• Home
  • Small-Business Marketing Statistics and Trends
  • What Is Mobile Banking?
  • How Student Loans Affect Credit Score?
  • Refinancing an Inherited House
  • How to Build a Kitchen?

Hanover Mortgages

The Refined Mortgage Lending Company & Home Loan Lenders

Credit Reports

Apache is functioning normally

June 4, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

We don’t want to get all mushy or anything, but you’re one-of-a-kind! And that means you have unique wants and needs.

There are a lot of mobile apps out there focusing on personalization, and some do a better job than others.

We pulled together seven of our favorites – each one will help you customize a different facet of your daily life.

Here they are!

Sworkit can help you get fit, regardless of how much time you have or where you are.

After downloading the app, you can choose what type of training you’re after (strength, cardio, yoga), your workout (full body, core, lower body) and the amount of time you have (anywhere from 5 to 60 minutes).

That’s it! Sworkit will curate a set of exercises just for you.

Available in: iTunes, Google Play, Amazon Apps

The latest version of BrightNest takes home customization to a new level with the Interactive Home Quiz.

The app serves up a series of simple “yes or no” questions about your home and delivers a personalized tip based on each response.

BrightNest also allows you to create custom to-dos and set recurring reminders, so whether you want to reorganize your tool shed twice a year or clean your fish tank once a week, BrightNest will help you get it done.

Available in: iTunes

Mint helps you understand exactly where your money is going.

Once securely synced with your bank accounts, Mint creates a customized budget based on personal spending.

Then, the app gives you the freedom to choose your own budget limits.

Whether you need to adjust your spending to include a new hobby (hello, new pottery wheel) or simply track your meals out, Mint makes it easy.

Available in: iTunes, Google Play, Amazon Apps, Windows Store

The mySkin app demystifies skincare by creating a personalized routine based on your skin.

When you sign up for mySkin, you’re prompted to answer questions about your skin type (dry or oily), skin color, hair color and past skin problems (like acne, blackheads or scars).

The app then serves up a skincare routine that’s right for you and recommends products.

Available in: iTunes, Windows Store

When you sign up for Ness, they’ll prompt you to select the types of foods you like and the types you hate.

After that, Ness will serve up restaurant recommendations, and allow you to rate places you’ve already tried.

Every time you rate a place you’ve eaten (it’s kind of like Netflix for restaurants), their recommendations for you will improve.

Available in: iTunes

Do you have trouble remembering people’s names?

What about doing quick math in your head or switching between different tasks?

Lumosity can help you get better at each of these things (or all three!).

When you create an account, Lumosity prompts you to select the different aspects of your brain that you’d like to train.

Then, they send you a customized workout routine every day. You can set training reminders at a time that works for you.

Available in: iTunes

Love to shop but hate the mall?

Keep personalizes the shopping experience by bringing styles you’ll actually wear into one app.

To customize your experience, choose brands, stores and looks that fit your personal style.

Then, under the MyFeed tab, you’ll see curated shoes, bags, clothes and home items for sale.

When you scroll over an item you like, you can “Buy” or “Keep,” making sure you never miss a deal.

Available in: iTunes, Google Play

BrightNest is a free site that provides tools and tips to homeowners to help them save money, get organized and keep their homes in great shape. Sign up for a free BrightNest account today!

Save more, spend smarter, and make your money go further

  • Previous Post
    When to Expect Your Tax Refund (and how to spend…

  • Next Post
    What to Do If You Have Duplicate Credit Reports

Chelsea Dehner

Browse Related Articles

Source: mint.intuit.com

Posted in: Financial Planning, Investing Tagged: About, All, Amazon, app, Apps, Bank, bank accounts, Blog, Budget, Buy, Clean, Clothes, color, Credit, Credit Reports, custom, dos, experience, Financial IQ, Financial Planning, Financial Wize, FinancialWize, Free, freedom, get fit, Google, great, home, homeowners, homes, How To, in, items, job, Life, LOWER, Make, making, math, Mint, mobile, Mobile Apps, money, More, needs, netflix, new, or, Personal, place, play, pottery, products, questions, rate, Refund, restaurant, restaurants, right, routine, sale, save, Save Money, Series, shopping, simple, Spending, Style, tax, tax refund, time, tips, tools, under, unique, wants, Wants and Needs, will, windows

Apache is functioning normally

June 1, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

Furniture is a huge investment, and picking up good pieces can easily run you hundreds, if not thousands, of dollars.

