What are derogatory marks and how can you fix them?

Derogatory Marks Header Image

Having a few items on your credit report dragging down your score can be incredibly frustrating, especially if you have a good financial record.

A derogatory mark is a negative item on your credit report that can be fixed by removing it or building positive credit activity. Because derogatory marks can stay on your credit report typically for seven to ten years, it’s important to know how to fix them.

Derogatory marks can affect your credit score, your ability to be approved for credit and the interest rates a lender offers you. Some derogatory marks are due to poor credit activity, such as a late payment. Or it could be an error that shouldn’t be on your report at all.

Types of negative items include late payments (30, 60, and 90 days), charge-offs, collections, foreclosures, repossessions, judgments, liens, and bankruptcies. We’ll cover what each one of these means, and how they can impact your credit reports.

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How do derogatory marks impact my credit score?

The amount that derogatory marks lower your credit score depends on the mark’s severity and how high your credit score was before the mark. For instance, bankruptcy has a greater impact on your credit score than a missed payment or debt settlement. And, unfortunately, having a derogatory mark impacts a high credit score more than it does a low credit score.

According to CreditCards.com and CNNMoney, even a single negative on your credit could cost you over 100 points. Negative items on your credit could cost you thousands of dollars in higher interest rates, or you could be denied altogether.

negative item score decrease stats

How long a derogatory mark stays on your credit report depends on the type of mark.

How long do derogatory marks stay on my credit report?

Derogatory marks usually stay on your credit report for around seven to ten years, depending on the type. After that period passes, the mark will roll off your report and you should start seeing a change in your credit score.

Here’s how long each derogatory mark stays on your credit report:

Type of derogatory mark What is it? How long does this stay on a credit report?
Late payment Late payments are payments made 30 days or more after the payment due date. Typically, this can remain on your report for seven years from the date you made a late payment.
An account in collections or a charge-off Creditors send your account to collections or charge them off if there’s been no payment for 180 days. Typically, this can remain on your report for seven years from the date you made a late payment.
Tax lien A tax lien is when the government claims you’ve neglected or failed to pay taxes on your property or financial assets. Unpaid tax lien: Can remain on your report indefinitely.

Paid tax lien: Can remain on your report seven years from the date the lien was filed.

Civil judgment Civil judgments are a debt you owe through the court, such as if your landlord sued you over missed rent payments. Unpaid civil judgment: Can remain on your report for seven years from when the judgment was filed, but can be renewed if left unpaid.

Paid civil judgment: Can remain on your report for seven years from when the judgment was filed.

Debt settlement Debt settlement is when you and your creditor agree that you will pay less than the full amount owed. A typical time period is seven years, starting from when the debt was settled or the date of the first delinquent payment if there were missed payments.
Foreclosure Foreclosure is when you fail to pay your mortgage and you forfeit the right to the property. Typically, seven years from the foreclosure filing date.
Bankruptcy Bankruptcy is a court proceeding to discharge your debt and sell your assets. Can remain on your report for seven years for Chapter 13 bankruptcy. Chapter 7 bankruptcy can remain on your report for 10 years.
Repossession A repossession is when your assets are seized, such as a vehicle that was used as collateral. Can remain on your report for seven years from the first date of the missed payment.

Types of derogatory marks

Late payments

Late payments occur when you’ve been 30, 60, or 90 days late paying an account. Although you don’t want late payments on your credit reports, an occasional 30 or 60-day late payment isn’t too severe. But you don’t want frequent late payments and you don’t want late payments on every single account. One recent late payment on a single account can lower a score by 15 to 40 points, and missing one payment cycle for all accounts in the same month can cause a score to tank by 150 points or more.

Payments 90 days late or more start to factor more heavily into your credit score, and consecutive late payments are even more harmful to your score, as each subsequent late payment is weighted more heavily. Sometimes, creditors will report payments as late as 120 days, which can be almost as severe as charge-offs and collections. Late payments can be reported to the credit bureaus once you have been more than 30 days late on an account and these late payments can stay on your credit reports for up to seven years.

Charge offs

A charge off is when a creditor writes off your unpaid debt. Typically, this occurs when you have been 180 days late on an account. Charge offs have a severely negative impact on your credit, and like most other negative items can stay on your credit reports for seven years. When an account is charged off, your creditor can sell it to collection agencies, which is even worse news for your credit.

Creditors see a charge off as a glaring indication that you have not been responsible with your finances in the past and cannot be counted on to fulfill your financial obligations in the future. When creditors see a charge off on your credit reports, they are more likely to deny any new applications for loans or lines of credit because they see you as a financial risk. If you do qualify, this can mean higher interest rates. Current creditors can respond by raising your interest rates on your existing balances.

Tax liens

In most cases, liens are the result of unpaid taxes – whether it’s at the state or the federal level. For a federal tax lien, the IRS can place a lien against your property to cover the cost of unpaid taxes. Tax liens can make it difficult to get approved for new lines of credit or loans because the government has claimed to your property. What this means is that if you default on any other accounts, your creditors have to stand in line behind the IRS to collect.

Unpaid liens can stay indefinitely on your credit reports. Once they have been paid, however, they can stay on your reports for up to seven years. Like judgments though, the credit bureaus are strictly regulated on how they can report liens because they are also public records.

Civil judgments

Judgments are public records that are also referred to as civil claims. A judgment can be taken out against a debtor for an unpaid balance. A creditor or collection agency can file a suit in court. If the court rules in favor of the creditor, a judgment is taken out against the debtor and put on their credit reports. This, like many other negative items, has a severely negative impact, and like most other negative items can be reported for seven years.

Judgments are also another indication that a person won’t pay their debts. Lawsuits are time-consuming and costly, so they are something that creditors potentially want to avoid. When a judgment is filed though, it can impact more than credit. The judge may allow the creditor to garnish a debtor’s wages, which can heavily impact finances.

Collections

Collections are the most common types of accounts on credit reports. About one-third of Americans with credit reports have at least one collection account. Over half of these accounts are due to medical bills, but other accounts like unpaid credit cards and loans, utilities, and parking tickets can be sold to collections.

Collections arise from debts that are sold to third parties by the original creditor if a bill goes unpaid for too long. They have a severe negative impact on your credit and can stay on your reports for up to seven years. When potential creditors see collections on your credit reports, it can raise flags and cause them to think that you won’t pay your debts.

