Tag: credit score

What does opening or cancelling a credit card do to my credit score? – MoneySense

To close a credit card, the balance is $0. If there’s a substantial balance on the remaining cards, it’s going to increase the credit utilization ratio. And, if the increase is high enough, it will hurt your credit score. This is because the closed card’s unused credit limit no longer provides balance in the relationship between your other credit balances and credit limits. What you owe elsewhere can have a bigger impact than if you had a zero-balance credit card.

Another thing: Closing an account means the creditor will stop reporting on your behalf your credit history on that card. If the card showed positive credit history, such as responsible usage and making payments on time, that history will gradually fade away and no longer bolster your credit score.

The reverse can’t be said. If the card showed negative credit history, closing the account will not erase the negative impact on your score.

Generally speaking, cancelling a credit card won’t improve your credit score, and you shouldn’t close a credit card unless you have a good reason, such as not trusting yourself to use the credit responsibly.

Buyer beware: Welcome offers

Many credit cards come with a generous sign-up bonus that helps you earn cash back, points, miles or a reduced interest rate. Welcome offers can be a great way to save money, especially if you already had planned on spending the minimum threshold to earn them. However, proceed with caution.

Read the fine print. Despite the enticing welcome offer of a credit card, your credit score may drop when you apply for a new card as a hard inquiry will be performed during the application process. Although your credit score will only drop a couple of points and will likely recover after a few months if you make your payments on time, it’s still a hit to your credit.

Remember that welcome offers are one-time deals. While some credit card sign-up bonuses may save you money up front, the reality is that any rewards you earn aren’t worth incurring additional bills if you’re already struggling with debt. You should only consider a new welcome offer if you have paid off your credit card debt in full. If you have any debt, focus on paying that down—not short-term wins like getting a lower and very temporary interest rate.

Opening and closing credit cards can impact how you use credit, too. Open multiple new cards, and you may end up with more credit than you can feasibly handle or keep track of. In addition, the allure of welcome offers may distract you from your financial goals. There’s impact on your credit score, and it’s critical to think about how having more or less credit affects your ability to live within your means and pay off your debt in full each month.

Doris Asiedu

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January 22, 2024
Paying rent usually won't boost your credit score. Here's what renters need to know to make it count

Luis Alvarez | Digitalvision | Getty Images

While rent payments do not traditionally affect your credit, a growing number of so-called rent-reporting services are trying to change that.

These services track users’ rent-paying habits and report them to one or more of the big credit bureaus — Equifax, Experian and TransUnion — with the aim of helping renters build credit and potentially boost their credit score.

But these services don’t all operate the same way, and some may have less value for renters. There’s one major detail you should consider before signing up, said Matt Schulz, chief credit analyst at LendingTree: Is your payment record going to all three bureaus?

“It’s important for people to understand that you don’t just have one credit score,” he said. “You just don’t know which bureau your lender is going to use to get your information.”

More from Personal Finance:
Many young unmarried couples don’t split costs equally
Here’s how Gen Zers can build credit before renting their own place
Gen Z, millennials are ‘house hacking’ to become homeowners

How rent-reporting programs work

This week, real estate site Zillow Group launched a new rent payment reporting feature. Renters who pay through the site can now opt in to have their on-time rent payments reported to Experian, one of the three major credit bureaus, at no charge to the renter or landlord.

In order for a renter to use the Zillow feature, their landlord must be a user of Zillow Rental Manager and have agreed to receive payments through the firm.

“It aligns with our goal of providing accessibility to building credit in the rental space. It’s a really positive step in that direction,” said Michael Sherman, the vice president of rentals at Zillow Group.

While Zillow is the first real estate marketplace to report rental payment data to a credit bureau, it joins a host of different rent-reporting services already available for consumers.

There are many services renters can look into, including some that are free, such as Piñata, and others that come with service or processing transaction fees, such as Rental Kharma, which charges $8.95 a month after an initial set-up fee of $75.

There are also services geared to landlords that offer rent reporting for tenants, including ClearNow, Esusu and PayYourRent. Landlords usually shoulder the cost of these programs, but there may be processing fees depending on how you make your rent payments.

Rent reporting can help the ‘credit invisibles’

Nearly 50 million Americans have no usable credit scores, according to a 2022 fact sheet from the Office of the Comptroller of the Currency’s Project REACh, or Roundtable for Economic Access and Change.

Being “credit invisible” can affect your ability to qualify for loans and affect the interest rates and terms you are given when you apply for credit.

When rent payments are included in credit reports, consumers see an average increase of nearly 60 points to their credit score, according to a 2021 TransUnion report.

Other payment reporting programs such as Experian Boost, StellarFi and UltraFICO have aims similar to those of rent-reporting services, but with different kinds of payments. They allow users to build credit based on alternative metrics such as banking activity and payments for streaming services, electric bills and mobile phone plans.

Talk to your landlord before you sign up for a rent-reporting service on your own. They may be open to signing up as a benefit to their tenants.

While “people are creatures of habit and don’t always embrace change,” a credit building feature can help a landlord stand out in a competitive rental market, said Schulz.

“It would be significant added value; building credit is a big deal and if you are somebody who can help people build credit, you may be a little more interesting to them,” he added.

‘Three credit reports are different reports’

Before you sign up to a rent-reporting service, it’s important to understand which bureau or bureaus the company sends reports to. It may not be worth using a service that sends rent payment reports only to a single bureau.

“If a rent-reporting service only gives your information to one of [the three big bureaus], and the lender that you are getting your auto loan from uses a different credit bureau, the benefits that could and should come with that tool may not end up panning out,” said Schulz.

The ideal is that the rent-reporting company gives the data to Equifax, Experian and TransUnion.

“People hear about three credit bureaus, but they don’t understand that your three credit reports are different reports, and different companies report to different bureaus,” said Schulz.

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January 20, 2024
The risks of credit repair companies in Canada – MoneySense
Some companies claim they can repair your credit and solve your debt problems quickly. However, you can only rebuild credit and there’s no quick fix to do so. We’ll walk you through why you should be skeptical of companies offering credit repair services and explore other ways to rebuild and maintain strong credit.

The importance of strong credit in Canada

It’s important to have a good credit score so you can get a loan, be approved for a credit card, buy a home and a car. And you want to get the best interest rates when doing so. A credit score may also determine whether a landlord approves your rental application, and employers might even consider credit histories in their hiring process. Having a strong credit score shows you are good at managing debt and credit. In contrast, bad credit suggests you are a risky bet to lenders because you may be having problems with money.

Why someone might reach out to a credit repair service

The average Canadian owes more than $21,000 in consumer debt. When you have a lot of debt and other monthly bills to take care of, it can become difficult to manage and make all of your payments on time, especially amid high inflation and rising costs of living. However, if you don’t manage your payments on time, your credit score will take a hit. Feeling desperate in a financial situation can cause anyone to make a bad decision. But many people run into further financial problems by trying to repair their credit with a quick fix.