In truth, there are many ways to get high-quality, long-lasting furniture for much, much less money than you might imagine.

All you have to do is look around a bit, and think before you whip out the wallet and spend away.

Why blow your entire life’s savings on one couch when you can…

Buy in Bulk

Buying in bulk isn’t just for diapers and soda anymore.

As you know, many grocery items are available at places like Costco or Sam’s Club in giant bulk packages for far less than they would be if you bought the items one at a time.

This practice applies to furniture shopping as well. While you COULD buy a sofa, a loveseat, a couple chairs, and a coffee table separately, you’re going to pay full price for everything if you do.

That is, if you don’t go broke halfway through.

Instead, get all of those items at once, as part of a pre-set package.

You’re likely to spend hundreds of dollars less this way, and you’re also guaranteed that everything will match.

Craigslist

Unlike what some people think, Craigslist isn’t filled with nothing but horrible products and scam artists.

Sure, there’s a lot of that stuff, but there are also some legitimately good items up for sale there, including furniture.

People are moving, or they recently refurnished their house, and they need to get rid of their old stuff fast. That’s where you, and your moving truck, come in.

The trick here is to not fall for the scams.

Ask real questions, and if the answers you get are vague or fishy-sounding in any way, don’t pursue further.

Ask to see the furniture before you buy, so you can inspect to ensure they’re in good shape and that they’re what was advertised.

Then, once you’re satisfied that everything is on the up-and-up, pay the seller and enjoy your awesome new furniture.

Discount Warehouses

Just because a store sells furniture, doesn’t mean that they have to sell expensive furniture.

There are plenty of discount furniture warehouses out there that specialize in selling other companies’ inventory for prices far lower than you’d get first-hand.

Maybe too many pieces were made. Maybe a few of them have ever-so-slight imperfections that would keep them off the showroom floor.

Either way, finding these warehouses can mean quality furniture, not to mention big savings, for you.

Flea Markets

If you don’t want to deal with Craigslist or other online outlets, you can always try flea markets.

Contrary to the stereotype of flea markets being filled with nothing but junk, there’s plenty of good stuff available to those who really look around.

Much like with dealing with Craigslist, as long as you ask the right questions and inspect your potential purchase thoroughly, you’ll come away with great furniture at a tiny fraction of the original cost.

Build Your Own

Of course, if you’re really handy-dandy with tools and your bare hands, you can always make your own furniture.

Supplies are always going to be cheaper than finished products (after all, you’re paying for the convenience of somebody else making furniture for you,) and you can make your homemade furniture as plain and or as exquisite as you like.

And then, if you’re ever ready or willing to sell it off, you can do so at a ginormous profit.

After all, if you bought $50 in supplies to build a TV stand, and then sold it for $100 later on, that’s 100% of your money back, plus a 100% profit. No way can anybody say no to that.

How about you, Mint community? What are some of your favorite tips for wallet-friendly furniture shopping?

Mary Hiers is a personal finance writer who helps people earn more and spend less.

Save more, spend smarter, and make your money go further

  • Previous Post
    Can Deleted Items Be Reinserted On Your Credit Reports?

  • Next Post
    Good Advice From Bad People: A Review of Zac Bissonnette’s…

Chelsea Dehner

Browse Related Articles

Source: mint.intuit.com

Posted in: Financial Planning, Investing Tagged: About, advice, All, artists, ask, before, big, Blog, build, Buy, Buying, chairs, coffee, coffee table, companies, Convenience, cost, costco, couch, couple, craigslist, Credit, Credit Reports, expensive, Fall, Finance, Financial IQ, Financial Planning, Financial Wize, FinancialWize, floor, Fraction, friendly, furniture, good, great, grocery, house, How To, in, inventory, investment, items, Life, LOWER, Make, making, markets, Mint, money, More, Moving, moving truck, new, or, Original, Other, Personal, personal finance, price, Prices, products, Purchase, quality, questions, ready, Review, right, sale, save, savings, scam, scams, Sell, seller, selling, shopping, sofa, time, tips, tools, tv, will

Apache is functioning normally

May 31, 2023 by Brett Tams

As a new homeowner, I recently had to buy a homeowners insurance policy. And as a personal finance writer, I tried to take my own advice and “shop around.”