Foreclosures

A foreclosure is a legal proceeding that is initiated by a mortgage lender when a homeowner has been unable to make payments. Usually, a lender will file a foreclosure when a homeowner has been three months late or more on mortgage payments.

When a lender decides to foreclose, they begin by filing a Notice of Default with the County Recorder’s Office, which begins the legal proceedings. If a foreclosure goes through and a homeowner can’t catch up on payments, then they are evicted from their home, and the foreclosure is reported to the credit bureaus.

Bankruptcies

Bankruptcy is extremely damaging to credit. Individuals who file for bankruptcy are those who have too much debt, and not enough money to pay it. They likely have had overdue accounts for a long period of time and in some cases loss of income that prevents them from being able to pay any of their bills. Bankruptcies can also arise from huge medical debt.

Whether or not file for bankruptcy is a difficult decision, and doing so can impact your credit from seven to ten years, depending on the type of bankruptcy you file. When a bankruptcy is filed, debts are discharged and the individuals filing are released from most of their previously incurred debts (there are some exceptions). This option can give people a “clean slate” from debt, but creditors don’t like to see it on credit reports because it can imply that an individual won’t pay their debts.

Repossessions

A repossession is a loss of property on a secured loan. Secured loans are where you have collateral, like a car or a house, and the loss occurs when the lender takes back the property because of the inability to pay. Usually, when this occurs, the lender will auction off the collateral to make up for the remaining balance, although it doesn’t usually cover the remaining balance.

When there is a remaining balance, the creditor may choose to sell it off to collections. A repossession has a severe negative impact on credit because it shows a debtor’s inability to pay back a loan. Usually, a repossession follows a long line of late payments and can knock a lot of points off a credit score.

How can I improve my credit score with derogatory marks on my credit report?

If you have derogatory marks, you can improve your credit score by working to rebuild your credit. By boosting your credit score, you’re more likely to get approved for loans and credit cards.

Here’s how to improve your credit score based on the type of derogatory mark:

Derogatory mark What to do to improve your credit score
Late payments Pay off the full debt as soon as possible. If there are late fees, ask the creditor to drop the fee (they often do if it’s your first time being late).
Stay on top of your payments with other lenders to show that you’re responsible, reducing the impact of a late payment.
An account in collections or a charge-off Pay off the debt or negotiate a settlement where you pay less than the full amount owed. Making a payment doesn’t remove the negative mark from your report, but prevents you from being sued over the debt.
Tax lien Pay the taxes you owe in full as soon as possible. Continue to make timely payments with any creditors and lenders.
Civil judgment Pay off the judgment amount, ideally before it gets to court. Make other payments on time to limit the impact of the civil judgment on your credit score.
Debt settlement Pay the full settled amount to prevent your account from going to collections or being charged off.
Foreclosure Keep other credit and loans open and make timely payments to build up positive credit activity.
Bankruptcy Rebuild your credit after bankruptcy with credit cards that cater to lower credit and credit builder loans. Make timely payments to reestablish that you’re a responsible borrower.
Repossessions Continue to pay other bills on time and pay off any further debt to the creditor.

You can also remove derogatory marks if they’re inaccurate or unfairly reported. By requesting your free credit report, you can look for mistakes and inaccuracies.

For example, check to see if a missed payment was inaccurately reported or if someone else’s account got mixed up with yours. You can remove these mistakes, giving your credit score a boost. 

How do I remove derogatory marks from my credit report?

You can remove derogatory marks from your credit report by disputing inaccuracies with the credit bureaus. Here’s how:

1. Request and review your credit report

TransUnion, Equifax and Experian provide one free credit report each year. Request your credit report and review it closely for errors.

Look through both “closed” and “open” derogatory marks. Check to see if your personal information is correct and if the creditor reported payments and dates appropriately. Take note of any discrepancies.

2. Dispute derogatory marks

If you notice incorrect items, payments or dates you need to file a dispute with that credit bureau (and any bureau that lists the item on your report).

You can file a dispute through the credit bureau or have a professional assist you. It’s best to make disputes as soon as you notice them, ideally within 30 days of the incident. The credit bureaus must respond to you within 30-45 days. 

3. Follow up on the dispute

You may have to provide more information or proof to refute something on your credit report. Be sure to respond to any inquiries by the specified time. Check your credit report afterward to make sure that the error is removed.

Removing a derogatory mark from your credit report helps to repair your credit. You’ll also want to improve your credit by doing things like lowering your credit utilization rate, upping the average age of your credit and making timely payments.

If you’re unable to remove a derogatory mark from your credit report, you’ll need to wait until it rolls off of your report, usually within seven to 10 years. In the meantime, work to rebuild your credit and improve your creditworthiness.

steps to remove derogatory marks from credit report

How can I get help with derogatory marks?

You can remove derogatory marks from your credit report by yourself. However, getting help from a credit repair company can make the process easier and improve your chances of getting the negative mark removed.

Many consumers appreciate professional help as it saves time, energy and resources. Contact us for a free credit report consultation. We’ll talk about your unique situation and the ways that we can help you.

Source: lexingtonlaw.com

What are derogatory marks and how can you fix them? – Lexington Law

Derogatory Marks Header Image

Having a few items on your credit report dragging down your score can be incredibly frustrating, especially if you have a good financial record.

A derogatory mark is a negative item on your credit report that can be fixed by removing it or building positive credit activity. Because derogatory marks can stay on your credit report typically for seven to ten years, it’s important to know how to fix them.

Derogatory marks can affect your credit score, your ability to be approved for credit and the interest rates a lender offers you. Some derogatory marks are due to poor credit activity, such as a late payment. Or it could be an error that shouldn’t be on your report at all.

Types of negative items include late payments (30, 60, and 90 days), charge-offs, collections, foreclosures, repossessions, judgments, liens, and bankruptcies. We’ll cover what each one of these means, and how they can impact your credit reports.

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How do derogatory marks impact my credit score?

The amount that derogatory marks lower your credit score depends on the mark’s severity and how high your credit score was before the mark. For instance, bankruptcy has a greater impact on your credit score than a missed payment or debt settlement. And, unfortunately, having a derogatory mark impacts a high credit score more than it does a low credit score.

