something is paid is good, right? In this instance, it can work against you, acting as a negative listing and damaging your credit score. What’s worse, is the belief that ignoring debt collections altogether will make them magically disappear. More often than not, outstanding debt collections can wind up escalating to a lawsuit.

This means National Credit Systems has the authority to slap you with a lawsuit for owed money. Should this happen to you, it could lead to a judgment that causes asset seizure, wage garnishment, and liens placed against you. And make no mistake, the judgment will be filed on your credit report and basically annihilate your entire credit score. To avoid a lawsuit and ensure you are fully aware of your rights as a consumer, here are four things you need to know.

Make an Account Validation Request

When faced with National Credit Systems debt collections, the first thing you want to do is make an account validation request. Your request, which is asking for proof that this debt belongs to you, should be sent in writing using certified mail. Under the Fair Debt Collections Practices Act (FDCPA) you are entitled to making this request. Once received, National Credit Systems will need to furnish you with evidence that the account does, in fact, belong to you and therefore, they own the collection rights. Should the company fail to provide authentication of your debt, then the legal responsibility to pay owed funds no longer falls on your shoulders. Also, NCS will contact credit bureaus to have the collections listing removed from your credit report.

about National Credit Systems

Time Restrictions

What happens if NCS does adequately validate your debt? The next step requires you to carefully examine the documents they provide and locate the last activity date recorded with the lender. Per the statute of limitations, a majority of consumer debt must be collected within a seven-year time frame. Confirm the laws for your state to ensure you know the exact number. This way, if debt collection agencies are attempting to re-age your account in an attempt to collect payment, you can exercise your consumer rights and prove that funds are no longer legally owed.

Settlement Negotiation

You’ve validated your account and confirmed it’s within the legal time limit. Now, you’ll want to begin settlement negotiations with NCS for your collections account. As a best practice, your negotiation should always focus on paying less than the total balance listed. For example, if they claim you must pay $600, it’s likely you settle your debt for less. It’s typically recommended that you negotiate a settlement payment between 10% and 40% of the entire balance owed.

A crucial part of successfully negotiating with National Credit Systems is to establish an agreement that you’ll remit payment in exchange for NCS agreeing to cease all reporting to the credit bureaus. This is a critical part of your settlement negotiation because without doing so, the collection listing will remain on your credit report and continue to damage your score. The collection listing needs to be removed, rather than just updated to a paid collection on your credit report.

Disputing Errors on Your Credit Report

Due to the Fair Credit Reporting Act (FCRA), you’re entitled to exercise your rights as a consumer and dispute a questionable, inaccurate, or erroneous items listed on your credit report. By working with a credit restoration company, like The itPhenix Group, you can partner with a credit specialist to dispute and remove all reporting errors on your behalf.

For example, by filing a credit bureau dispute for the NCS collections listing, the reporting bureaus will conduct an investigation to validate your claim. During their investigation, they’ll connect with National Credit Systems for account verification. Since the terms of your settlement agreement require NCS to stop their reports, they will be unable to verify your account, and the item will be removed from your report. Taking these types of steps will help repair poor credit.

Final Thoughts

Many collection agencies take advantage of consumers, violating their rights because they assume consumers aren’t knowledge about these laws. Cleaning up your credit report is incredibly important for maintaining a healthy financial standing. Seeking assistance from a qualified and trustworthy credit repair agency is the most effective way to ensure negative items are removed from your credit reports.

How Divorce Impacts Your Credit Score And How You Can Fix It

How Divorce Impacts Your Credit Score And How You Can Fix It

Whether it’s on friendly terms or not, divorce is stressful, and it can even take a considerable toll on your finances. This means you’ll likely hear phrases such as “100% liable for bills” and “child support payments” as well. In this post, we’ll go over how divorce can impact credit scores and how you can repair your credit.

How Divorce Impacts My Credit Score

Your divorce doesn’t directly impact your credit score or credit results, but the financial issues that come afterward can certainly impact it.

Here are some factors that can cause your credit score to decline:

Your Debt Racked After The Split Up Because Your Ex Was An Authorized User On Your Credit Card

This is quite the common thing with non-friendly divorces. If for instance, your ex is being spiteful, they could try to punish you by using your credit card in order to make large purchases in your name or by accessing your bank accounts.

However, since your former spouse is an authorized user, they can do this legally. What’s more, is that they’re not liable for the payment. To be frank, they can spend as much money as they want to without bearing the consequences for it.

Your Joint Accounts Are Unpaid

Married couples usually have joint accounts. Both and your spouse may share a credit card, mortgage, car loan or other forms of debt. The debt doesn’t go away even after separation because you both are still responsible for paying it off.

Paying For Bills Will Be Tough

It’s no secret that life after divorce is a tough one. During that time, you may experience trouble trying to keep up with all the bills you have stocked up as well as paying for living expenses, especially if your ex was the main breadwinner.

As a result, this damages your credit score if there are any late or missed payments. Because your credit history is the most important factor of your credit score, it would be wise of you to make the payments on time, every time.

divorce credit score

Using Your Credit Card To Pay For Costs

If you’re using your credit cards to substitute as means of income – or lack thereof – you could likely end up with a lower credit score. You must ensure that your credit utilization ratio is less than 30%.

With that in mind, paying for legal expenses with your credit card could also affect your credit score. Although every divorce comes with fixed costs, like filing fees, other costs may wildly vary. The fees of the lawyer depend on the condition of your case and the degree to which the issues between you and ex can be contested. For example, if you’re dealing with property or custody disputes, the divorce might cost thousands of dollars and sadly, most people don’t have that kind of cash at hand.