To be honest, it was a pain, and the rates I was getting on my own were way too high. Maybe it wouldn’t have been so bad if I wasn’t also trying to close on a house. In the end, I found an independent insurance agent, and she saved me hundreds of dollars and lots of headaches.

But I also learned that there were things I could do to help her keep my premium low year after year. For instance, I had planned to install an ADT security system, which I later learned would lower our premium.

So if you’re in the market for a new policy, here are six ways to make sure you’re getting the best possible rate:

1. Make sure you aren’t over-insured.

Being under-insured can be a big problem when disaster strikes. But being over-insured means you’re wasting your hard-earned moolah. So the ideal situation is to have just the right amount of coverage. So how do you do that?

Review your policy when it’s up for renewal each year. Specifically, make sure to review any floaters, which are extra insurance for items not fully covered in a standard homeowner’s policy. Examples include things like expensive electronics or equipment, valuable jewelry and artwork. If you no longer own the item or if its value has lowered, cancel or reduce the floater.

2. Reconsider your deductible.

A deductible is the amount of money you have to pay before your insurance policy kicks in and pays the claim. And the lower your deductible, the higher your insurance premium. According to the Insurance Information Institute (III), today most insurance companies recommend a deductible of $500 or more. But if you can afford to raise your deductible to $1,000, you could save as much as 25 percent. And, advises the III, don’t forget that you might have more than one kind of deductible. For instance, if you live in a disaster-prone area, like one prone to windstorms, hail or earthquakes, your insurance policy may have a separate deductible those specific types of damage.

3. Clean up your credit report.

Like it or not, when it comes to insurance, your credit report is up for grabs. The Fair Credit Reporting Act (FCRA), states that insurance companies have a “permissible purpose” to look at your credit information without your permission. And since insurers have found that credit history is a reliable predictor of how risky someone is to insure, they use that information to determine whether or not to offer you a policy, as well as how much to charge for your premium.

So besides all the other important reasons to monitor your credit report, doing so can also yield you a lower premium on your home insurance, or at least prevent your premium from going up. And be sure to order copies of your credit reports once per year, since you can be sure insurers are checking it before you renew. For instance, a 2007 report by the Arkansas Insurance Department found that in 2006, a total of 457,982 policies in the state were written or renewed that involved the use of credit as one of the factors weighed in determining the premium. Of those, 32.3 percent resulted in the premium being decreased, and 9.2 percent resulted in the premium being increased. In the remaining 58.5 percent, credit was a neutral factor.

According to the III, in most states the insurance company has to advise you that they’re raising your premium because of red flags on your credit report. But it’s best to just check your credit on a regular basis and correct errors quickly to make sure your record is always accurate.

4. Make your home Fire Marshall Bill-proof.

Fire Marshall Bill was a Jim Carrey character on the sketch show In Living Color, and his safety lessons, which he demoed on himself, resulted in fires, explosions, and loss of limb.

[embedded content]

You probably know better than to toss lighter fluid on a burning pipe, but you might not know about less ridiculous safety measures that could lower your insurance premium. Talk to your insurance agent or rep to find out if you can save money by doing things like:

  • Making your home more windstorm-resistant, such as adding storm shutters.

  • Updating your plumbing and electrical systems to reduce the risk of water and fire damage.

  • Increasing your home security with smoke detectors, burglar alarms or dead-bolt locks.