According to CreditCards.com and CNNMoney, even a single negative on your credit could cost you over 100 points. Negative items on your credit could cost you thousands of dollars in higher interest rates, or you could be denied altogether.

negative item score decrease stats

How long a derogatory mark stays on your credit report depends on the type of mark.

How long do derogatory marks stay on my credit report?

Derogatory marks usually stay on your credit report for around seven to ten years, depending on the type. After that period passes, the mark will roll off your report and you should start seeing a change in your credit score.

Here’s how long each derogatory mark stays on your credit report:

Type of derogatory mark What is it? How long does this stay on a credit report?
Late payment Late payments are payments made 30 days or more after the payment due date. Typically, this can remain on your report for seven years from the date you made a late payment.
An account in collections or a charge-off Creditors send your account to collections or charge them off if there’s been no payment for 180 days. Typically, this can remain on your report for seven years from the date you made a late payment.
Tax lien A tax lien is when the government claims you’ve neglected or failed to pay taxes on your property or financial assets. Unpaid tax lien: Can remain on your report indefinitely.

Paid tax lien: Can remain on your report seven years from the date the lien was filed.

Civil judgment Civil judgments are a debt you owe through the court, such as if your landlord sued you over missed rent payments. Unpaid civil judgment: Can remain on your report for seven years from when the judgment was filed, but can be renewed if left unpaid.

Paid civil judgment: Can remain on your report for seven years from when the judgment was filed.

Debt settlement Debt settlement is when you and your creditor agree that you will pay less than the full amount owed. A typical time period is seven years, starting from when the debt was settled or the date of the first delinquent payment if there were missed payments.
Foreclosure Foreclosure is when you fail to pay your mortgage and you forfeit the right to the property. Typically, seven years from the foreclosure filing date.
Bankruptcy Bankruptcy is a court proceeding to discharge your debt and sell your assets. Can remain on your report for seven years for Chapter 13 bankruptcy. Chapter 7 bankruptcy can remain on your report for 10 years.
Repossession A repossession is when your assets are seized, such as a vehicle that was used as collateral. Can remain on your report for seven years from the first date of the missed payment.

Types of derogatory marks

Late payments

Late payments occur when you’ve been 30, 60, or 90 days late paying an account. Although you don’t want late payments on your credit reports, an occasional 30 or 60-day late payment isn’t too severe. But you don’t want frequent late payments and you don’t want late payments on every single account. One recent late payment on a single account can lower a score by 15 to 40 points, and missing one payment cycle for all accounts in the same month can cause a score to tank by 150 points or more.

Payments 90 days late or more start to factor more heavily into your credit score, and consecutive late payments are even more harmful to your score, as each subsequent late payment is weighted more heavily. Sometimes, creditors will report payments as late as 120 days, which can be almost as severe as charge-offs and collections. Late payments can be reported to the credit bureaus once you have been more than 30 days late on an account and these late payments can stay on your credit reports for up to seven years.

Charge offs

A charge off is when a creditor writes off your unpaid debt. Typically, this occurs when you have been 180 days late on an account. Charge offs have a severely negative impact on your credit, and like most other negative items can stay on your credit reports for seven years. When an account is charged off, your creditor can sell it to collection agencies, which is even worse news for your credit.

Creditors see a charge off as a glaring indication that you have not been responsible with your finances in the past and cannot be counted on to fulfill your financial obligations in the future. When creditors see a charge off on your credit reports, they are more likely to deny any new applications for loans or lines of credit because they see you as a financial risk. If you do qualify, this can mean higher interest rates. Current creditors can respond by raising your interest rates on your existing balances.

Tax liens

In most cases, liens are the result of unpaid taxes – whether it’s at the state or the federal level. For a federal tax lien, the IRS can place a lien against your property to cover the cost of unpaid taxes. Tax liens can make it difficult to get approved for new lines of credit or loans because the government has claimed to your property. What this means is that if you default on any other accounts, your creditors have to stand in line behind the IRS to collect.

Unpaid liens can stay indefinitely on your credit reports. Once they have been paid, however, they can stay on your reports for up to seven years. Like judgments though, the credit bureaus are strictly regulated on how they can report liens because they are also public records.

Civil judgments

Judgments are public records that are also referred to as civil claims. A judgment can be taken out against a debtor for an unpaid balance. A creditor or collection agency can file a suit in court. If the court rules in favor of the creditor, a judgment is taken out against the debtor and put on their credit reports. This, like many other negative items, has a severely negative impact, and like most other negative items can be reported for seven years.

Judgments are also another indication that a person won’t pay their debts. Lawsuits are time-consuming and costly, so they are something that creditors potentially want to avoid. When a judgment is filed though, it can impact more than credit. The judge may allow the creditor to garnish a debtor’s wages, which can heavily impact finances.

Collections

Collections are the most common types of accounts on credit reports. About one-third of Americans with credit reports have at least one collection account. Over half of these accounts are due to medical bills, but other accounts like unpaid credit cards and loans, utilities, and parking tickets can be sold to collections.

Collections arise from debts that are sold to third parties by the original creditor if a bill goes unpaid for too long. They have a severe negative impact on your credit and can stay on your reports for up to seven years. When potential creditors see collections on your credit reports, it can raise flags and cause them to think that you won’t pay your debts.

Foreclosures

A foreclosure is a legal proceeding that is initiated by a mortgage lender when a homeowner has been unable to make payments. Usually, a lender will file a foreclosure when a homeowner has been three months late or more on mortgage payments.

When a lender decides to foreclose, they begin by filing a Notice of Default with the County Recorder’s Office, which begins the legal proceedings. If a foreclosure goes through and a homeowner can’t catch up on payments, then they are evicted from their home, and the foreclosure is reported to the credit bureaus.

Bankruptcies

Bankruptcy is extremely damaging to credit. Individuals who file for bankruptcy are those who have too much debt, and not enough money to pay it. They likely have had overdue accounts for a long period of time and in some cases loss of income that prevents them from being able to pay any of their bills. Bankruptcies can also arise from huge medical debt.

