Making Sense of Millennial Credit Card Delinquency

Making Sense of Millennial Credit Card Delinquency

The New York Federal Reserve report recently shared a chart that does not bode well for young millennials. It showed a trend of 18-29 year-olds who are more than 90 days delinquent on credit card payments.

This can be concerning for a few reasons; one, because the millennial generation has been traditionally known up to this point as being debt-averse and critical of banks and creditors. The millennial generation grew up watching their parents struggle during the Great Recession that ravaged the US economy during the late 2000s.

Economists believe that this was the genesis for the millennial generations’ distrust in banks and reluctance to take on credit card debt. In fact, between 2008 and 2012, only 41% of adults in their twenties even had a credit card.

The point is that up until very recently millennials have been cautious with their money and typically responsible with credit card debt if they even had any. But that is not the only concerning factor to this growing trend.

Millennial Unemployment

Having credit card debt is one thing but not having any means to pay it back is a much more alarming notion, but that is the reality that many millennials are facing. Just a few years ago, the millennial unemployment rate was at a staggering 12.8%. It is even grimmer when you compare that number to the 4.9% of other eligible age groups that were unemployed at the same time.

The US economy has put the Great Recession behind it and has been experiencing growth for the last decade, so the jobs are out there. The problem is that millennials tend to have higher expectations when it comes to getting a job.

Millennials often get looked at as a remarkably entitled generation of people, and this reflects in the way they select jobs. Many job offers are turned down by members of this generation because they were expecting a higher pay rate even in comparison to their lack of experience.

Education may have something to do with the millennial unemployment rate as well. Many companies are reporting that the upcoming workforce is lacking in real-world skills like critical thinking and basic communication. Millennials are also more likely to have gravitated towards theoretical studies in their college educations, which doesn’t help the situation much.

This lull in employment could not have come at a worse time for millennials either. It is generally agreed by people of the previous generation that it is much harder to get started in life financially these days than it was for their age. Part of this has to do with the increasing cost of higher education, so student loan debts are higher than ever.

This creates a vicious cycle for millennials in terms of job prospects. For example, a fresh-faced college graduate may open a line of credit to help furnish a new apartment with the hopes of landing a job soon. Maybe he also has a significant amount of student loan debt. Things are shaky as he or she are first entering the job market, and a combination of high expectations, mounting debt and lack of real-world skills are making it difficult to land a job.

So their credit scores are taking a nosedive and guess what: some companies will actually look at a candidate’s credit score and factor that into their decision to hire or not.

credit card delinquency

What is Contributing to Millennial Credit Delinquency?

Seeing a generation traditionally wary of credit card debt and realizing that it is harder for them to get a job are both bad omens but there what is causing the actual rise in delinquency among millennials?

One of the most immediate contributors to the increasing amount of millennial credit card debt is raising rates. In 2018 interest rates were at a staggeringly low level but they are beginning to rise again, meaning that even people with good credit are facing interest rates of 18-25%.

Student loans are another factor in this trend. The prior generation had the benefit of much more lenient crediting when it came to student loans with significant banks offering specialized student credit cards. These student credit cards were relatively easy to come by, but the Credit Card Accountability Responsibility and Disclosure Act (also known as the CARD Act) of 2009 changes all that.

Now students have to show proof that they will be able to pay back student loans or at least evidence that their parents would help them. This has resulted in millennial students taking high-interest loans for their education, which can be challenging to claw one’s way out of.

Keeping Perspective

This all sounds like a financial emergency, but it is crucial to keep things in perspective. Even with a rise in millennial credit card delinquency the debt-to-income ratio as reported by the Federal Reserve is the lowest it’s been since 1980. Delinquency rates have also been at a record low in the past year, so we are nowhere near a financial crisis even with this uptick in millennial payment delinquency.