These aren’t cheap updates, so make sure they’ll lower your premium enough to make it worthwhile and that your updates will qualify for the discount. For instance, an insurer might have a list of qualifying alarm systems. Realistically, expensive updates like these aren’t usually done solely to save crazy money on insurance premiums. They’re typically things you want to do to make your home safer, or as Fire Marshall Bill would say, less “Dtuhhh-dthuhhh…DEADLY!”

5. Shop around every year.

We talked about this earlier, but really and seriously, you have to shop around if you want to make sure you’re getting a great rate. Ask your network for recommendations, and check out the National Association of Insurance Commissioners (www.naic.org) for help finding an insurer in your area. Pay special attention to the consumer complaint information, since price isn’t the only thing you want to consider when deciding on an insurer.

Or find an independent insurance agent, who shops around for you. Before finding my agent, my auto and home insurance quotes were in the $1,000-$1,300 range. Then I employed her services and she found a great policy from a reputable company for just $700. That’s some serious savings.

And speaking of auto and home insurance…

6. Consolidate to save more.

Some companies that sell multiple types of insurance, such as homeowners, auto and liability, will knock a percentage off your premium if you buy two or more policies from them. It can save you anywhere from 5 to 15 percent, according to the III. Just make sure the combined price with a discount is actually lower than buying separate policies from different companies.

Readers, can you add anything to this list? How have you saved money on your home insurance policy?

Source: getrichslowly.org

Posted in: Insurance, VA Loans Tagged: 2, 457, About, advice, agent, All, Amount Of Money, Arkansas, ask, Auto, before, best, big, Buy, Buying, Clean, color, companies, company, Credit, credit history, Credit Report, Credit Reporting, Credit Reports, Deductible, disaster, Electronics, expensive, FCRA, Finance, Financial Wize, FinancialWize, fire, great, history, home, Home & Garden, Home Insurance, Homeowner, homeowners, homeowners insurance, house, in, install, Insurance, insurance agent, insurance premiums, items, knock, learned, lessons, liability, list, Live, Living, locks, low, LOWER, Make, making, market, money, More, neutral, new, new homeowner, offer, or, Other, percent, Personal, personal finance, plumbing, policies, premium, price, proof, Quotes, Raise, rate, Rates, Review, right, risk, safety, save, Save Money, savings, security, Sell, smoke, smoke detectors, states, under, updates, value, will

Apache is functioning normally

May 28, 2023 by Brett Tams

The data, published on Monday, shows that older vintage mortgages (loans originated before 2010) accounted for under 9% of the total refinanced during the Covid-19 refi boom. This contrasts with nearly a third of mortgages refinanced from 2015 and later vintages. 

As it makes sense to refinance if the balance is higher, less than 10% of the mortgages with balances below $100,000 outstanding as of the first quarter of 2020 were refinanced, compared to half of those with balances between $400,000 and $500,000. 

When broken down by investor type, 38% of U.S. Department of Veteran Affairs mortgages outstanding as of the first quarter of 2020 were refinanced by the end of 2021, compared to 25% of Fannie Mae and Freddie Mac mortgage loans and 22% of Federal Housing Administration mortgages. 

According to the New York Fed researchers, the refi boom will have impacts for decades.

About 64% of the refis were for borrowers to get better rates, which resulted in an average payment reduction of $220. Nine million borrowers refinanced their loans without equity extraction, with an aggregate decrease of $24 billion annually. 

In addition, five million borrowers extracted $430 billion of home equity through cash-out refis. The average amount cashed out was $82,000, and the average monthly payment increased by $150. 

“The mortgage refinancing boom is over, but its impact will be seen for decades to come,” Andrew Haughwout, director of Household and Public Policy Research at the New York Fed, said in a statement. 

“As a result of significant equity drawdowns, mortgage borrowers reduced their annual payments by tens of billions of dollars, providing additional funding for spending or pay downs in other debt categories,” Haughwout added.   

According to the researchers, the 2020-2021 refi boom differed from the refi booms in 2003 and 2013 for three reasons: Interest rates were historically low; home equity was at an all-time high leading to the pandemic; and the rebound in rates was historically steep.

In fact, when the market turned, the 30-year mortgage rates rose by 400 basis points, climbing from a historically low rate of 2.68% in December 2020 to 6.90% in October 2022. Such an increase had not been seen since early 1980, per Freddie Mac’s estimates. 