Whether or not file for bankruptcy is a difficult decision, and doing so can impact your credit from seven to ten years, depending on the type of bankruptcy you file. When a bankruptcy is filed, debts are discharged and the individuals filing are released from most of their previously incurred debts (there are some exceptions). This option can give people a “clean slate” from debt, but creditors don’t like to see it on credit reports because it can imply that an individual won’t pay their debts.

Repossessions

A repossession is a loss of property on a secured loan. Secured loans are where you have collateral, like a car or a house, and the loss occurs when the lender takes back the property because of the inability to pay. Usually, when this occurs, the lender will auction off the collateral to make up for the remaining balance, although it doesn’t usually cover the remaining balance.

When there is a remaining balance, the creditor may choose to sell it off to collections. A repossession has a severe negative impact on credit because it shows a debtor’s inability to pay back a loan. Usually, a repossession follows a long line of late payments and can knock a lot of points off a credit score.

How can I improve my credit score with derogatory marks on my credit report?

If you have derogatory marks, you can improve your credit score by working to rebuild your credit. By boosting your credit score, you’re more likely to get approved for loans and credit cards.

Here’s how to improve your credit score based on the type of derogatory mark:

Derogatory mark What to do to improve your credit score
Late payments Pay off the full debt as soon as possible. If there are late fees, ask the creditor to drop the fee (they often do if it’s your first time being late).
Stay on top of your payments with other lenders to show that you’re responsible, reducing the impact of a late payment.
An account in collections or a charge-off Pay off the debt or negotiate a settlement where you pay less than the full amount owed. Making a payment doesn’t remove the negative mark from your report, but prevents you from being sued over the debt.
Tax lien Pay the taxes you owe in full as soon as possible. Continue to make timely payments with any creditors and lenders.
Civil judgment Pay off the judgment amount, ideally before it gets to court. Make other payments on time to limit the impact of the civil judgment on your credit score.
Debt settlement Pay the full settled amount to prevent your account from going to collections or being charged off.
Foreclosure Keep other credit and loans open and make timely payments to build up positive credit activity.
Bankruptcy Rebuild your credit after bankruptcy with credit cards that cater to lower credit and credit builder loans. Make timely payments to reestablish that you’re a responsible borrower.
Repossessions Continue to pay other bills on time and pay off any further debt to the creditor.

You can also remove derogatory marks if they’re inaccurate or unfairly reported. By requesting your free credit report, you can look for mistakes and inaccuracies.

For example, check to see if a missed payment was inaccurately reported or if someone else’s account got mixed up with yours. You can remove these mistakes, giving your credit score a boost. 

How do I remove derogatory marks from my credit report?

You can remove derogatory marks from your credit report by disputing inaccuracies with the credit bureaus. Here’s how:

1. Request and review your credit report

TransUnion, Equifax and Experian provide one free credit report each year. Request your credit report and review it closely for errors.

Look through both “closed” and “open” derogatory marks. Check to see if your personal information is correct and if the creditor reported payments and dates appropriately. Take note of any discrepancies.

2. Dispute derogatory marks

If you notice incorrect items, payments or dates you need to file a dispute with that credit bureau (and any bureau that lists the item on your report).

You can file a dispute through the credit bureau or have a professional assist you. It’s best to make disputes as soon as you notice them, ideally within 30 days of the incident. The credit bureaus must respond to you within 30-45 days. 

3. Follow up on the dispute

You may have to provide more information or proof to refute something on your credit report. Be sure to respond to any inquiries by the specified time. Check your credit report afterward to make sure that the error is removed.

Removing a derogatory mark from your credit report helps to repair your credit. You’ll also want to improve your credit by doing things like lowering your credit utilization rate, upping the average age of your credit and making timely payments.

If you’re unable to remove a derogatory mark from your credit report, you’ll need to wait until it rolls off of your report, usually within seven to 10 years. In the meantime, work to rebuild your credit and improve your creditworthiness.

steps to remove derogatory marks from credit report

How can I get help with derogatory marks?

You can remove derogatory marks from your credit report by yourself. However, getting help from a credit repair company can make the process easier and improve your chances of getting the negative mark removed.

Many consumers appreciate professional help as it saves time, energy and resources. Contact us for a free credit report consultation. We’ll talk about your unique situation and the ways that we can help you.

Source: lexingtonlaw.com

Alternative Credit Data

Many people assume that you automatically receive a credit report when you’re born or turn 18, but this is far from the truth. The three major credit bureaus (Experian, TransUnion and Equifax) don’t open a credit file on you until you apply for and start using a form of credit. Some people may live several years into their adult lives without ever getting to this point. There is a financial term for people who have little or no credit—they’re known as credit invisibles.

As of 2019, there was an estimated 26 million adults in the United States with a thin or stale credit score. Unfortunately, these people can find themselves facing denials on credit applications or approvals with incredibly high interest rates. In fact, a low or nonexistent credit score can stop a person from getting credit cards or loans, being approved for a mortgage or even getting hired for a job.

In response to this gap that’s leaving millions of Americans in a tough predicament, alternative credit data is becoming more popular.

What is alternative credit data?

Alternative credit data is information that allows lenders to have more insight into a person with a limited credit profile. Traditional credit data looks at factors such as:

  • Credit card history
  • Loan and loan repayment history
  • Mortgage history
  • Credit inquiries
  • Public records, such as bankruptcy files

In comparison, alternative credit data looks at:

  • Rent payments
  • Utility payments
  • Cell phone payments
  • Payments for cable television
  • Payments for subscription services, such as Netflix
  • Money management markers (the amount of money in your savings, frequency of withdrawals and deposits and how long your accounts have been open)
  • The value of owned assets, such as cars or property
  • Payments on alternative lending methods such as payday loans, rent-to-own payments, installment loans, auto title loans and buy-here-pay-here auto loans
  • Demand deposit account (DDA) information (recurring payment deposits and payments, average account balance, etc.)

This alternative credit data is valuable information that can provide a clear picture of how risky a consumer is. For example, if a person has never missed a payment or made a late payment on their rent, has a decent amount of savings in their account and has steady recurring income, then you know they’re responsible with their money. Alternatively, a person who frequently makes late rent and cell phone payments will likely behave the same with credit payments.

How can alternative credit data be helpful?

Alternative credit data can give you a score if you don’t have one or boost your current score. Many people have ended up—either intentionally or unintentionally—as credit invisible. This means FICO doesn’t have enough information on them to determine a credit score.