Many millennials are just starting to build their credit and hit the job market, so this is not necessarily a trend that will continue. While all young adults should be careful and responsible with credit card debt, the recent Fed report should be more of a precautionary tale than the harbinger of an all-out crisis.

 

What is a Charge-Off?

What is a Charge-Off?

Learning the lingo of the credit world is an important part of keeping yours intact. One of the terms that you should be aware of is “charge-off.” This may seem like a complicated term at first glance, but the true definition of it is quite simple. If you don’t pay off your debt for several months in a row (usually, six), a creditor may label your debt as a loss in their records. This labels your debt with them as a charge-off on your credit report. Having a charge off on your credit report is one of the worst things that you can have and the most irritating when doing credit repair. It signals that you aren’t responsible as a borrower which can influence future creditors against trusting you with their money.

How a Charge-Off Affects Your Credit Report

A charge-off can stay on your credit report for up to seven years. This up to a variety of different factors including when you start paying it off and if it has been passed on to a collections agency. If you have a charge-off, then you’ve probably been dealing with multiple hits to your credit report for a long time. These hits would have come from the multiple missed payments. But finally getting a charge-off makes a huge dent in your credit report. Also, if your debt ends up getting passed off to a collections agency, then that’s could affect your credit score as well. If you neglect to pay the collections agency that has taken responsibility for your debt, then that could negatively affect your credit score. Dealing with a charge-off can set off a never-ending chain of events that could deal out a huge blow to your credit that could inevitably take years to recover from.

Even if you pay your charge-off debt in full, that doesn’t mean that your charge-off is going to be wiped off of your credit report. When you pay off the debt, it’ll change the status of the debt on your credit report to “charge-off paid” or “charge-off settled.” This is more favorable than having the charge-off on your credit report, but it’s still going to linger on your credit report for seven years.

Another option that you have is to negotiate with your creditor. They might take the charge-off off of your credit report if you pay the debt in full. If your inability to pay the debt dealt with a life event like jobless or a major medical issue you might be able to influence your creditor one way or another by displaying a pattern of positive payment history before that life event. It’s not a sure thing, but it’s definitely worth a try.

How to Pay Off Charge-off Debt

Contrary to popular belief, getting a charge-off doesn’t mean that you aren’t still responsible for the money that you owe.  It just means that the debt is deemed unlikely to collect. Your debt is still going to be owed until it’s paid, settled, or discharged in a company proceeding. Your debt might have been sold to a third-party debt collector after your debt was charged-off. That just means that you’re going to have to get in contact with someone new in order to deal with your debt.

rebuild credit

If they haven’t sold your debt to a collection agency yet, then try to get in contact with the original lender. Talk with them about your options which may include introducing a payment plan, paying off the debt in full, or settling it for a lower amount. If they have sold it to a collections agency, be sure to ask for proof beforehand that they have ownership of your debt. Once you have that proof, get in contact with them as soon as possible in order to figure out the best path towards paying off this debt. Sometimes, new creditors won’t lend you out any new credit until you take care of all of your debts that are past due. If you’re planning on acquiring any new debt (home, auto, etc.) then it’s very important that you take care of this debt as soon as possible. Don’t let a charge-off debt take control of your life any more than it already has.

If you have a charge-off on your credit report, it’s not the end of the world. You absolutely should work towards getting that debt paid off and possibly even getting the charge-off taken off of your credit report. But, if you’ve done all you can do, then practice positive credit management (paying your debts on time, monitoring new credit lines, etc.) in the meantime in order to build back your credit score and get your credit fix. The effect that the charge-off has on your credit report will wane in time. In turn, be sure to use your credit responsibly and your credit score will be stronger before you know it.

What You Need to Buy a House in 2019

What You Need to Buy a House in 2019

You are about to embark on one of the most amazing and rewarding experiences that can ever come from spending money: buying a home. If you are buying a home in 2019, you should know that the entire process is not quick, but when all is said and done, there are few things more exhilarating than buying a house. This guide will help equip you with what you need to buy a house this year.