And, the mortgage market is still recovering.

The New York Fed’s Center for Microeconomic Data shows in its Quarterly Report on Household Debt and Credit that mortgage originations – measured as appearances of new mortgages on consumer credit reports – dropped in Q1 2023 to $324 billion. 

That’s the lowest level seen since Q2 2014, which was an unusually low quarter due to the “taper tantrum.”

Meanwhile, the pace of equity extraction halted when mortgage rates began climbing. Quarterly equity extraction volumes were near historic lows in the first quarter of 2023, mainly as a share of disposable personal income, researchers said.  

“Owners now looking to move will face increased borrowing costs and higher prices, with current home prices being more than 36% higher than they had been pre-pandemic,” the researchers concluded. “The improved cash flow generated by the recent refinance boom will potentially provide significant support for future consumption.” 

Source: housingwire.com

Posted in: Mortgage, Refinance Tagged: 2, 2021, 2022, 2023, 30-year, 30-year fixed mortgage, 30-year mortgage, About, Administration, All, average, balance, before, borrowers, borrowing, categories, consumption, covid, COVID-19, Credit, Credit Reports, data, Debt, decades, Economics, equity, Fannie Mae, Fannie Mae and Freddie Mac, fed, Federal Reserve, FHA loan, Financial Wize, FinancialWize, Freddie Mac, future, historic, home, home equity, home prices, household, household debt, Housing, hwmember, impact, in, Income, interest, interest rates, Investor, Loans, low, market, More, Mortgage, Mortgage Borrowers, mortgage loans, mortgage market, Mortgage originations, Mortgage Rates, mortgage refinancing, Mortgages, Move, new, new york, New York Fed, or, Origination, Originations, Other, pandemic, payments, Personal, points, Politics & Money, Prices, Public policy, rate, Rates, rebound, Refinance, refinancing, Research, rose, Spending, the balance, time, under, VA loan, will

Apache is functioning normally

May 28, 2023 by Brett Tams

Credit card pre-approval makes signing up for your first credit card a lot easier.

The credit card marketplace is crowded, and every issuer is advertising to get your attention. But they may not tell you (or only tell you in the fine print) which cards you’re actually likely to get approved for, or which will score you the best interest rates. 

A little research into good credit cards can help you cut through the noise, and the pre-approval process helps you narrow down which cards are the best fit for your (cloth or virtual) wallet. It’s a low-risk opportunity to pick the credit card with the features you want — and to make sure you qualify. 

What’s Ahead:

What is pre-approval?

Credit card companies are always on the lookout for new customers. One way they find potential cardholders is by pre-screening credit reports from the major credit bureaus. 

They identify consumers whose credit scores and reports are in the ballpark of what the company looks for — like no bankruptcies, no delinquencies for several months, and a score below the company’s minimum cutoff.

Then they’ll send a pre-approval card offer to these consumers. 

It’s important to remember that pre-approval doesn’t mean you’re automatically qualified for the card. But it does mean you’ve made the “first cut” by fitting the credit card issuer’s most basic requirements. 

What’s the difference between pre-qualification and pre-approval?

Some issuers use the term “pre-qualified” instead of “pre-approved.” Though these terms are sometimes used interchangeably, they describe different types of offers based on who initiates the process.

Pre-qualification for a card means the customer (you) makes the first request.

If you’re interested in a specific card, you can go to the company’s website and fill out some basic info. The company responds by showing you the cards and offers you might qualify for if you made a formal application. At that point, you’re “pre-qualified” and can decide whether or not to apply. 

Or a lender may invite you to find out if you pre-qualify for their card (through an advertisement, for instance). This isn’t pre-approval, since the lender hasn’t screened your credit yet to see if you’ve made the first cut. 

Pre-qualification may be the route to take if you’re brand new to credit — without a credit score, you’re probably not getting on pre-approval mailing lists. 

Pre-approval means the credit card company reaches out to you first because you meet their basic requirements. Once they’ve scanned consumers’ credit scores, they let certain consumers know they’ve been “pre-approved.”