How credit repair companies work

Credit repair companies say they will repair your credit by removing negative information from your credit report, thus boosting your credit score—for a costly, upfront fee. They may also offer to negotiate with credit reporting agencies to improve your credit score or encourage you to take out a high-interest loan to pay off your debts. Be aware that these credit repair companies make money from fees, set-up costs and interest, so you may be left with even more debt without any changes to your credit score.

These companies often take advantage of the fact that many Canadians don’t know you can’t remove accurate information from your credit report—even if it’s bad. You should be skeptical if a company says they can remove accurate, negative information from your history.

Pay attention to the warning signs

Many Canadians run into further financial problems as they attempt to “repair” their credit because they fall victim to credit repair scams. Credit repair services are different from not-for-profit credit counselling agencies. The latter are typically a free service offering non-profit financial education and advice. But back to the scams, here are the warning signs that a company offering credit repair services is likely a scam:
- They request an “upfront” payment (this is illegal under Canadian consumer protection laws)
- They offer instant approval for loans or other credit products without fully understanding your financial situation
- They call themselves a “credit repair company”
- They request payment by gift cards
- They use high-pressure sales tactics
- They say they “erase” your negative credit information
- They don’t provide a transparent contract (or any contract at all)
- They warn you against contacting a credit bureau
How to rebuild your credit in Canada

Accurate negative information on your credit report cannot magically go away; it’s there until it falls off your credit report, which takes about six years. If your credit report isn’t great, the only way you can go about “fixing” it is by rebuilding it with a positive credit history. You have to show your creditors that your financial habits have improved, which takes time. Here’s what you can do to get the ball rolling:

1. Review your credit

It is important to review your credit report regularly by getting a free copy of your credit history from both Equifax Canada and TransUnion. Look over the report to see what’s documented and if the information is correct. For no charge, you can remove incorrect information by filing a dispute with the credit reporting company.
Special to MoneySense

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November 30, 2023
Here’s the credit score you need to buy a home—it’s not a perfect 850
If a low credit score is keeping you from buying a home, you’re not alone. Nearly a quarter of Americans under 35 say that bad credit is preventing them from owning a home, according to CNBC’s Your Money survey conducted by Survey Monkey.

What does it take to buy a home? The minimum score needed can be as low as 500, but will ultimately depend on your lender and what type of mortgage you’re applying for.

“The higher your score the better, of course,” Melinda Opperman, Credit.org‘s chief external affairs officer, tells CNBC Make It.

To qualify for a conventional loan, the most commonly used mortgage loan, you’ll typically need at least a credit score of 620, Experian says. Some lenders may require you to have a score above 660.

Credit scores range from 300 to 850 and measure how well you’re managing your debt. Here are the credit score ranges that qualify as poor, fair, good, very good and exceptional, according to Experian.

Poor: 300 to 579

Fair: 580 to 699

Good: 670 to 739

Very good: 740 to 799

Exceptional: 800 to 850

Lenders use these scores to determine how risky it would be to lend money to you, which is why having a higher score can help you qualify for the best mortgage rates.

“The score is a measure of risk, so the lower your score, the more risk the lender is taking with you,” Opperman says. “The higher your score, the lower the risk, so a lender will charge you less interest the higher your score gets.”

How your credit score impacts your mortgage

When it comes to mortgages, a higher credit score can save you thousands of dollars in the long run. This is because your credit score directly impacts your mortgage rate, which determines the amount of interest you’ll pay over the life of the loan.

The national average for a 30-year fixed-rate mortgage is 6.98% as of Sept. 20, according to FICO. Your credit score would need to fall between 760 and 850 to qualify for that rate, per FICO’s website. If it does, your monthly payment on a $300,000 loan would be about $1,992, according to CNBC Make It’s calculations.

On the other hand, the average mortgage rate for credit scores between 620 and 639 is 8.57%. With that higher interest rate, your monthly payment would increase to around $2,322 on the same loan, according to CNBC Make It’s calculations.

That difference can really add up over time.

Over the course of 30 years, someone with a mortgage rate of 8.57% would pay an additional $118,714 in interest, compared with someone with the 6.98% mortgage rate, according to CNBC Make It’s calculations.

CNBC Make It’s mortgage calculator can help you understand how different mortgage rates would impact your potential monthly payments and interest charges.

How to boost your credit score

Don’t panic if your credit score isn’t quite where you want it to be yet.

One option for improving your score before applying for a mortgage is to lower your credit utilization ratio, says Ted Rossman, senior industry analyst at Bankrate.com.

Your credit utilization rate, a measure of how much of your available credit you’re using at a time, plays a big role in how your credit score is calculated. Say you have a $3,000 credit limit and a balance of $600. Your credit utilization rate would be 20%.

To maintain or improve your credit score, financial experts recommend keeping your credit utilization rate below 30%.

Ultimately, you should try to show credit reporting agencies that you can successfully manage various types of credit by consistently keeping your debt low and by paying your bills on time, Rossman tells CNBC Make It.

“Improving your credit score it more of a marathon than a sprint,” he says.

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CHECK OUT: This credit card debt payoff strategy may sound ‘too good to be true,’ but it could save you thousands
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September 23, 2023
Southeast Asia moves closer to economic unity with new regional payments system

Indonesian President Joko Widodo makes a speech during the Association of Southeast Asian Nations (ASEAN) Foreign Minister’s Meeting in Jakarta, Indonesia on July 14, 2023.

Murat Gok | Anadolu Agency | Getty Images

A new regional cross-border payment system recently implemented by Southeast Asian nations could deepen financial integration among participants, bringing the ASEAN bloc closer to its goal of economic cohesion.

The program, which allows residents to pay for goods and services in local currencies using a QR code, is now active in Indonesia, Malaysia, Thailand and Singapore. The Philippines is expected to join soon.

That’s according to each country’s respective central bank.

The move comes after the five Southeast Asian countries signed an official agreement late last year. At the recent ASEAN summit in May, leaders also reiterated their commitment to the project, pledging to work on a road map to expand regional payment links to all ten ASEAN members.

The scheme is aimed at supporting and facilitating cross-border trade settlements, investment, remittance and other economic activities with the goal of implementing an inclusive financial ecosystem around Southeast Asia.

Analysts say retail industries will particularly benefit amid an expected rise in consumer spending, which could in turn strengthen tourism.

Regional connectivity is considered crucial to reduce the region’s reliance on external currencies like the U.S. dollar for cross-border transactions, particularly among businesses. The greenback’s strength in recent years has resulted in weaker ASEAN currencies, which hurts those economies since the majority of the bloc’s members are net energy and food importers.

“The system will forgo the U.S. dollar or the Chinese renminbi as intermediary,” said Nico Han, a Southeast Asia analyst at Diplomat Risk Intelligence, the consulting and analysis division of current affairs magazine The Diplomat.