1. Check Your Credit Score

Before applying for a loan and certainly before ever making an offer on a house, you should know your credit score. Why is your credit score important? Well, it’s not only the difference between getting a low-interest rate on a home loan versus a high one, but it will also directly impact how much a bank or lender will actually loan you. There are several websites you can use to check your credit score, here are a few to consider: TransUnion, Equifax, Experian.

You can check your own score as much as once a day without affecting your credit, also known as a soft inquiry. Hard inquiries are when financial institutions check your credit score, typically when you’re applying for a loan or credit card. Hard inquiries lower your credit score a few points, so try to keep hard inquiries to a minimum.

2. Improve Your Credit Score

Maybe you just checked your credit score and realized it’s not as high as you had expected. Don’t worry, there are a few things you can do now that will help raise your credit score so you can capitalize on a great interest rate.

Though you can easily implement steps to help your credit score, fixing or raising a credit score doesn’t happen overnight. It’s imperative to start now so when you go to apply for a home loan your credit score will (hopefully) be where you want it. Here are a few tips from The Phenix Group to help improve your credit score:

  • Get Your Free Credit Report: Knowing what’s on your credit report is the first step in moving your score upward. When you obtain your report, review each section of your credit history for accuracy. Any credit-related mistakes you find and resolve should help boost your score, at least to some degree. Even the smallest bump to your credit score is movement in the right direction.
  • Establish a Solid Payment History: If you want to improve your credit score, one of the easiest things you can do is start making all of your required payments on time. Even if you’ve had a history of making late payments, by making 100% of all your payments on time going forward, you’ll see your credit score rise.
  • Improve Your Debt to Credit Ratio: Whether it takes days or years, paying off debt will help you improve your ratio as well as your financial future. Which in turn means a big jump in your credit score. Try focusing on paying down high-interest debt first, like credit cards. If you have a credit card nearing its limit, then targeting that one would be a good strategy to start with.

3. Know What You Can Afford

The best way to determine how much house you can afford is to simply use an affordability calculator. Though calculators such as these do not necessarily account for all of your monthly expenditures, they certainly are a great tool for understanding your larger financial situation.

After you figure out what you can comfortably afford, you can then start online window shopping for houses and really begin to narrow down what you want in a house versus what you can afford. Are you looking at specific neighborhoods? How many bedrooms do you want? Do you need a large yard, big deck, swimming pool, man cave, she shed, etc?

Understanding what you can afford in the area you want to buy will help keep you grounded and focused on what you actually want in a house versus what might be nice to have.

4. Save Up For a Down Payment

Unless you want to pay Private Mortgage Insurance (PMI), you really want to save up for a sizable down payment. PMI is an added insurance charged by mortgage lenders in order to protect themselves in case you default on your loan payments. The biggest problem with PMIs for homeowners is that they usually cost you hundreds of dollars each month. Money that is not going against the principal of your mortgage.

How much should you save for a house? Twenty percent down is typical with most mortgage lenders in order to avoid paying for PMI. However, there are other types of home loans, such as a VA loan if you have served in the military and qualify, that may allow you to put down less than twenty percent while avoiding PMIs altogether.

As an added benefit to having a sizable down payment, you may also receive a lower interest rate that will save you tens of thousands of dollars in interest over time. So start saving now!

5. Build Up Your Savings

Lenders like to see a healthy savings account and other investments or assets (i.e. 401k, CDs, after-tax investments) that you can tap into during hard times. What they really want to see is that you are not living paycheck to paycheck. A healthy savings account and other investments are a good idea in general as it will help you establish your future financial independence, but it is also a necessary item on your checklist of what you need to buy a house in 2019.

6. Have a Healthy Debt-to-Income Ratio (DTI)

Another key component banks and other lenders consider when issuing loans, and at what interest rate, is your debt-to-income ratio. The debt-to-income ratio is a lender’s way of comparing your monthly housing expenses and other debts with how much you earn.