After opening your first credit account, you’ll have to wait another six months before FICO issues a credit score on your profile. This is because the system needs at least six months’ worth of data to establish a pattern of behavior.

People can become credit invisible for various reasons. They could have spent years in a mostly cash job, such as serving or bartending, and never bothered to open credit. Or maybe they were scared of debt and avoided credit to avoid temptation.

Whatever the reason, credit invisible people can’t get very far without traditional credit data to back them up. Having no credit data is like a vicious cycle—it’s challenging to get approved for credit products without having credit information. So these people struggle to improve their thin profiles even when they want to.

However, in recent years, alternative data has grown in popularity because lenders have started to see this market segment’s value. It was previously assumed that those with thin credit were risky individuals. Now, it’s become more and more apparent that many of these people are potentially safe individuals who would be responsible with credit.

Does alternative credit data really work?

Yes, alternative credit data really works and is used by major credit bureaus and lenders. Additionally, alternative credit data is recognized by the Equal Credit Opportunity Act (ECOA). The ECOA requires that all credit scores:

  • Prove the scoring model can accurately predict risk
  • Don’t discriminate against any protected class based on marital status, gender, race, religion, sexual orientation, etc.

Alternative credit data can help both consumers and businesses. It gives more credit opportunities to the credit invisible who have a track record of being financially responsible. Of course, some people with thin credit profiles are high risk. But a report titled “Research Consensus Confirms Benefits of Alternative Data” found that a significant portion of credit invisible people are low to moderate risk.

Options for alternative credit data

There are a few options when it comes to alternative credit data.

UltraFICO

In 2018, FICO introduced its UltraFICO score to help those with a thin or nonexistent credit profile. Consumers simply need to link their bank accounts with their FICO score to provide additional indicators of sound financial behavior. If a consumer is financially responsible, they might see an increase in their FICO score. This is a free service and only requires a voluntary opt-in.

Experian Boost

In response to UltraFICO, Experian quickly followed and introduced its Experian Boost service. This free service allows consumers to link their bank accounts to their Experian profile to provide the credit bureau with more financial information. Experian says that, on average, consumers saw a 13-point increase in their credit score with Experian Boost.

Note that to benefit from this service, the lender you’re using will need to pull FICO Score 8 or higher and use Experian as the credit bureau of choice.

Level Credit

Level Credit is a company that promises to help “consumers build the credit they deserve.” Through Level Credit, consumers can link their bank accounts and have their rent payments reported in their credit profile. Level Credit verifies the payments and reports it to the credit bureaus on your behalf.

It’s important to note that to benefit from alternative credit data, you’ll have to use a lender that is willing to or already does use this type of information when evaluating potential borrowers. While many lenders are slowly starting to adopt these alternative scores, it’s not completely widespread across all credit lenders yet. Consider asking your lender up front if they consider alternative credit data before you apply with them.

How does your credit look?

Now that you know what alternative credit data is, it’s time to decide if you need it. First, know where your credit stands. Get a copy of your credit report and credit score. If you have a thin profile or a low credit score, you may need alternative credit data. Remember that alternative credit data will only benefit you if you’ve been responsible with payments.

Even if you’re relying on alternative credit data right now, it’s never too early to start building up your traditional credit data. You can improve your credit score by making payments on time, reducing your debt and keeping your credit utilization ratio low. Starting these behaviors early will also set you up for success so you’re always making financially sound decisions.


Reviewed by Vince R. Mayr, Supervising Attorney of Bankruptcies at Lexington Law Firm. Written by Lexington Law.

Vince has considerable expertise in the field of bankruptcy law. He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Pros & Cons to Building Your Own New Home

When it comes to owning a house, the decision whether to build or buy is one you have to contend with. Each option comes with its set of advantages and disadvantages. For instance, buying ensures you become homeowner in record time as opposed to building which takes longer. Whichever option you settle on, it helps to evaluate the argument for and against each. With that in mind, here are the pros and cons to building your own new home.

Building Your Own HomeBuilding Your Own Home

Pros

Less
Competition

Building has less competition than buying when it comes to getting your desired home. Properties are typically on the market for a little over a month. This means the competition is not only high but it’s also possible not to get a home; between the time it takes for financing to be approved and shopping, ‘your house’ could already be off the market.

Customization

Building means that you get to come up with a
design that embodies your dream house. You can personalize every detail from
the wall colors to the types of faucets. This beats buying whereby you have little
or no control on the layout, number of rooms or even the types of installations.

With own construction you can replicate
design features from your parents house for nostalgia. You also get the chance
to choose the type of contractors whose work is reliable. This is in contrast
to buying a home whose construction integrity could be faulty and easily to be
missed by real estate assessors.    

Less
Maintenance

Building codes and standards keep on
changing. This makes building from the ground up a chance for you to make your
home up-to-date. You can incorporate energy saving measures such as solar
powered HVAC systems. Furthermore, new appliances and building material means
you will be spending less on renovations for some years to come.

Cons

Time
Consuming

Building a new home can take anywhere between
a few to over 10 months, this is according a US Census Bureau report. This means for the entire duration of contraction you will have to
shoulder rent payments; money that could have gone to other expenses if you
opted to buy.

Can
be More Expensive

According to figures from the National Association of Home Builders, on average the cost of building a single-family house is about $289,415; this translates to over $66,415 more than the cost of purchasing a ready home. The high cost is a result of the level of personalization that comes with your own design and preferences. This could be spacious rooms, expensive décor or antique finishes.

Stressful

Building is quite stressful, even if you are not doing it with your own two hands; you are bound to get some headaches from overseeing the process. The project manager or foreman will be there to ask questions on specifications, design alterations and of course payments.

These issues will more than likely leave you exhausted and will eat into your daily routine. The stress from seeing construction can even lead to under performance in your job and cutting into your family time.

The Bottom Line  Building
comes with the satisfaction of knowing that you are the first owner of the
home. You get to install modern and energy saving appliances which lowers your
utility bills. You can also count on paying less for maintenance and upgrades
that comes with buying a house. On the other hand, building has some drawbacks.
These includes; having to wait for a long time before construction is
completed, being stressed due to strenuous decision making and lastly, there is
the possibility of spending way more on your new home than you would if you
chose to buy.