A unified cross-border digital payment system will “foster a sense of regionalism and ASEAN-centrality in managing international affairs,” he added. “This move becomes even more crucial in light of escalating tensions among major global powers.”

How it works

By connecting QR code payment systems, funds can be sent from one digital wallet to another.

These digital wallets effectively act as bank accounts but they can also be linked to accounts with formal financial institutions.

For instance, Malaysian tourists in Singapore can make a payment with Malaysian ringgit funds in their Malaysian digital wallet when making a transaction. Or, a Malaysian worker in Singapore can send Singapore dollar funds in a Singaporean digital wallet to a recipient’s wallet in Malaysia.

Fees and exchange rates will be determined by mutual agreement between the central banks themselves.

For now, a region-wide system like this doesn’t exist in other parts of the world but down the road, the Bank of International Settlements, based in Switzerland, hopes to connect retail payment systems across the world using QR codes and mobile phone numbers.

“The ASEAN central banks’ effort is innovative and novel,” said Satoru Yamadera, advisor at the Asian Development Bank’s Economic Research and Development Impact Department.

“In other regions like Europe, retail payment connection via credit and debit cards is more popular while China is well-known for advanced QR code payment, but they are not connected like the ASEAN QR codes,” he continued.

Economic benefits

QR payments don’t impose fees on cardholders and merchants. They also boast of better conversion rates than those set by private payment processors like Visa or American Express.

Micro enterprises as well as small- and medium-sized businesses, or SMBs will emerge as winners from regional payment connectivity, experts say. According to the Asian Development Bank, such companies account for over 90% of businesses in Southeast Asia.

“SMBs can avoid the expenses associated with maintaining a physical point-of-sale system or paying interchange fees to card companies,” explained Han from Diplomat Risk Intelligence.

Marginalized individuals from low-income backgrounds also stand to benefit. As the payment system works via digital wallets and doesn’t require a traditional bank account, it can be used by the unbanked population.

“The system has the potential to improve financial literacy and wellbeing for the underbanked population,” Han noted.

ASEAN’s new system will also enable merchants and consumers to build a robust payment history, and provide valuable data for credit scoring, said Nicholas Lee, lead Asia tech analyst at Global Counsel, a public policy advisory firm.

“That’s particularly advantageous for unbanked and underbanked segments of the population, who traditionally lack access to such credit assessment data.”

Moreover, “increased non-cash transactions would allow policymakers to capture transaction data and trade flow more effectively, assuming these data are accessible,” said Lee.

“This, in turn, could lead to better economic forecasting and policymaking.”

Currency pressure ahead

While strengthening payment connectivity within the region has the potential to reduce payment friction and accelerate digital transition, it could inadvertently put pressure on certain currencies, particularly the Singapore dollar.

“The potential scenario of the [Singapore dollar] emerging as a de facto reserve currency within the region poses a challenge that ASEAN states will need to confront,” said Lee.

“With the [Singapore dollar’s] strength and stability, both international and regional businesses may opt to hold more of their working capital in [Singapore dollars], relying on the new payment network for efficient currency conversion,” he explained.

If that happens, it could weaken the purchasing power of other currencies in the region and result in higher imported inflation if central banks don’t intervene.

In such a scenario, authorities may feel the need to impose capital restrictions in order to protect their respective currencies, which could undermine the very purpose of establishing a regional payment network.

Regulations pose another challenge.

Central banks will have to address security and fraud issues, plus undertake the task of educating the public to embrace the new payment system, said Han.

“These factors can collectively contribute to a time-consuming process,” he warned.

This kind of coordinated action will require strong political will from regional leaders and it remains to be seen if ASEAN members can come together to successfully implement such an ambitious venture.

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July 30, 2023
You’d need to be a millionaire with great credit to buy the life-size Barbie Malibu Dreamhouse

In the real world, it would be pretty expensive to live like Barbie — especially when it comes to housing.

Consider Airbnb’s life-size Barbie Dreamhouse rental in Malibu, an all-pink mansion decked out in Barbie décor, for example. Although the listing is no longer accepting bookings, guests who did manage to snag a stay will get to live like Barbie for a night, free of charge.

But if you wanted to buy the multistory property, you’d probably need millions of dollars and a credit score of at least a 750 to get it, Tony Mariotti, CEO of RubyHome, a Malibu-based luxury real estate company, tells CNBC Make It.

That’s a pretty high credit score; any score between 740 and 799 qualifies as “very good,” according to Experian. It’s just one step down from “exceptional.”

While the oceanfront estate is privately owned and isn’t actively for sale, several real estate companies have given varying estimates of what it may be worth.

RubyHome estimates the pink mansion is worth about $10 million, Mariotti says. However, Zillow prices the home at about $5.3 million and Redfin estimates it would run you about $3.3 million.

The credit score you need to buy your own dream home

Don’t panic if your credit score isn’t high enough to buy a property like Barbie’s Malibu Dreamhouse.

The typical score you need to buy a home is much lower, usually ranging between 500 and 700, according to Experian. The exact score you need depends on the type of mortgage loan you’re trying to get and the lender you choose.

For a conventional loan, which you would typically get from a bank and isn’t backed by a government agency, you would need a minimum credit score of 620, according to Experian. However, some lenders may require a minimum of 660 or higher.

Some potential buyers may want to consider a Federal Housing Administration loan, which is a mortgage loan insured by the U.S. Department of Housing and Urban Development. If you have a credit score of 580 or higher, you may be able to get an FHA mortgage with a down payment as low as of 3.5% of the cost of the home.

If you can make a 10% down payment, you could qualify for an FHA loan with a credit score between 500 and 579.

It’s important to note that all FHA loans require you to pay a mortgage insurance premium, which is similar to private mortgage insurance on conventional loans, regardless of the down payment amount. Additionally, FHA loans tend to have lower limits and can only be used for a primary residence.

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July 22, 2023
What is a loan-to-value ratio and how does it work?
When you’re applying for a mortgage, the numbers matter. So it’s important to understand what everything means, which isn’t always easy when you’re trying to decipher industry jargon and acronyms.

One of these terms is “loan-to-value ratio”, which is often simply referred to as LTV. When applying for a home loan, the LTV can make a big difference in what type of mortgage you’re eligible for, your loan’s interest rate and the fees you pay.

Below, CNBC Select covers how loan-to-value ratios work and why it’s such an important number to understand.

What is a loan-to-value ratio or LTV?

A loan-to-value ratio (LTV) is a number that shows how much money is being borrowed in comparison to the value of the collateral. LTV has significant implications for mortgage applications and is expressed as a percentage. For example, if you’re purchasing a home worth $100,000 and your mortgage loan balance is $80,000, you have an 80% LTV.

The LTV requirement for a mortgage depends on the type of loan and your financial situation. If you’re struggling to find a home loan that fits your needs, try a lender that offers a larger variety of loan types. PNC Bank is CNBC Select’s best mortgage lender for flexible loan options and offers conventional loans, USDA loans, VA loans, FHA loans and more.