Lenders often tap into their existing customer base to find people to pre-approve, as well. If your current bank is rolling out a new credit card, for example, they might send you a pre-approval offer. 

Which is better, pre-approval or pre-qualification?

Neither of these processes is better than the other, or more likely to get you final approval. They’re just different ways to review your credit card options. 

For both pre-approval and pre-qualification, you’ll go through a soft credit check — a check that doesn’t impact your credit score. This means both processes are relatively risk-free. 

The hard credit check, the one that knocks a few points off your score, doesn’t happen until you fill out the longer application for the card. 

Read more: Soft pull vs. hard pull – how each affects your credit

How do I get pre-approved for a credit card?

Respond to an offer from a credit card company

If you have time to pick a card and don’t have a lender you prefer, you can wait for the credit card company to come to you. 

Companies do still send offers by snail mail, though not as much as they once did. So it’s worth taking a look at any mail offers before dropping them in the recycling bin. 

Pre-screened offers are different from the general mailings that companies send to everyone on their marketing list. Look for the words “pre-approved,” “pre-qualified,” or “pre-screened.” The offer may include an invitation code you’ll need to apply for the card online. 

One advantage to applying for a pre-approval offer is that they’ll sometimes give you an introductory deal associated with the offer, like a sign-up bonus or a few extra months of 0% interest. 

These deals aren’t always advertised to the general public, so they’re a nice pre-approval perk. 

Request pre-qualification on a credit card company’s website

Inquiring about a pre-qualification offer may be the best way to get credit card pre-approval if: 

  • You’re new to credit and opening your first credit card. 
  • You’re rebuilding a low credit score.
  • You want to go through a certain bank or apply for a specific card, and you haven’t received an offer.
  • You want to check out a wider range of card options. 

Most major card issuers that offer pre-qualification have an online link to a simple form. Usually, you won’t enter more than your:

  • Name.
  • Address.
  • Date of birth.
  • Social security number. 

Why is it important to get pre-approved or pre-qualify?

If you’re shopping around and considering lots of different cards, pre-qualification is a risk-free way to compare initial offers before you fill out any applications. 

The pre-approval stage allows you to: 

  • Rule out any cards or issuers that you don’t qualify for, so you don’t waste time applying. 
  • Figure out the interest rate range you’re likely to get. 
  • Compare potential sign-on bonuses, loyalty rewards, and other credit card features. 
  • Double-check the card company’s requirements for cardholders, which are more detailed than their pre-approval requirements. 

When you take the next step of a formal application, you’re officially applying for new credit. This means the company is required to run a hard credit check. They’ll ask your permission first. 

Hard credit checks do show up on your credit score, usually knocking it down only 10 or 20 points. That’s not a huge deal if it happens once in a while. 

But if you apply for credit pretty frequently — more than two or three times in six months — your credit score takes a bigger drop. 

With pre-approval, you can make sure you’re only committing to the hard credit check if you’re likely to be approved for new credit. 

Picking the right credit card to apply for

As a savvy MoneyUnder30 reader, you probably know this already, but I’ll remind you just in case: pre-approval or pre-qualification doesn’t mean the card is the best fit for your needs and lifestyle. 

First, spend some time figuring out what you want in a credit card. I suggest asking yourself questions like:

  • Are you likely to use it for big expenses like travel, or everyday costs like groceries?
  • Do you want a card where the rewards category matches up with the way you spend?
  • Is your main goal to start building credit? 

Once you know what’s important to you, you can use the pre-approval process to find cards that are a good match. 

This is especially helpful if your credit card pre-approval offer suggests multiple cards from the same company. These cards will all have slightly different terms, so take the time to do your research about their differences. 

Read more: Best credit cards for young adults & first-timers

How do you apply for a credit card after you’re pre-approved?

The pre-approval or pre-qualification process doesn’t require much info. 

You’ll usually enter your name, birth date, address, and your social security number (either the last four digits or the whole number) to confirm your identity. 