Your Credit Limit Has Decreased

Most of the time, creditors can decide to lower your credit card limits. This may happen once the accounts of you and your former spouse have been separated, especially if the creditor discovers that you’re making much less money now.

Fortunately, there are a number of ways for you to protect your credit score after a divorce.

How to Fix Your Credit Upon Separation

You need to be proactive about your credit score, as it’s not necessarily going to be there during your divorce. This way you can protect your money and make it easier to start your new, independent life.

Here’s what you should do to fix your credit score:

  • Separate all joint accounts: As soon as you’ve confirmed that you’re getting a divorce, either close your joint accounts or switch them to individual accounts immediately.
  • Determine which accounts were shared, according to your credit report: Read each and every line of your credit report for any mishaps and find out which accounts you’re either partially or fully responsible for. It’s actually quite common for spouses to open accounts in their partner’s names.
  • If your spouse has access to your account, remove their authorization: If your spouse does indeed have access to a bank account or credit card that is solely in your name, then remove them immediately to protect your finances.
  • Change your security information: Improve the security of your credit and debit cards by changing their PIN code, as well as the password on sites and apps that link to your bank account. You can also change the security questions so that your spouse doesn’t easily guess them. And if you have moved, change the address so that your credit reports and bank statements are delivered straight to your new location.
  • Change your lifestyle to match your income: Most divorcees – especially those who relied on the income of their spouses – struggle financially to maintain their lifestyles. If this is so, then you may want to cut back on the spending. For instance, you should consider moving into an apartment, get rid of your cable, and also sell your car for a less expensive one. The best way to know what you can and can’t afford is to make a budget. Give greater priority to your most important expenses and try to stay ahead of payments that could directly affect your credit score, like credit cards and loans.
  • Work out an agreement about joint debt payments: Try to work out the specifics of joint debt payments, with or without the help of a divorce decree, and then get it in writing.
  • Keep a check on your ex’s payment due dates on joint accounts: If your former spouse doesn’t pay on time, you can make the minimum payment on your joint account and save your credit score. Later, you can report the non-payments to the courts and get your money back.
  • Boost your income: During your divorce, you should prioritize earning more and spending less. Besides lowering your expenses, you can earn more money by either working overtime or do some freelancing on the side.
How Long Does It Take To Repair My Credit Score?

How Long Does It Take To Repair My Credit Score?

Having good credit is essential if you want to obtain a loan for a house or a new vehicle, open a credit account at a retail store or even get a cell phone contract. Even some employers look at credit scores when determining whether or not to hire an applicant.

According to Experian, it’s estimated that 30% of Americans have poor credit, bad credit, or no credit at all. When speaking of credit scores, most reporting agencies use a model that scales credit from 300 to 850, and the cutoff for what’s considered to be bad credit is anything below 499.

Most people need credit at some point in their lives, so it’s essential that you keep your credit score above 661 if you want the benefits of being able to get a loan or open a credit account.

In this article, we’re going to look at what causes your credit score to go down and how to fix it.

What Determines A Credit Score

It’s easy to fall into bad habits and find yourself behind when trying to keep up with your credit score. So, how does one get bad credit? Well, let’s take a look at the factors that go into determine your score.

  • Late Payments — 35% of your credit score is determined by your payment history. In fact, it’s the most important factor in determining your credit score. If you’re consistently late with payments, your credit score will remain in the ‘bad’ range. Also, note that bankruptcies and charge-offs fall under this category too.
  • Amount Owed — This represents 30% of your credit score and it includes the amounts you owe on each individual account as well as the total amount you owe in relation to the amount of credit you have.
  • Credit History — 15% of your credit score is your credit history or how long your accounts have been open and active.
  • New Credit — 10% of your score is determined by any new accounts that have been opened and the number of inquiries that have been made to your credit history.
  • Types Of Credit — 10% of your score is made up of the varying types of credit you carry; it looks better on your report to have a few credit cards, an installment loan and a mortgage rather than having all of your credit tied up in credit cards.

Credit Score Repair

How To Fix A Poor Credit Score

Now that we know what goes into your credit score, we can look at how to set it right.

The first thing to do is to get hold of your credit report and monitor it. You can do this if you have a smartphone by downloading an app that lets you view and track your credit. Most of these apps will even alert you any time you have a change in your score so it’s a good idea to start there, because you can’t know where to go if you don’t know where you stand.

Once you’ve seen your credit score and determined it’s in need of fixing, you can set about doing that.

Now that you have your credit report, check it for inaccuracies and dispute anything you see that’s not right. You can dispute these errors you find online, and while there’s no guarantee you’ll be successful, there’s no reason you shouldn’t try.

The first step is to get payments up to date and make them on time; this is the most important step you can take and you must be vigilant. Set up autopay or reminders if you’re forgetful, make sure every payment is made on time.

The next thing you have to do is to work on getting your debts paid down quickly; that may mean paying more than your monthly payment, but whatever you have to do, pay off your balances as soon as you can, starting first with the accounts with the highest interest.

Another thing that can help is getting another credit account. We get it, you’re trying to get out of debt, not go deeper in! But here’s the trick. If you open a new account, but don’t carry a balance on it, that increases your credit to debt ratio, and will improve your score.

How Long Will It Take?

The good news is that bad credit isn’t forever. If you follow the steps outlined and use credit wisely, your credit score will improve. The short answer to how long it takes is: it depends. It depends on how low your score was to begin with and what kind of negatives you had. But you can expect the process to take anywhere from six months to a year. The key is to be patient and keep monitoring your score every month to see the progress.