PNC Bank

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

Types of loans

Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan

Terms

Credit needed

Minimum down payment

0% if moving forward with a USDA loan

How to calculate the loan-to-value ratio

Calculating LTV is straightforward because you’ll typically only have to know two numbers: The loan amount and the appraised property value.

The formula is this:

Current loan balance / current property value = LTV

You can change your initial LTV by increasing your down payment or negotiating a lower purchase price. Over time, your LTV will drop as you pay off the loan and the property (hopefully) increases in value.

LTV vs. CLTV

Whenever you’re taking out a second loan on a property the lender will look at a combined-loan-to-value ratio (CLTV). The CLTV uses a similar formula as LTV but factors in the balances of multiple loans.

A common situation where CLTV matters is when you’re getting a home equity loan or a home equity line of credit (HELOC). For these types of loans, you’re typically allowed to have a CLTV of up to 80%.

If you’re looking to cash out some of your home’s equity to pay for a renovation, calculating your CLTV helps you figure out your rehab budget. Let’s say your home is worth $350,000, you’ll usually be able to borrow up to an 80% CLTV, which would be $280,000 in total. This means if your current mortgage balance is $200,000, you could finance $80,000 in home upgrades.

Why does LTV matter?

When it comes to mortgages, LTV affects what type of loans you’re eligible for and your borrowing costs.

The LTV requirements for a mortgage vary depending on the loan type. Mortgages with smaller down payment requirements, for example, allow for higher LTVs. An FHA loan allows down payments of as little as 3.5% or an LTV of 96.5%. And USDA or VA loans can have an LTV of 100% (essentially requiring no down payment).

Conventional loans usually have stricter LTV guidelines, although certain conventional loan programs allow for an LTV as high as 97%. Just remember that with conventional loans, you’ll be required to pay private mortgage insurance (PMI) if your LTV is 80% or higher.

Aside from helping you qualify for a mortgage, a lower LTV can get you a better interest rate, although other factors such as your credit score, the type of loan and the loan balance also play a role.

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Bottom line

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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May 28, 2023
Rent or buy? Here’s how to make that decision in the current real estate market

Choosing whether to rent or buy has never been a simple decision — and this ever-changing housing market isn’t making it any easier. With surging mortgage rates, record rents and home prices, a potential economic downturn and other lifestyle considerations, there’s so much to factor in.

“This is an extraordinarily unique market because of the pandemic and because there was such a run on housing so you have home prices very high, you also have rent prices very high,” said Diana Olick, senior climate and real estate correspondent for CNBC.

By the numbers, renting is often cheaper. On average across the 50 largest metro areas in the U.S., a typical renter pays about 40% less per month than a first-time homeowner, based on asking rents and monthly mortgage payments, according to Realtor.com.

In December 2022, it was more cost-effective to rent than buy in 45 of those metros, the real estate site found. That’s up from 30 markets the prior year.

How does that work out in terms of monthly costs? In the top 10 metro regions that favored renting, monthly starter homeownership costs were an average of $1,920 higher than rents.

But that has not proven to be the case for everyone.

Leland and Stephanie Jernigan recently purchased their first home in Cleveland for $285,000 — or about $100 per square foot. The family of seven will also have Leland’s mother, who has been fighting breast cancer, moving in with them.

By their calculations, this move — which expands their space threefold and allowing them to take care of Leland’s mother — will be saving them more than $700 per month.

‘You don’t buy a house based on the price of the house’

“You don’t buy a house based on the price of the house,” Olick said. “You buy it based on the monthly payment that’s going to be principal and interest and insurance and property taxes. If that calculation works for you and it’s not that much of your income, perhaps a third of your income, then it’s probably a good bet for you, especially if you expect to stay in that home for more than 10 years. You will build equity in the home over the long term, and renting a house is really just throwing money out.”

Mortgage rates dropped slightly in early March, due to the stress on the banking system from the recent bank failures. They are moving up again, although they are currently not as high as they were last fall. The average rate on a 30-year fixed-rate mortgage is 6.59% as of April — up from 3.3% around the same time in 2021.

But that hasn’t significantly dampened demand.

“As the markets kind of bubbled in certain parts of the country and other parts of the country priced out, we’ve seen a lot of investors coming in looking for affordable homes that they can buy and rent,” said Michael Azzam, a real estate agent and founder of The Azzam Group in Cleveland.

“We’re still seeing relatively high demand” he added. “Prices have still continued to appreciate even with interest rates where they’re at. And so we’re still seeing a pretty active market here.”

Buying a home is part of the American Dream

The Jernigans are achieving a big part of the American Dream. Buying a home is a life event that 74% of respondents in a 2022 Bankrate survey ranked as the highest gauge of prosperity — eclipsing even having a career, children or a college degree.

The purchase is also a full-circle moment for Leland, who grew up in East Cleveland, where his family was on government assistance.

“I came from a single-mother home who struggled to put food on the table and always wanted better for her children … it was more criminals than there were police … It is not the type of neighborhood that I wanted my children to grow up in,” said Jernigan.

The new homeowner also has his eye on building a brighter future for more children than just his own. Jernigan plans to purchase homes in his old neighborhood, renovate them and create a safe space for those growing up like he did.

“I’m here because someone saw me and saw the potential in me and gave me advice that helped me. … and I just want to pay it forward to someone else” Jernigan said.

Watch the video above to learn more.

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April 26, 2023
How to Rebuild Credit After Bankruptcy | Entrepreneur

Opinions expressed by Entrepreneur contributors are their own.

Bankruptcy can provide financial relief, but the downside is that it can negatively impact credit. While bankruptcy will remain on a credit report for as long as 10 years, the impact will lessen with time. Whether you filed Chapter 7 (which means you have the ability to pay back your debts) or Chapter 13 (you’re required to pay your creditors all of your disposable income), it is possible to start rebuilding credit with some simple measures.

Rebuilding credit after bankruptcy as an entrepreneur can be challenging, but it’s not impossible. The first step is understanding that rebuilding credit takes time and consistent effort.

How bankruptcy affects credit

Payment history is one of the most important factors when determining credit scores. When someone files for bankruptcy, the individual won’t be repaying covered debts in full as per the original credit agreement. This means that when filing for bankruptcy, it can have a severe negative impact on someone’s credit score.

A bankruptcy filing will appear on an individual’s credit report for up to 10 years, making it difficult to obtain credit or loans in the future. An entrepreneur may also have difficulty obtaining credit from suppliers or vendors, as they may be hesitant to extend credit to a business that has filed for bankruptcy.

Regardless of the bankruptcy type, lenders will see it on a credit report within the public records section, and it is likely to be a decision-making factor. After completing the legal process, it will show the bankruptcy and included debts that have been discharged.