Source: creditabsolute.com

Alternative Credit Data – Lexington Law

Many people assume that you automatically receive a credit report when you’re born or turn 18, but this is far from the truth. The three major credit bureaus (Experian, TransUnion and Equifax) don’t open a credit file on you until you apply for and start using a form of credit. Some people may live several years into their adult lives without ever getting to this point. There is a financial term for people who have little or no credit—they’re known as credit invisibles.

As of 2019, there was an estimated 26 million adults in the United States with a thin or stale credit score. Unfortunately, these people can find themselves facing denials on credit applications or approvals with incredibly high interest rates. In fact, a low or nonexistent credit score can stop a person from getting credit cards or loans, being approved for a mortgage or even getting hired for a job.

In response to this gap that’s leaving millions of Americans in a tough predicament, alternative credit data is becoming more popular.

What is alternative credit data?

Alternative credit data is information that allows lenders to have more insight into a person with a limited credit profile. Traditional credit data looks at factors such as:

  • Credit card history
  • Loan and loan repayment history
  • Mortgage history
  • Credit inquiries
  • Public records, such as bankruptcy files

In comparison, alternative credit data looks at:

  • Rent payments
  • Utility payments
  • Cell phone payments
  • Payments for cable television
  • Payments for subscription services, such as Netflix
  • Money management markers (the amount of money in your savings, frequency of withdrawals and deposits and how long your accounts have been open)
  • The value of owned assets, such as cars or property
  • Payments on alternative lending methods such as payday loans, rent-to-own payments, installment loans, auto title loans and buy-here-pay-here auto loans
  • Demand deposit account (DDA) information (recurring payment deposits and payments, average account balance, etc.)

This alternative credit data is valuable information that can provide a clear picture of how risky a consumer is. For example, if a person has never missed a payment or made a late payment on their rent, has a decent amount of savings in their account and has steady recurring income, then you know they’re responsible with their money. Alternatively, a person who frequently makes late rent and cell phone payments will likely behave the same with credit payments.

How can alternative credit data be helpful?

Alternative credit data can give you a score if you don’t have one or boost your current score. Many people have ended up—either intentionally or unintentionally—as credit invisible. This means FICO doesn’t have enough information on them to determine a credit score.

After opening your first credit account, you’ll have to wait another six months before FICO issues a credit score on your profile. This is because the system needs at least six months’ worth of data to establish a pattern of behavior.

People can become credit invisible for various reasons. They could have spent years in a mostly cash job, such as serving or bartending, and never bothered to open credit. Or maybe they were scared of debt and avoided credit to avoid temptation.

Whatever the reason, credit invisible people can’t get very far without traditional credit data to back them up. Having no credit data is like a vicious cycle—it’s challenging to get approved for credit products without having credit information. So these people struggle to improve their thin profiles even when they want to.

However, in recent years, alternative data has grown in popularity because lenders have started to see this market segment’s value. It was previously assumed that those with thin credit were risky individuals. Now, it’s become more and more apparent that many of these people are potentially safe individuals who would be responsible with credit.

Does alternative credit data really work?

Yes, alternative credit data really works and is used by major credit bureaus and lenders. Additionally, alternative credit data is recognized by the Equal Credit Opportunity Act (ECOA). The ECOA requires that all credit scores:

  • Prove the scoring model can accurately predict risk
  • Don’t discriminate against any protected class based on marital status, gender, race, religion, sexual orientation, etc.

Alternative credit data can help both consumers and businesses. It gives more credit opportunities to the credit invisible who have a track record of being financially responsible. Of course, some people with thin credit profiles are high risk. But a report titled “Research Consensus Confirms Benefits of Alternative Data” found that a significant portion of credit invisible people are low to moderate risk.

Options for alternative credit data

There are a few options when it comes to alternative credit data.

UltraFICO

In 2018, FICO introduced its UltraFICO score to help those with a thin or nonexistent credit profile. Consumers simply need to link their bank accounts with their FICO score to provide additional indicators of sound financial behavior. If a consumer is financially responsible, they might see an increase in their FICO score. This is a free service and only requires a voluntary opt-in.

Experian Boost

In response to UltraFICO, Experian quickly followed and introduced its Experian Boost service. This free service allows consumers to link their bank accounts to their Experian profile to provide the credit bureau with more financial information. Experian says that, on average, consumers saw a 13-point increase in their credit score with Experian Boost.

Note that to benefit from this service, the lender you’re using will need to pull FICO Score 8 or higher and use Experian as the credit bureau of choice.

Level Credit

Level Credit is a company that promises to help “consumers build the credit they deserve.” Through Level Credit, consumers can link their bank accounts and have their rent payments reported in their credit profile. Level Credit verifies the payments and reports it to the credit bureaus on your behalf.

It’s important to note that to benefit from alternative credit data, you’ll have to use a lender that is willing to or already does use this type of information when evaluating potential borrowers. While many lenders are slowly starting to adopt these alternative scores, it’s not completely widespread across all credit lenders yet. Consider asking your lender up front if they consider alternative credit data before you apply with them.

How does your credit look?

Now that you know what alternative credit data is, it’s time to decide if you need it. First, know where your credit stands. Get a copy of your credit report and credit score. If you have a thin profile or a low credit score, you may need alternative credit data. Remember that alternative credit data will only benefit you if you’ve been responsible with payments.

Even if you’re relying on alternative credit data right now, it’s never too early to start building up your traditional credit data. You can improve your credit score by making payments on time, reducing your debt and keeping your credit utilization ratio low. Starting these behaviors early will also set you up for success so you’re always making financially sound decisions.


Reviewed by Vince R. Mayr, Supervising Attorney of Bankruptcies at Lexington Law Firm. Written by Lexington Law.

Vince has considerable expertise in the field of bankruptcy law. He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

AcreTrader Review – An Easier Way to Invest in Farmland

One of the most important parts of building a successful investment portfolio is diversification. Holding a mixture of different assets, like stocks, bonds, and real estate can help you reduce volatility. If one asset does poorly, another type might perform well and offset the losses.

Real estate investing can be very complex. Investing in real estate can be difficult without the help of vehicles such as real estate investment trusts (REITs). Even then, there are many different types of real estate you can invest in.