So what is a healthy debt-to-income ratio when applying for a home loan? The short answer is the lower the better, but definitely, no more than 43% or you may not even qualify for a loan at all. There are two DTIs to consider as well.

The Front-End DTI: This DTI typically includes housing-related expenses such as mortgage payments and insurance. You want to shoot for a front-end DTI of 28%.

The Back-End DTI: This DTI includes all other debts you may have, such as credit cards or car loans. You want a back-end DTI of 36% or less. A simple way to improve this DTI is to pay down your debts to creditors.

How do you calculate your DTI ratio? You can use this equation for both front-end and back-end DTIs:

DTI = total debt / gross income

7. Budget for Extra Costs

There are a lot of little costs that go into buying a house that are overlooked by new home buyers all the time. Though there are some things, such as sales tax and home insurance, that can be wrapped into a home loan and monthly mortgage, there are several little things that cannot be included into the home-buying package and need to be paid for out of pocket.

Though these items can range in price depending on the area, size and cost of the house your buying, here is a list of extra costs you should consider (not all inclusive):

  • Home Appraisal Fee
  • Home Inspection Fee
  • Geological study
  • Closing costs*
  • Property taxes**
  • Home insurance**
  • Utility hookup/start fees
  • HOA fees
  • Home remodeling/updating
  • Existing propane gas

*Closing costs can sometimes be wrapped into the home loan, depending on the agreement with your lender.

**Property taxes and home insurance can be paid separately or your lender could include it into your monthly mortgage payment.

saving money for a house

8. Don’t Close Old Credit Card Accounts Or Apply for New Ones

Closing a credit card account will not raise your credit score. In fact, in some cases, it may actually lower it. Instead, try to pay down the balance as much as you can, while continuing to make your monthly payments on time. If you have an old credit card you never use anymore, just ignore it, or at least don’t close it until after you have purchased your new home.

Opening new credit cards before buying a home is also not a good idea. You don’t want creditors checking your credit or opening new cards under your name, as you may lose some points on your credit score.

The absolute worst thing you can do is max out one of your credit cards, even if the limit on the card is low. If you do, your credit score may plummet. Try tackling your credit cards with the highest interest rate first, then as one gets paid off, focus on the next card until you’re free and clear.

9. A Solid Employment History

If you haven’t gotten the picture yet, lenders like consistency, including your employment history. Lenders like to see a borrower with the same employer for about two years.

What if you have a job with an irregular or inconsistent pay schedule? People with jobs such as contract positions, who are self-employed, or have irregular work schedules can still qualify for a home loan. A mortgage known as a ‘Bank Statement’ mortgage is becoming rapidly popular with lenders as more self-employed or what has been referred to as the ‘gig economy’ has taken off.

10. Know the Difference Between a Fixed Rate and an Adjustable Rate Mortgage

The difference between these two types of mortgage rates really lies within their names. A fixed rate loan is exactly that, an interest rate that will never change the moment it’s locked in. You will pay the same amount the very first month you pay your home loan and will continue to pay that same exact amount over the course of thirty years (or however long the loan term is).

An adjustable-rate mortgage (ARM) is typically a mortgage that starts out as a lower rate than fixed interest rates but then is adjusted each year typically resulting in a rate higher than a fixed rate. A 5-1 ARM is a popular mortgage offered by lenders, which is a hybrid between fixed and adjustable rate mortgages. Your mortgage would start out at a lower fixed rate for the first five years, then after that time period has elapsed, the rate would then be adjusted on an annual basis for the remainder of the loan term.

11. Follow Interest Rates

It is important to know what interests rates are doing. The big question is are they on the rise or are they falling?

When the economy is good the Federal Reserve typically raises the interest rate in an effort to slow down economic growth in order to control inflation and rising costs. When the economy is in the dumps the Fed does the exact opposite. They lower the interest rate in order to entice more people to make larger purchases that require loans (i.e. land, cars, and houses) to help stimulate the economy.