The official application is a lot more thorough. At a minimum, be prepared with: 

  • Income information. You may or may not need to submit proof of income, depending on the issuer. But you’ll at least have to estimate how much you earn every year. 
  • Housing payment information. This should include how much you’re paying in rent or mortgage a month.  
  • Employment status. 
  • Income details for a co-signer, if someone is co-signing for the card with you. 

Read more: How to apply for a credit card (and approval requirements)

What credit score do you need?

It depends. There’s no minimum score that applies to all issuers, so if you have any credit at all, it may be possible to pre-qualify for a card. Of course, the better your credit is, the more offers will be available. 

If you don’t have a credit history, it’s a little trickier. Some card issuers consider alternative credit data, like income and work history, to determine financial responsibility. 

Read more: What credit score do you need to get approved for a credit card?

After you get approved

If you make the final cut and get approved, not just pre-approved, it’s time to double-check your card terms.  

Credit card companies are required to provide the same terms listed in the initial pre-approval offer if they accept you. This means you should get the same interest rate, fee, or bonus that was stated in the offer. Many pre-approvals show a range of interest rates, so they’re required to give you a rate somewhere within that range. 

Read more: The best credit cards – MU30’s top picks

Are you guaranteed approval when pre-approved for a credit card?

Not necessarily. A pre-approval or pre-qualification is an invitation to apply, not a guarantee of acceptance. It means there’s a strong chance you’ll meet the standards for cardholders, but the lender needs to know more before actually extending you credit. 

Can you get denied after pre-approval?

Remember, pre-approval is just the first step in the process. You can get denied after submitting a formal application, even if you were pre-qualified or were pre-approved.

According to a 2019 report, only around 40% of credit card applicants made the final cut and got approved for a card. 

When you officially apply, you’re giving credit card issuers a lot more information about your financial status than you did in the pre-screening stages. This means they’ll judge you a little more strictly. 

Here are some of the most common reasons pre-approved candidates get their applications declined: 

  • Your monthly or annual income doesn’t meet the issuer’s minimum cutoff. 
  • Your reported payments are too high relative to your income.
  • Your credit data has changed significantly since the pre-approval offer. 
  • You’ve taken on debt or missed several payments since the pre-approval offer. 
  • Your income has dropped since the pre-approval offer. 

The lender should send you a letter telling you why they made the decision, so it won’t be a mystery. 

What if I can’t get pre-approved for a credit card?

If you don’t get any card pre-approvals or pre-qualifications, don’t sweat it. Credit lenders may be looking for cardholders who fit a particular financial profile, and that doesn’t reflect on your general creditworthiness. You still have a number of options. 

  • Try pre-qualifying with another credit card company. Their terms may be more generous or suited to what you need. 
  • Apply anyway. This is a risk because the issuer will run a hard credit check. But if you have stable employment, good income stats, or a co-signer with strong credit, these factors may make up for a less-than-perfect credit score. 
  • Work on improving your credit. Make rent, bill, and loan payments on time. If you’re brand new to credit, you can take out a credit builder loan (as long as you’re able to pay it back on schedule!). Or ask a trusted family member or partner if you can be an authorized user on their account. 

Read more: How to build credit the right way

Apply for a secured credit card

For credit newbies, secured credit cards are a nice bridge into the world of credit, and a lot of major card issuers offer them. 

You’ll “secure” the card with a deposit — this amount can vary, but think around $200 — which gives you access to a credit line up to that amount. Then you spend just as you would on any other card. 

After several months of responsible use, you’ll usually be eligible to transition to an unsecured credit card from the same company. 

Read more: Best secured credit cards

Credit card companies that offer pre-approval

Most of the bigger credit card names have pre-approval or pre-qualification forms that are easy and quick to fill out online. 

Keep in mind you may not be able to seek pre-approval for every card in the lender’s collection, but they’ll offer a decent range of cards to choose from. 

Summary

Whether you’re getting your first credit card or adding one to your collection, it’s worth going through the pre-approval process first. You’ll save time, preserve your credit, and hopefully end up with a great card that will help you achieve financial stability. 