AcreTrader is a unique real estate investing platform that helps everyday people invest in an often-overlooked type of real estate: farmland.

What Is AcreTrader?

AcreTrader is a real estate crowdfunding platform that facilitates investments in U.S. farmland in places like Arkansas and other states across the Midwest. Traditionally, farmland investments have been difficult for the average investor to make, so AcreTrader aims to make the process easier.

The company has a team that combines experience in both agriculture and finance. The company carefully selects the opportunities it offers to investors and claims that it only selects 1% of the investment opportunities it sees.

AcreTrader also handles the management of these investments, paying out rental income and facilitating a marketplace where investors can sell their shares of farmland to others interested in buying farmland.


Key Features of AcreTrader

There are a few key facts to know about AcreTrader.

Thorough Underwriting

For many investors, it can be difficult to do due diligence when investing in real estate. Several factors influence the value of real estate and its potential returns, and farmland is unique enough that most people don’t know what to consider when thinking about an investment.

AcreTrader offers help with this through its underwriting process. The company only accepts 1% of the opportunities it receives from farm owners, based on the research and knowledge of its leadership.

AcreTrader displays investment opportunities for customers to consider. It also assigns a rating to each opportunity based on its risk and potential return according to AcreTrader’s vetting process. Investors can see the expected cash return, the overall expected return, the location of the farm, and the crops that will be grown.

By only accepting the best opportunities, AcreTrader hopes to provide strong returns and limit risks for investors.

Buying in Small Amounts

AcreTrader places each farm it buys into a limited liability company. It then divides the farm into shares representing one-tenth of an acre. That makes it easy for investors to invest the exact amount that they want.

Keep in mind that each offering has a minimum investment based on the size of the farm. The minimums tend to range from $15,000 to $20,000.

AcreTrader is only open to accredited investors, meaning people with an annual income of $200,000 or more ($300,000 for couples) or a net worth exceeding $1 million. That makes the $15,000 to $20,000 minimum relatively reasonable for its intended audience.

Multiple Sources of Return

Once an investment offering is fully subscribed, AcreTrader takes over the management of the farm. It works with professionals in agriculture and local farmers to help improve farm value through:

  • Sustainability improvements
  • Implementing best practices
  • Technological improvements
  • Capital investment

The farmers working the land also pay rent to AcreTrader annually. AcreTrader charges an annual management fee of 0.75% of the land value to its investors, taken out of the rent income it pays out to the investors.

AcreTrader states that it typically looks for opportunities that will yield 3% to 5% after fees and capital appreciation sufficient to result in an annual return of 7% to 9%.

Trade Shares or Hold Until Maturity

Investors on AcreTrader have two options for earning a return when they invest in farmland.

It operates a marketplace where its customers can sell shares to other investors. Customers can only sell AcreTrader shares through AcreTrader; they cannot sell them on the open market. This can make the shares far less liquid than the securities many people are used to, which trade frequently on the open market.

For people who don’t want to sell or who cannot find a buyer, AcreTrader investments come with a maturity date. When AcreTrader buys a property, it typically intends to hold it for three to five years, although sometimes the time frame extends as long as 10 years. This gives the company’s team time to make improvements to the land and the methods used to farm it, increasing its value.

Once the investment’s end date arrives, AcreTrader sells the farm and distributes the proceeds to the shareholders.

Flat Fees

AcreTrader charges a simple 0.75% fee for its investments, based on the value of the underlying farmland. Investors don’t pay the fees out of pocket. Instead, the company deducts the cost of managing the investment from the cash rent payments it receives from farmers. It passes the remainder on to investors as annual distributions.

Some opportunities may also come with closing costs associated with purchasing the land.

The 0.75% annual fee is relatively typical for companies that facilitate real estate investments.


How Have Farmland Investments Fared in the Past?

Past performance doesn’t indicate future results, but looking at how farmland investing performed in the past can provide some information to investors.

AcreTrader claims that since 1990, farmland has been one of the best-performing assets in the United States, outpacing the returns offered by stocks, bonds, precious metals, and traditional real estate. According to the company, an investment of $10,000 made in 1990 would now be worth nearly $200,000.

Much of this growth came from a recovery in the market for farmland following a crash that saw prices fall from a high in the early 1980s, as well as a boom in the late 2000s caused by increasing demand for ethanol.

Inflation-adjusted, farmland saw little change in value between 1900 and the 1960s, until the boom that began in the late 1960s and early 1970s.

Keep in mind that part of AcreTrader’s value proposition is improving the operating of the farms it purchases. The company’s team includes people highly experienced with agricultural best practices and technology. Even if farmland as an asset class holds steady or falls in value, AcreTrader may manage to increase the value of the specific properties it buys through the improvements it implements.

The promise of distributions from the rent AcreTrader receives also helps to offset the risk of falling or stagnant land values.

All in all, that means that is certainly potential for farmland to be a successful investment, but there’s no guarantee it will offer significant returns or outperform other asset classes.


Advantages

AcreTrader brings a few important benefits to the table.

1. Access to a Unique Asset Class

One of the primary benefits of investing through AcreTrader is access to investments in farmland. Farmland is a relatively unique asset class. It can be hard to get exposure to it through more traditional channels.

That means AcreTrader provides a unique opportunity to diversify your portfolio and capture gains most people don’t have access to.

2. Carefully Selected Offerings

AcreTrader touts its team’s combined experience in the worlds of both agriculture and finance. The company says it only accepts 1% of the opportunities that are presented because it has strict requirements that ensure the investments available through its site are of the highest quality.

If you believe in the expertise of AcreTrader’s management team, you can feel confident that you’re investing in high-quality farmland with great potential to produce income and grow in value.

3. Annual Cash Payments

AcreTrader offers returns in two forms: cash from the rental payments made by farmers working the land AcreTrader owns, and land appreciation created by the investments AcreTrader makes into updating the farms it purchases. These investments can help increase crop yields and make the land more valuable.

The regular cash payments can help smooth out returns if farmland fluctuates in value and provide investors with passive income. It can also provide a stream of income investors can use to add to their portfolio or cover other expenses.


Disadvantages

AcreTrader isn’t perfect, and it’s important to know the drawbacks before you start investing.