As new soon-to-be homeowners, it’s a good idea to know how the overall economy is doing, and more importantly, how it’s impacting the interest rates you’ll soon be applying for. In 2018, after years of bottom of the barrel interest rates, the Fed raised interest rates three times and is projecting to raise it three more times in 2019.

Why are small hikes in interest rates so important to you? To put it into perspective, even a one percent increase in your interest rate on a home loan is the difference of paying or saving tens of thousands of dollars in interest payments on your home loan over time.

12. Know How Much Time it Takes to Buy a House

The home buying process from start to finish is time-consuming and very relative to individual circumstances and the housing market in your area. However, there are some general universal constants that you can expect, such as a cash offer on a house is usually much quicker than a traditional loan, and if there is a perfect house in a good neighborhood and at a great price, you better expect competition and added time for a seller to review offers.

Depending on the housing market in your area and possibly which season you’re buying in, it can take you a couple of weeks to find a home or more than a year. But after you find your home you can typically expect the entire process from making an offer on a house to walking in its front door, to be as little as a few weeks to a couple of months on average.

13. Find a Knowledgeable Real Estate Agent

There are several ways to find a knowledgeable real estate agent. Many people rely on recommendations from friends and family, while others look to online reviews. While both of these scenarios work really well and can land you a great real estate agent, the reason these agents rise above the others as the best of the best or the crème de la crème is because of their intentions.

A good real estate agent isn’t trying to get you into a house as quickly as possible so they can earn a commission. Instead, you want an agent that will act as your guide through the home buying process, while having your best interests in mind. A good agent will be able to tell you straight if they think a house is a good fit for you, or if you should keep looking. They should also be expert negotiators so that you get the best deal possible.

14. Find a Mortgage Lender

There are a few things to keep in mind when researching a mortgage lender. The first thing that comes to most people’s’ minds is what mortgage rate can they get. You may have to shop around to find the best rate because lower the rate the more money you save.

Secondly, how does that mortgage lender rate compared to other lenders? By looking at positive and negative online reviews you can usually establish a theme pretty quickly of the strengths and weaknesses of the lender, and what you can possibly expect for a level of service down the road.

Ask the lender what their average length of time is to close on a house after the offer has been accepted?  A good lender versus a bad one can be the difference of moving into your new home two to four weeks earlier. You want to find out how streamlined their processes are.

15. Get Pre-approved

When being approved by a mortgage lender, you should be aware that there is a small but relevant difference between the typical fast preapproval for a home loan versus an underwritten pre-approval.

The fast pre-approval usually encompasses a credit report and a loan officer review and can be done in less than a couple of hours. This basic pre-approval allows you to quickly know how much you can afford and then make an offer on a house that may have just come on the market.

The underwritten pre-approval usually takes about twenty-four hours and includes a credit report, loan officer review, underwriter review, and a compliance/fraud review. Though this process takes longer, your offer on a house is actually stronger. Eventually, if you’re planning on buying a house, you will have to go through the underwritten pre-approval process anyway, so it’s better to jump on it from the start.

16. Research Neighborhoods or Areas You Want to Live

There are many variables to think about when researching your future residents. The key to beginning your research is to determine those variables most important to you. Are you looking for a good school district, a large house, convenience to commuter options, or a specific neighborhood that is extremely friendly and ranks high on Walk Score?

Your real estate agent will most likely tell you to figure out your list of the things you absolutely want in a house versus the extra features that you would like to have, but wouldn’t deter you from a house if it wasn’t there.

Your list will help your agent narrow down the number of houses they’ll show you, saving you time by only showing you houses you’d actually be interested in.

17. Shop For Your Home and Make an Offer

Now that you know where you want to live and you’re pre-approved, the fun begins. You get to look at houses! Once you find the house you know would be a great fit for you and your family, you’ll want to make an offer.