However, it’s important to note that filing for bankruptcy can also provide a fresh start for an entrepreneur, allowing them to discharge debt and start anew.

When applying for credit, lenders may not approve certain types of credit — and even if approved, an individual may find that they’re offered higher interest rates or other unfavorable terms.

Related: How This Entrepreneur Achieved His Greatest Success After His Worst Failure

Can I get a credit card after bankruptcy?

It can be difficult for an entrepreneur to get a credit card after filing for bankruptcy. Many lenders view individuals who have filed for bankruptcy as a higher risk. However, it is possible to get a credit card after bankruptcy, but it may take time and effort.

The best approach is to apply for a card that is specifically designed to help rebuild credit. An ideal card option is a secured credit card — approval is possible even with a fresh bankruptcy. Secured cards typically have a credit limit equal to the amount of security deposit that is provided.

However, some unsecured card issuers won’t pull a credit score or may extend a line of credit even if there are blemishes on someone’s credit history. Just be aware that these types of cards typically have extremely high rates and an abundance of fees. A secured card is likely the better option with lower costs.

The best ways to build credit after bankruptcy

As soon as a bankruptcy has been finalized, the individual can start working on building credit. Some of the best ways include the following:

Maintain payments on non-bankruptcy accounts

After filing, determine if any accounts have not been closed. While bankruptcy cancels most debt, there may be some remaining. Paying down these balances can lower the debt-to-income ratio — making timely payments remains crucial. Consistent payments will also help with staying on top of bills.

Keep credit balances as low as possible

Credit balances not only impact the credit utilization ratio but depending on how the need to file for bankruptcy was developed, people should look to avoid falling into the same habits. Reduce credit card usage and pay down balances — it will benefit your financial health.

Build emergency savings

Save some money each payday to build emergency savings. This will provide a fund for unexpected expenses, which will help to avoid incurring future debt that could impede rebuilding credit.

Get a secured card

As we touched on above, a secured credit card could help with rebuilding credit. While a security deposit is necessary, each time that a repayment is made on the card’s account, it will be reported to the credit bureaus. This will demonstrate responsible credit behavior.

Some secured card issuers allow cardholders to move on to an unsecured card after making consistent and on-time payments. This is a great benefit as there will be no need to apply for a new card as credit starts to improve.

Consider credit builder loans

A credit builder loan could be another way to help build credit. An individual will need to have a certain amount of money held in a secured savings account, but the individual can make monthly payments until the loan amount is repaid. Depending on the lender, it is also possible to have a secured loan that allows borrowing against savings.

As with a traditional loan, the payment activity for a credit builder loan will be reported to the major credit bureau, which will help to improve credit scores over time.

Related: I Filed for Bankruptcy at Age 21

How long until credit improves?

This will depend on an individual’s specific circumstances, but if someone is making consistent payments, and has a low credit utilization ratio and low debt-to-income ratio, they should start to see positive changes to their credit score after approximately six months.

However, be prepared to take a long-term approach. Remember that bankruptcy will be on a credit report for seven to 10 years. While the effects will diminish over time, responsible behavior will lead to improvements. Stay patient.

Related: 6 Steps Resilient Entrepreneurs Take to Rebound From Bankruptcy

Can I get a mortgage after bankruptcy?

There is no need to wait for bankruptcy to disappear from a credit report to apply for a mortgage. However, if applying for a conventional mortgage, an individual will need to wait at least four years after bankruptcy has been discharged. If there are extraneous circumstances, it may be possible after two years.

Baruch Mann (Silvermann)

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February 28, 2023
With mortgage rates dropping and fee changes in the pipeline, now may be the time to buy that home
The average rate for a 30-year mortgage dropped to 6.15% last week — the lowest in 18 weeks.

This dip in rates provides welcomed relief for many potential homebuyers who’ve put their dreams on pause thanks to high mortgage interest rates, which have drastically reduced their buying power.

On top of reduced interest rates, the Federal Housing Finance Agency (FHFA) has announced changes to its fee structure beginning May 1, 2023. These changes affect conventional loans and will reduce the cost of a loan for certain borrowers (while increasing it for others).

Plus, according to Redfin, average home prices in the U.S. have continuously dropped, albeit slowly, since hitting their peak in May 2022.

With rates lower than they have been and fee changes coming down the pipeline, it’s a good time to reassess the home-buying plans you may have put on hold and decide if now is the time to act.

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Is now a good time to lock-in your mortgage rate?

If a painfully-high interest rate was the only thing holding you back from signing a mortgage, then you may want to jump on today’s (relatively) low rates. The Federal Reserve has been steadily increasing its benchmark Federal Funds rate and has signaled its intent to continue this pattern until inflation is under control. As long as the Federal Funds rate stays high, so will mortgage rates.

The recent dip in rates represents a significant savings for home buyers. Today’s 30-year mortgage rates are currently 0.93% lower than they were last fall, when rates hit 7.08%. For a $500,000 home loan, a 0.93% lower rate saves you $300+ on your monthly payment and over $110,000 in interest over the life of the loan.

To get the lowest interest rate on your mortgage, however, you’ll want to make sure your credit score is as high as possible. This may be the most-important step you can take when trying to get the best terms on a mortgage.

But before committing to buying a home, you’ll need to save up money for a down payment and closing costs. These upfront costs can easily add up to 10%- 20% of the home’s purchase price. On top of that, it’s a good idea to have money set aside for maintenance, repairs and moving costs. You’ll need to make sure you have enough money saved up before starting your home search.

One way you can reduce some of the upfront costs of buying a home is to compare offers from lenders that don’t charge origination fees. Here are some of the best lenders with no origination fees according to our rankings:

Ally Bank

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

Types of loans

Conventional loans, HomeReady loan and Jumbo loans

Terms

Credit needed

Minimum down payment

3% if moving forward with a HomeReady loan

Pros

Ally HomeReady loan allows for a slightly smaller downpayment at 3%

Pre-approval in just three minutes

Application submission in as little as 15 minutes

Online support available

Existing Ally customers can receive a discount that gets applied to closing costs

Doesn’t charge lender fees

Cons

Doesn’t offer FHA loans, USDA loans, VA loans or HELOCs

Mortgage loans are not available in Hawaii, Nevada, New Hampshire, or New York

Better.com Mortgage

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

Types of loans

Conventional loan, FHA loan, Jumbo loan and adjustable-rate mortgage (ARM)

Terms

Credit needed

Minimum down payment

3.5% if moving forward with an FHA loan

Pros

No application fee, origination fee, or underwriting fee

Pre-approval in as little as three minutes

24/7 support available

Offers options for an adjustable-rate mortgage (ARM)

Promise to match competitor’s loan offer and if they are unable to, they will give you $100

Cons

Doesn’t offer VA loans or USDA loans

Navy Federal Credit Union

Annual Percentage Rate (APR)

Apply online for personalized rates

Types of loans

Conventional loans, VA loans, Military Choice loans, Homebuyers Choice loans, adjustable-rate mortgage

Terms

Credit needed

Not disclosed but lender is flexible

Minimum down payment

0%; 5% for conventional loan option

Pros

0% downpayment for most loan options

flexible repayment terms ranging from 10 years to 30 years

Offers refinancing, second-home financing and loans for investment properties

No PMI required

Fast pre-approval

RealtyPlus program allows applicants to receive up to $9,000 cash back

Cons

Must be a Navy Federal Credit Union member to apply

How will the upcoming fee changes impact me?