1. Relatively Unproven

AcreTrader was founded in 2018, which means the company has only been around for a few years. While the company is reputable, it doesn’t have the long track record of producing a positive return that other investment companies have.

It also means the company doesn’t have significant experience handling changing market conditions, which could increase risk during market turbulence. You might also worry about leaving the management of land that’s miles away from you to AcreTrader’s management team.

If you want to invest in similar asset classes, you might consider commercial real estate or other alternatives if you dislike AcreTrader’s lack of history. There are other real estate crowdfunding platforms, such as Fundrise, that facilitate commercial real estate investing.

2. Potentially Low Liquidity

When you buy shares in a farm through AcreTrader, it may be difficult to sell those shares to other investors. With traditional investments like stocks, bonds, and mutual funds, you can generally sell your investment on demand. This is important if you need to access your funds because of a financial crisis.

On AcreTrader, you can only sell your shares to other AcreTrader users through the platform’s marketplace. AcreTrader restricts investment to accredited investors, which limits the number of people who can join the platform. Non-accredited investors can’t get involved. That means there’s no guarantee you’ll find someone who wants to buy the shares you’re selling.

Given that the investment is relatively illiquid, if you need your money back, you might find yourself having to wait through the five- to 10-year holding period for AcreTrader to liquidate the investment and distribute the proceeds to investors.

3. Available to Accredited Investors Only

AcreTrader is only open to accredited investors. To qualify as an accredited investor, you must meet one of the following requirements:

  • Have an individual or joint (with a spouse) net worth exceeding $1 million, excluding your primary residence
  • Have an individual income exceeding $200,000 per year and a reasonable expectation of the same level of income in the current year
  • Have a joint income (with a spouse) exceeding $300,000 per year and a reasonable expectation of the same level of income in the current year

According to 2016 Federal Reserve data, only about 10% of households qualified as accredited investors, which means the majority of people cannot invest through AcreTrader.


Final Word

AcreTrader offers exposure to an unusual and potentially lucrative asset class for investors with sufficient net worth or income to qualify. The company helps with due diligence by only offering the best opportunities it comes across, but further research should be part of every individual’s investing process.

If you can’t invest through AcreTrader, or you’d prefer to invest in real estate through more traditional means, REITs provide an easy way to invest in different kinds of real estate while letting you use your regular brokerage account. You can also look into other real estate crowdfunding sites and investment platforms.

Source: moneycrashers.com

Can You Pay Rent With a Credit Card?

Charge! From everyday purchases to splurges, consumers often turn to credit cards. Some Americans even reach for the plastic to pay the rent. But is paying rent by credit card a good idea? Is it even allowed? The answer to both questions: It depends.

By late 2020, there had been as much as a 70% increase in the number of people paying rent by credit card, compared with the year before, according to data from the Federal Reserve Bank of Philadelphia.

And in light of pandemic pressures, landlords around the country had begun waiving or reducing fees for using credit cards to pay rent.

Let’s address questions and look at pros and cons of charging the rent in any economic climate.

Do Landlords Allow Payment by Credit Card?

For renters tempted to reach for the plastic, the first likely question is whether this mode of payment is even accepted. The answer will depend on the landlord, though many do not allow it.

The reason: Accepting credit card payments incurs fees for the merchant.

When people make a purchase on a credit card—whether they’re buying household items, a car, or paying the rent—they are essentially taking out a loan from their credit card company, which advances the money to the merchant (or in the case of rent, the landlord or property management company).

credit score.

As such, individuals may want to leverage credit cards for flexibility only if they are sure they’ll have the money available when their credit card payment becomes due.

Benefits, Including Cash Back

While there are many basic credit cards on the market, there are also credit card products that reward people for spending—in the form of cash back, points that can be redeemed toward travel and other perks, and other benefits.

The cost of housing consistently ranks as Americans’ greatest annual expenditure (based on percentage of total annual spending), according to the Bureau of Labor Statistics. For those with reward cards, this means paying rent by credit card can represent the greatest opportunity to rack up spending and earn those perks.

But it’s important to do the math. Third-party fees or credit card payment surcharges can cancel out any benefit a cardholder may earn, or even ultimately cost more if fees are greater than the reward offering.

Cons of Paying Rent With a Credit Card

Charging the rent can be a risky proposition. Regularly paying the rent by credit card because of a lack of money on hand can be a sign something is wrong financially, whether because of emergency circumstances or poor budgeting.

If you regularly charge the rent out of necessity, it merits taking a closer look into the root causes and how they may be addressed in your monthly budget.

But there are additional reasons why paying rent with a credit card may not be a good idea.

It May Cost More

As discussed, some landlords and third-party payment companies may tack on a surcharge for credit card payments.

Let’s say the surcharge is 3%, or an extra $30 on $1,000 in monthly rent. While that may not sound like much, it adds up to $360 a year, money some individuals may prefer to spend elsewhere.

Landlord surcharges are not the only thing that can make it more expensive to pay rent by credit card. When cardholders pay by the due date, they are only on the hook for the amount they agreed to pay. But making a credit card payment even a day late can increase the total amount due, thanks to interest charges. And the later the debt—in this case rent—is paid, the greater the interest charges will be.

Though interest rates vary by credit card, they are often higher than other lending products like personal loans.

The average credit card annual percentage rate exceeded 20% in early 2021. Worse, the interest compounds, so each month that cardholders do not pay off the rent in full, they will incur interest on both the balance and interest that has accrued.

It Can Affect Credit Score

Your credit score reflects your creditworthiness, or the risk you pose to lenders. The number (300 to 850 for the FICO® Score and VantageScore models) affects how likely it is for you to be approved for another credit card, or a mortgage or other loan, and the interest rate you will have to pay.

Regularly missing credit card payments will negatively affect your score. Because rent tends to be a significant expenditure, you’ll want to ensure that you will have the funds on hand to pay the balance in full if you choose to charge the rent.

But even on-time payments can affect a credit score. Scores are based in part on an individual’s credit utilization ratio—the proportion of credit being used relative to the total available amount.

rewarding credit card from SoFi that has no annual fee*.


*See Pricing, Terms & Conditions at SoFi.com/card/terms
1See Rewards Details at SoFi.com/card/rewards.
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com