There are numerous variables to consider and hopefully, your knowledgeable real estate agent will help you through this process. Understanding the market conditions, how houses have been selling in the neighborhood and at what price (above or below asking), and knowing if there are other competing offers will help you assess and determine how you’d like to make an offer.

Negotiating an offer on a house can be emotionally taxing, so do your research and rely on your agent’s advice so you come to the table prepared.

what you need to buy a house

18. Get a Home Inspection

Congratulations are in order! The sellers have accepted your offer. Now you want to get the home inspected to make sure there are no underlying issues that could cost you money down the road, such as a bad roof or foundation. Usually, a home inspection is a contingency built into the initial offer, and your real estate agent can help you set this up. However, it is recommended to hire an inspector that is certified by a national organization (such as ASHI or Inter-NACHI). Though you can waive this contingency if you’re trying to make your offer more competitive in a hot market. Just be aware that if you do waive a home inspection contingency, you may be taking on considerable risk.

There are several types of home inspections, but in general, a typical home inspection involves a certified inspector that will go in, around, under, and top of your house looking for anything that could be of concern, such as structural or mechanical issues. The inspector would also look for safety issues related to the property. Though they will go into crawl spaces and attics as part of their inspection, they will not open walls. They will inspect the plumbing and electrical systems and should point out any defect in the property that could cost money down the road for the homeowner.

Then they will put their findings into a nice written report for you with pictures, which then basically becomes a miniature instruction manual for your house. No house is perfect, but the report will give you a great snapshot of the property at the time of the inspection. If there are fixes that need to be addressed, this report will certainly let you know.

You should also know that the sellers are not required to make any repairs to the property. However, you can request them through your real estate agent, which will let you know what repairs are reasonable or not.

19. Have the Home Appraised

Home appraisals are an important part of the process because oftentimes house prices can quickly skyrocket when the housing market is hot, and banks do not like to loan out more money than what a home is worth. A home appraiser will not only tell you what the home is actually worth for the area and for the current housing market, but this appraisal will also directly affect the size of loan the bank will give you.

If the home appraisal comes back and states that the house is worth $300,000, but you made an offer of $310,000, the bank will most likely only lend you $300k. You will then either be stuck with paying the additional $10k out of pocket, or you may try to renegotiate the price with the sellers to see if they would be willing to come down. Or you may lose the house altogether.

Also, the mortgage lender will usually set up the home appraisal so you can take this time to focus on other home-buying tasks that need to be finished up.

20. Close the Sale and Sign the Papers

Congratulations, you’re a homeowner! Your real estate agent should help you map out the last details, such as when and where you should sign all the papers to take ownership of the house and, of course, the handing over of the keys. Welcome to your new home.


This article was contributed by Redfin for The Phenix Group blog.

10 Life Hacks That Will Help You Save Money

10 Life Hacks That Will Help You Save Money

Saving money isn’t as hard as you might think. These ten life hacks will make saving money just as easy as tying your shoes. Just making small lifestyle changes can snowball into saving hundreds, or even thousands of dollars each year. Wouldn’t you want that extra money in your bank account? Or use that money to help get credit repair? Read on to learn about ten life hacks that’ll save some extra dough.

Brew Your Coffee at Home

Kicking your Starbucks habit can save you loads of money in the long run. Depending on where you get your daily caffeine fix, you’re probably spending anywhere between $1 to $5 dollars on your precious cup of coffee. If you brew it at home, you’d be spending somewhere between 16 and 18 cents. The next time that you’re in need of a boost, look no further than your home kitchen.

saving money hacks

Borrow from the Library

Libraries offer a ton of different services and currently, they’re most technologically efficient than ever. Instead of buying books from a bookstore or an online retailer, try borrowing the next bestseller from the library. You have thousands of books at your disposal and you don’t have to worry that you’re wasting money if you don’t finish them. You can also borrow movies and magazines from the library as well. If you’re looking for some in-home entertainment, make the library your first stop.