The upcoming FHFA fee changes affect conforming conventional loans, which can be sold to Fannie Mae or Freddie Mac by lenders. More niche mortgages, such as jumbo loans, FHA loans and VA loans will not be affected by these changes.

The specific fees that are changing are known as Loan Level Price Adjustments (LLPAs), which are risk-based fees applied to loans. Lenders base these fees on factors such as the borrower’s credit score, the loan-to-value ratio (LTV) and the type of mortgage. In general, you’ll pay more if your credit score is lower or if you’re borrowing a higher percentage of the property’s value (i.e. higher LTV).

The future fee changes will add an additional layer of complexity to a process that already causes heads to spin. For example, the LLPAs for a purchase mortgage will drop for some borrowers with lower credit scores, while borrowers with higher credit scores could be paying more in certain circumstances.

Given the amount of nuance with LLPAs, it’s important to have a conversation with your lender (or multiple lenders) to see how the upcoming changes could affect your home loan. Keep in mind that although the changes apply to loans sold to Fannie Mae or Freddie Mac from May 1, 2023, lenders will begin adjusting their fees well before that deadline.

You can see the current fees here and the upcoming fee structures here.

Bottom line

Mortgage rates have dipped in recent weeks, which can help make your future mortgage payments more affordable. Just be sure to pay attention to the fees, in addition to the rate, when you are comparing mortgage loan offers.

Also, certain fees associated with conventional loans are changing soon, which could save you money or cost you more depending on your situation. So if you’re in the process of buying a home, talk with your lender to figure out how you’ll be affected.

Catch up on Select’s in-depth coverage of personal finance, tech and tools, wellness and more, and follow us on Facebook, Instagram and Twitter to stay up to date.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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January 23, 2023
These common misconceptions can prevent you from achieving that perfect credit score

Randy had an 850 credit score. According to FICO, the most popular scoring model, that’s as good as it gets.

Still, a line on his credit report said he could lower his utilization rate, so he promptly paid off the remainder of his car loan with one $6,000 payment, and then his score sank 30 points. (Randy has been a target of identity theft and asked to omit his last name for privacy concerns.)

Most people assume that wiping out those auto payments couldn’t hurt, but that’s a mistake.

More from Personal Finance:
Here’s the best way to pay down high-interest debt
63% of Americans are living paycheck to paycheck
‘Risky behaviors’ are causing credit scores to level off

When it comes to credit scores, there are a few things many borrowers often get wrong, experts say. Here are the top misconceptions and why it’s so hard to set the record straight.

Misconception No. 1: Debt is bad

Your credit score — the three-digit number that determines the interest rate you’ll pay for credit cards, car loans and mortgages — is based on a number of factors but most importantly, it’s a measure of how much you are borrowing and how responsible you are when it comes to making payments.

Having an excellent score doesn’t mean you have zero debt but rather a proven track record of managing a mix of outstanding loans. In fact, consumers with the highest scores owe an average of $150,270, including mortgages, according to a recent LendingTree analysis of 100,000 credit reports.

The borrowers with a credit score of 800 or higher, such as Randy, pay their bills on time, every time, LendingTree found.

To that end, having a four-year auto loan in good standing was working to Randy’s advantage.

“Lenders also want to see that you’ve been responsible for a long time,” said Matt Schulz, LendingTree’s chief credit analyst.

The length of your credit history is another one of the most important factors in a credit score because it gives lenders a better look at your background when it comes to repayments.

Misconception No. 2: All debt is the same

Since Randy had already paid off his mortgage and has no student debt, that auto loan was key to show a diversified mix of accounts.

“Your credit mix should involve more than just having multiple credit cards,” Schulz said. “The ideal credit mix is a blend of installment loans, such as auto loans, student loans and mortgages, with revolving credit, such as bank credit cards.”

“The more different types of loans that you’ve proven you can handle successfully, the better your score will be.”

The total amount of credit and loans you’re using compared to your total credit limit, also known as your utilization rate, is another important aspect of a great credit score.

As a general rule, it’s important to keep revolving debt below 30% of available credit to limit the effect that high balances can have.

Misconception No. 3: You need a perfect score

Only about 1.6% of the 232 million U.S. consumers with a credit score have a perfect 850, according to FICO’s most recent statistics.

Aside from bragging rights, you won’t gain much of an advantage by being in this elite group.

“Typically, lenders do not require individuals to have the highest credit score possible to secure the best loan features,” said Tom Quinn, vice president of FICO Scores. “Instead, they set a high-end cutoff, that is typically in the upper 700’s, where applicants scoring above that cutoff qualify as a good credit score and get the most favorable terms.”

Each lender sets their own credit score thresholds for who they consider the most creditworthy. As long as you fall within these ranges, you are likely to be approved for a loan and qualify for the best rates the issuer has to offer, Schulz added.

“Anything over 800 is gravy,” Schulz said, and “in some cases, the difference between 760 and 800 may not be that significant.”

Most credit card issuers now provide free credit score access to their cardholders, making it easier than ever to check and monitor your score.

Subscribe to CNBC on YouTube.

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January 23, 2023
Getting your credit score above 800 isn’t easy, but it’s ‘definitely attainable,’ says analyst. Here’s how to do it

Generally speaking, the higher your credit score, the better off you are when it comes to getting a loan.

FICO scores, the most popular scoring model, range from 300 to 850. A “good” score generally is above 670, a “very good” score is over 740 and anything above 800 is considered “exceptional.”

Once you reach that 800 threshold, you’re highly likely to be approved for a loan and can qualify for the lowest interest rate, according to Matt Schulz, LendingTree’s chief credit analyst.

More from Personal Finance:
Here’s the best way to pay down high-interest debt
63% of Americans are living paycheck to paycheck
‘Risky behaviors’ are causing credit scores to level off

There’s no doubt consumers are currently turning to credit cards as they have a harder time keeping up with their expenses and there are a lot of factors at play, he added, including inflation. But exceptional credit is largely based on how well you manage debt and for how long.

Earning an 800-plus credit score isn’t easy, he said, but “it’s definitely attainable.”

Why a high credit score is important

The national average credit score sits at an all-time high of 716, according to a recent report from FICO.

Although that is considered “good,” an “exceptional” score can unlock even better terms, potentially saving thousands of dollars in interest charges.

For example, borrowers with a credit score between 800 and 850 could lock in a 30-year fixed mortgage rate of 6.13%, but it jumps to 6.36% for credit scores between 700 and 750. On a $350,000 loan, paying the higher rate adds up to an extra $19,000, according to data from LendingTree.

4 key factors of an excellent credit score

Here’s a breakdown of four factors that play into your credit score, and ways you can improve that number.

1. On-time payments

The best way to get your credit score over 800 comes down to paying your bills on time every month, even if it is making the minimum payment due. According to LendingTree’s analysis of 100,000 credit reports, 100% of borrowers with a credit score of 800 or higher paid their bills on time, every time.

Prompt payments are the single most important factor, making up roughly 35% of a credit score.

To get there, set up autopay or reminders so you’re never late, Schulz advised.

2. Amounts owed

From mortgages to car payments, having an exceptional score doesn’t mean zero debt but rather a proven track record of managing a mix of outstanding loans. In fact, consumers with the highest scores owe an average of $150,270, including mortgages, LendingTree found.

The total amount of credit and loans you’re using compared to your total credit limit, also known as your utilization rate, is the second most important aspect of a great credit score — accounting for about 30%.

As a general rule, it’s important to keep revolving debt below 30% of available credit to limit the effect that high balances can have. However, the average utilization ratio for those with credit scores of 800 or higher was just 6.1%, according to LendingTree.

“While the best way to improve it is to reduce your debt, you can change the other side of the equation, too, by asking for a higher credit limit,” Schulz said.

3. Credit history

Having a longer credit history also helps boost your score because it gives lenders a better look at your background when it comes to repayments.

The length of your credit history is the third most important factor in a credit score, making up about 15%.

Keeping accounts open and in good standing as well as limiting new credit card inquiries will work to your advantage. “Lenders want to see that you’ve been responsible for a long time,” Schulz said. “I always compare it to a kid borrowing the keys to the car.”

4. Types of accounts and credit activity

Having a diversified mix of accounts but also limiting the number of new accounts you open will further help improve your score, since each make up about 10% of your total.

“Your credit mix should involve more than just having multiple credit cards,” Schulz said. “The ideal credit mix is a blend of installment loans, such as auto loans, student loans and mortgages, with revolving credit, such as bank credit cards.”

“However, it’s very, very important to know that you shouldn’t take out a new loan just to help your credit mix,” he added. “Debt is a really serious thing and should only be taken on as needed.”

Subscribe to CNBC on YouTube.

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January 19, 2023
This graph shows Charlotte home affordability based on credit score, interest rates
A for sale sign sits in front of a house on Circle Avenue in Charlotte, N.C., Friday, Nov. 4, 2022.

Alex Slitz

alslitz@charlotteobserver.com

Interest rates have been the talk of the real estate world recently, with mortgage rates rising to levels not seen in years as white-hot markets try to cool.

Higher rates across the board mean more expensive mortgages for folks looking to buy a home, but the market isn’t the only thing that influences interest rates. Your individual financial situation, especially your credit score, impacts the rate you’ll be offered by lenders when you apply for a mortgage.

Here’s what to know about credit scores and interest rates on mortgages, and how to improve your own chances of getting the best rates available:

Credit scores and interest rates on mortgages

Regardless of whether interest rates on mortgages are going up or down, your credit score impacts the rate you’ll get from lenders. Even small differences in rates can make a big difference in what you’ll ultimately pay over the life of your mortgage.

Use the graph below to see what your credit score would get you in today’s market (Note: This graphic will update as rates fluctuate):

Tips for improving your credit score

If you’re thinking about buying a home in the future, there are steps you can take to improve your credit score before applying for a mortgage. The mortgage lender Fannie Mae recommends:
- Using credit cards “in moderation” and maintaining a low balance on them
- Paying your bills on time
- Not opening an excessive amount of credit cards
- Avoiding closing credit cards and therefore impacting “the total amount of credit you have available and how much you have used”
- Avoiding opening a new credit card or making a big purchase “within six months before trying to buy a home”
This story was originally published November 11, 2022 1:26 PM.

Related stories from Charlotte Observer

Mary Ramsey is a service journalism reporter with The Charlotte Observer. A native of the Carolinas, she studied journalism at the University of South Carolina and has also worked in Phoenix, Arizona and Louisville, Kentucky.
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November 11, 2022
How to Establish Credit with a Credit-Builder Loan

Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research determine where and how companies may appear. Learn more about how we make money.

Receiving credit approval can be tricky. It’s difficult for a borrower to qualify for loans and credit cards if they don’t have a good credit history. Creditors want proof that you don’t overspend and can pay your bills on time. If you don’t already have an established credit line, you may struggle to demonstrate that you’re a reliable borrower.

Luckily, borrowers can improve their credit scores through credit-builder loans. Keep reading to learn more about these loans and who should apply for one.

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What is a credit-builder loan?

Community banks and credit unions sometimes offer credit-builder loans as a way to give borrowers a chance to show they can make regular payments to pay off a loan or debt. Ultimately, a credit-builder loan builds or rebuilds a positive credit history.

How credit-builder loans work

A credit-builder loan is a little different from a traditional loan. A lender holds money in a federally insured savings account. Every month, you pay the lender as though you are paying a credit card bill or loan, and your lender reports those payments to the credit bureaus. As long as you pay your credit-builder loan payments on time, your credit score should improve.

Unlike a traditional loan, the borrower doesn’t receive money at the loan closing. Instead, once the lender obtains the last payment, the borrower receives the funds.

How much is a credit-builder loan?

Since the objective of this loan process is to help the borrower establish a good credit history, terms and amounts are different from a traditional loan.

Lenders offer these loans in small amounts, such as $500 to $1,500. Some loans go as high as $5,000. You make payments over the term of the loan, which is typically one to two years.

Who needs a credit-builder loan?

People who are trying to establish credit or rebuild it after a major financial discrepancy, such as bankruptcy, may want to consider applying for a credit-builder loan. These loans also help people trying to build credit for the first time in their lives, such as recent college graduates, divorcés or immigrants.

For example, a recent college graduate who doesn’t have a credit card can use it to establish a positive credit history. After going through the credit-builder loan process and developing a good credit history, they may have an easier time renting an apartment or getting a mobile phone account. These types of first-time borrowers may see a bigger boost in their credit score than someone rebuilding their credit.

To qualify for this loan, you should have an income that allows you to make $50 to $100 monthly payments for the loan’s term. Unresolved financial judgments can make it more difficult to qualify. Make sure you pay outstanding debts before applying for a credit-builder loan.

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The importance of credit history

Credit bureaus calculate your credit score based on several credit data points, including your credit history. In fact, your credit history makes up 35% of your entire score. It’s important to maintain a good credit history for your financial future.

Ultimately, applying for a credit-builder loan is a good way to establish credit. It may eventually lead you to qualify for other loans, such as a car loan. Credit-builder loans can also help you obtain future loans with lower interest rates.