Buy from the Thrift Store

If you’re looking to buy clothing, small appliances, or even furniture, try looking at the thrift store first. Your first thought might be to run to a department store or the mall, but if you don’t check out the thrift store first, you could be missing out on the deal of your life at the thrift store. There’s a wide variety of pre-loved items that are available at thrift stores near you. You’ll surely be surprised at the excellent quality that you’re able to find at thrift stores. You can’t find a better deal! Also, since you’re getting a bargain on the item that you’re buying, you might be able to turn it into a DIY project in order to make it perfect for you. There are so many opportunities available when you’re buying from the thrift store.

Carpool with Friends or Coworkers

If you have a consistent commute to work or even an event, try to work out a carpooling schedule with your friends or coworkers. Even if you can only carpool one or two days out of the week it’ll help you both save gas and wear and tear on your car over the coming years. You both can get to know each other, and you may be able to make a new friend in the process. Also, you both are helping save the environment. It’s definitely a win-win situation.

Buy in Bulk

Items like toilet paper, deodorant, or toothbrushes are things that you’re going to need forever. So, why not buy these items in bulk and save about 20% in the process? Also, if you’re looking to buy food in bulk as well, be sure it’s non-perishable. Wasting food is terrible, and it throwing away money instead of saving it. Who wants that?

Buy Neutral Clothing

Buying clothing items in neutral colors (white, black, grey, brown, etc.) will allow you to better use your wardrobe. All of your clothing items will pair with each other well. If you’re looking to add a pop of color, try out lower-cost accessories like jewelry and scarves. This’ll give the appearance of having a larger wardrobe without having to dish out tons of money for endless pieces of clothing.

Buy Generic

Whether it’s groceries, prescriptions, or toiletries, using the generic brand will always be cheaper. Most of the time they’re using the same ingredients anyway, so it’s an easy decision to make. You might think that the brand name tastes or works better, but give the generic a week in your home before you swear it off. You might end up finding your next favorite ketchup or body wash.

Use Coupons

Using coupons can help you save a ton no matter where you go. For groceries, look through your Sunday paper and keep a sharp eye on the deals that are happening in your neck of the woods. You can also look at sites such as Groupon and RetailMeNot to look for coupon codes and offers that are happening with the stores that you’re using every day. There are usually coupons available for most shops that you frequently go to, you just have to take time to research them.

Start a Piggy Bank

Take a note from your younger self and store away your change in a piggy bank or change jar. Every day, when you come back home, take the time to store away your loose change. The money definitely adds up and it sure to come in handy. At the end of the year, you might even have enough to pay an extra bill or help pay off some debt and help with rebuilding your credit.

Drink Water

This is a simple change to incorporate your lifestyle, but it’s saving you money every time you take a gulp. Whenever you get thirsty, take a drink of water instead of grabbing some soda or juice. It’s also better for your health as well, which is saving you money in the long run. If your tap water is less than savory, try to invest in a water filter. They’re easy to install and can be equipped straight to your faucet so you can have beautifully filtered water no matter what. Be sure to keep an ice cold bottle of water with you wherever you go so you can always have a refreshing drink to enjoy.

Each of these life hacks can help you add a couple of extra bucks to your monthly budget. You’ll be able to save more money and use that money in a variety of different ways. Whether you’re trying to plan a much-needed vacation or just looking to pay your bills, utilizing these life hacks will help you save money for whatever adventures life will take you on. Be sure to incorporate one (or all!) of these life hacks into your daily lifestyle and your bank account will be better because of it.

5 Ways Credit Impacts Your Wallet

5 Ways Credit Impacts Your Wallet

Whether you like it or not, your credit is a reflection of you. It’s basically a snapshot of how trustworthy you’ve been with money in the past. Throughout your life, credit can affect many different milestones such as getting a job or an apartment. Also, when you choose to make bigger purchases such as a car or a home, credit can make or break whether you’re going to be willing to afford it. It’s important to realize how important credit before you can work on increasing your score as much as possible or look into credit repair. To learn more about how credit impacts your wallet, read on.