Disclaimer: This story was originally published on June 1, 2022, on BetterCreditBlog.org. For more information on building your credit please visit: https://money.com/how-to-build-credit/.

Aaron Crowe

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June 1, 2022
Tradebloc Inc. Unveils New Debt Relief Services

Press Release
–

updated: Nov 24, 2020

LAS VEGAS, November 24, 2020 (Newswire.com)
–
Tradebloc’s new debt relief department will be headed up by Jesse Kyle Ruzicka, J.D. Jesse is a member of Tradebloc Inc.’s in-house legal counsel. He excels in diverse customer relations and brings a warm and forthright presence to the team. He has vast experience in a number of fields of law including municipal, health, wills and trusts, insurance defense, debt settlement, and bankruptcy. Jesse is passionate about assisting others to rise above their challenges in life, especially breaking free from debt and bondage. He graduated with a Bachelor of Science Degree in Business and Finance within the top 10 percent of his class, from Brigham Young University – Idaho. He served in more than 10 societies during his time in undergrad and law school, including the School Body Presidency, Women in Law, Family Law Assistance Program, and Business Organizations Law Society. Jesse obtained his law degree from the William S. Boyd School of Law, UNLV.

About Tradebloc, Inc.

Tradebloc, Inc® is recognized as a top leader in credit repair and credit- identity theft monitoring with consecutive years of triple-digit growth. Tradebloc is the nation’s largest affiliate-based credit repair company and holds an A+ Rating with the Better Business Beuaru, adding thousands of new clients monthly.

For more information or questions, contact:
Tim Clark
info@tradebloc.com
(800) 554-7694

Source: Tradebloc Inc.

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November 24, 2020
Paid Credit Repair Increases Consumers’ Credit Scores Surprisingly Well, New Study by Credit Knocks Finds
In a nationwide survey, 58.6% of U.S. adults (ages 25+) who paid for professional credit repair services received a 75 point credit score increase or higher. Credit repair services were also shown to be more effective when consumers stayed with the repair company for over 6 months. But buyer beware! 12% of respondents thought the repair company’s business practices were ‘Shady’ or ‘Borderline illegal.’

Press Release
–

updated: Oct 23, 2019
SAN DIEGO, Calif., October 23, 2019 (Newswire.com)
–
According to new research from Credit Knocks, 48.1% of consumers who paid for professional credit repair services for 6 months or more saw an increase of 100 points or more to their credit score. Only 12% of respondents said they had a credit score increase of 24 points or less.

Overview of Credit Repair Services – Credit repair is a $3 billion per year industry in the U.S. according to IBIS World. Companies that provide credit repair services help consumers with bad and/or damaged credit. Common services offered are the removal of negative items from the customers’ credit reports (late payments, charge offs, collections), setting up payment plans with creditors, and debt consolidation plans.

Impact of the Study – Many personal finance experts question if credit repair companies are truly effective and question if credit repair is ethical. The Credit Knocks study surveyed 500 U.S. adults ages 25+ in October 2019 and found that a surprisingly high percentage of respondents indicated a positive credit score gain, especially when the respondents stuck with their credit repair company for 6 months or more, and mostly reported a favorable user experience. Some of the key statistics found were:
- The most common credit score gains reported were 100 to 149 points (26% of respondents) and 75 to 99 points (17.2% of respondents) compared to only 8.4% who reported a gain of 0 to 24 points
- 48% of respondents who used credit repair services for 6 months or more saw an increase of 100 points or more to their credit score
- 31% of respondents said the lifetime total of all monthly fees, start-up costs, and additional fees was between $250 to $500 (most prevalent answer)
Consumers’ Surprising Criticism of Credit Repair Companies – Even though consumers’ results (as measured by credit score increase) were very impressive overall, a significant percentage of consumers criticized their companies’ business practices and billing. Key statistics:
- 12% of respondents thought the repair company’s business practices were “Shady” or “Borderline illegal”
- 25.8% thought the credit repair company kept them as a client longer than it should have taken – They felt “strung along”
- 18.6% said the credit repair company made it difficult to cancel
For questions about the survey or to comment on the findings, contact Chris Huntley at chris@creditknocks.com.

Credit Knocks is the #1 resource for individuals with a 400-720 credit score to improve their credit.

Source: Credit Knocks
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October 23, 2019
Credit Card Authorized Users Enjoy Higher Credit Scores, New Study by Credit Knocks Finds
U.S. adults (ages 20 to 29) who were added as authorized users to credit cards were nearly 2x as likely to have a 680+ credit score than non-authorized users. The ‘authorized user effect’ may be a more significant variable to credit score than race, income, or education.

Press Release
–

updated: Sep 25, 2019
SAN DIEGO, September 25, 2019 (Newswire.com)
–
According to new research from Credit Knocks, 46.4% of credit card authorized users enjoy a 680+ credit score compared to 27.7% of non-authorized users with a 680+ credit score.

Overview of the Strategy – One little-known strategy in the credit improvement space is for individuals with bad credit to ask a friend or family member who has an established credit card account if they can be added to the account holder’s credit card as an “authorized user.” By doing so, many credit cards report the account’s payment history to the authorized user’s file at the credit bureaus. The strategy allows authorized users to “inherit” the benefits of the account into their own credit file, such as payment history, account age, and credit limit – all of which are factored into one’s credit score.

Impact of the Study – Some personal finance experts question if the authorized user strategy really works. The Credit Knocks study surveyed 570 U.S. adults ages 20 to 29 in April 2019 and found a direct correlation between people who had been added as authorized users and good credit scores. In some cases, the authorized user effect also trumped the impact of ethnicity, income, and education on the respondents’ credit scores. Of the respondents who had been added:
- Only 13% of authorized users had a credit score under 600, compared to 24.6% who had not been added
- 46.4% had a 680 or higher credit score, compared to 27.7% who weren’t added
- 27.5% had a 639 or lower credit score, compared to 39.9% who weren’t added
- 48.2% of all respondents had never heard of the strategy
- 21.6% of respondents had asked a friend or family member to add them
The Authorized User Effect on Minorities – It has been widely studied and reported that Black and Hispanic Americans’ credit scores are disproportionately lower, on average, than white and Asian Americans’ scores. However, the study shows that minorities who’d been added as an authorized user had higher credit scores than white Americans who had not been added, on average. For example:
- 52.4% of Black and Hispanic authorized users had a credit score of 680 or higher
- 30.5% of White and Asian non-users had a credit score of 680 or higher
The study showed a similar pattern of the authorized user’s effect on overcoming the barriers to good credit scores imposed by low income and low education.

For questions about the survey or to comment on the findings, contact Chris Huntley at chris@creditknocks.com.

Credit Knocks is the #1 resource for individuals with a 400-720 credit score to improve their credit.

Source: Credit Knocks
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September 25, 2019