1. Your Rent

More and more apartment managers, landlords, and rental agencies review their tenants’ credit scores. When they look at your credit report, they are trying to find a record of fiscal responsibility (or lack thereof.) Negative information like missed payments can influence them to believe that you may not pay your rent on time. They might be looking to see if you have any large debts as well, which may prevent you from paying your rent. Having a low credit score means that you might have to find a co-signer, put down a larger deposit, or that your housing application might just get passed on altogether. Causing you to settle for an area that you’d rather not live in or pay more than you were planning to for rent.

2. Your Utilities & Cell Phone Service

As with your rent, having a low score may force you to have to get a cosigner or pay a large deposit on your utilities. Cell phone providers might ask to take a look at your credit history before giving you service. Also, if you have a lower credit score, you might miss out on deals that individuals with better credit scores are being offered.

3. Your Career

Even though you may not think it’s fair, the truth is that many employers check the credit reports of prospective employees as a part of the screening process. Some of the reasons why include assessing trustworthiness, discipline, and figuring out the potential for theft or embezzlement. It’ll often happen if a person is going for a high-stakes position, or if someone yearns to be in an industry that deals with money quite a bit (i.e. banking.) But, in the end, it’s a possibility that many people will face when they’re trying to get a new job.

By law, employers are required to have your written consent before they look at your credit history. And also, they might not see your actual credit score. In turn, they’ll see a modified credit report that could omit some details. Still, if your credit report involves a number of negative factors, it may be the thing that stands between you and getting the job that you have always wanted.

4. Student Loans

If you’re looking to continue your education, then finding a student loan might be a frustration instead of an ease. But, this depends on a couple of different factors. When you’re dealing with Stafford, Perkins, or PLUS loans they don’t rely on your credit score. But, if you’re planning on getting a PLUS loan, it requires that you don’t have an “adverse credit history.”

Private student loans are a completely different story. They, in turn, do look at your credit score when deciding whether to give you a loan or not. When it all comes down to it, the borrowers with the worst credit are going be offered loans with 5-6% more of interest than those with an excellent credit score. Sometimes, the rates are even higher depending on the lender. This means more money is going to come out of your pocket in the long run than someone who has already established an excellent credit history.

5. Your Mortgage or Car Loan

If you’re currently in the market for buying a house, one of the first things that you’re going to do is apply for a mortgage loan. If you are dealing with a terrible credit score, then you might not even qualify for getting any type of mortgage loan at all. Many lenders use your credit score as proof of your reliability as a borrower. If you’re dealing with bad credit, that’s definitely going to be a red flag for a lender that they might not get their money back if they lend to you. Even if you don’t have an established credit, you might not get a good deal for a loan as well because lenders are basically taking a bet on you.

Even if you do get approved, the loans that are available to you will probably have high-interest rates. In the long run, you’ll probably end up spending tens of thousands of dollars more than someone who has a much better credit score than you.

Car loans work the same way. If you don’t have a decent credit score, then you might not even have car loans available to you. If you do, you’ll probably end up drowning in interest for years to come. Having bad credit can not only stand in the way of your goals, but they can also cost you thousands of dollars in the long run due to interest.

The status of your credit can affect your wallet in many different ways. It can come between you and many of your life’s goals including getting a job, getting an apartment, and qualifying for an auto loan. Also, your credit can cause utility and credit card companies to see you as “untrustworthy” and keep the best deals from you as a result. Choosing to start building your credit means, inevitably, choosing a better life for yourself. Having good credit gives you the ability to choose the things that you want whether it is your job, your place to live, or your car. Choose today to work on bettering your credit, and give yourself the gift of choice.

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