Featured image: Roman Samborskyi/Shutterstock.com

Read more:

Source: moneyunder30.com

Posted in: Credit Cards, Personal Finance, Saving And Spending Tagged: About, Advertising, All, Applications, ask, authorized user, bad credit, Bank, bank of america, barclaycard, basic, before, best, best credit cards, big, bonus, bonuses, bridge, build, build credit, builder, building, Building Credit, capital one, chance, chase, co-signer, companies, company, Consumers, Credit, Credit Bureaus, credit card, credit card company, credit card issuer, Credit Card Offers, credit cards, credit check, credit history, Credit Reports, credit score, credit scores, Credit Scores and Reports, data, Deals, Debt, decision, Delinquencies, deposit, double, Employment, existing, expenses, Family, Featured, Features, financial stability, Financial Wize, FinancialWize, Free, General, Giving, goal, good, good credit, great, groceries, helpful, history, Housing, How To, How to build credit, impact, in, Income, interest, interest rate, interest rates, lenders, Lifestyle, list, lists, loan, low, Main, Make, Marketing, member, money, More, Mortgage, needs, new, offer, offers, opportunity, or, Other, payments, personal finance, points, pre-approval, pre-qualifying, pretty, proof, proof of income, questions, rate, Rates, Rent, Research, Review, rewards, right, risk, save, secured credit card, secured credit cards, security, shopping, simple, snail mail, social, social security, stable, stage, time, Travel, under, virtual, will, work, young, young adults

Apache is functioning normally

May 27, 2023 by Brett Tams

A fraud alert is a temporary alarm system set up on your credit account that will inform you if there are any changes in your account. A credit freeze is a freeze placed on your credit file that blocks lenders from viewing your report without authorization.

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Fraud alerts and credit freezes are two methods for protecting yourself from identity theft. But they’re not the same thing, and if you understand the pros and cons of each, you can decide which is best suited to your needs. A fraud alert requires creditors to verify your identity before allowing new credit accounts to be opened, whereas a credit freeze stops new credit accounts from being opened in your name. 

So, what’s the right choice for you in the fraud alert vs. credit freeze debate? Keep reading for a complete breakdown of both options. 

What is a fraud alert?

A fraud alert is when you put an added layer of security on your credit report that forces all lenders and financial institutions to verify your identify before approving a new credit account being opened. Typically, the creditor will call you whenever a new account request is initiated to confirm you’re the one asking for the account. 

People typically use a fraud alert if they’ve been a victim of identity fraud or if they suspect their information has been compromised. While a fraud alert adds some protection to your account, it’s not a guarantee, and there are still ways scam artists can get around the identity check. 

There are three main types of fraud alerts:

  • Standard fraud alert: A standard fraud alert typically lasts one year but can be renewed as many times as needed. Individuals don’t need to be victims of identity theft to activate this kind of fraud alert on their accounts. 
  • Extended fraud alert: An extended fraud alert lasts for seven years. This option is only available to those who’ve been victims of identity theft. To qualify, you have to file a report with the police or the FTC’s IdentityTheft.gov website. In addition to verifying your identity with each new account request, the extended fraud alert will remove you from marketing lists for credit and insurance offers for the next five years. However, if you want to remain on this list, you can choose to do so. 
  • Active-duty fraud alert: The active-duty fraud alert is only for military service members. When individuals go on active duty assignments, they can apply for this type of fraud alert to protect their accounts while they’re abroad. The alert typically lasts one year but can be renewed as long as the individual is deployed. In addition, they’ll be removed from marketing lists for two years unless they request otherwise. 

Fraud alerts are self-imposed and free to add to your account. 

How do you place a fraud alert?

You can place a fraud alert on your account by reaching out to one of the three major credit bureaus—Experian®, Equifax®, or TransUnion®. After you notify one bureau, it’s their responsibility to inform the others. You can set up a fraud alert online or contact any of the bureaus by phone with this request. You’ll need to submit your proof of identity to successfully set up the fraud alert. 

How do you remove a fraud alert?

Fraud alerts are automatically lifted from your account after the applicable deadline (one year for standard and active-duty alerts and seven years for extended alerts). However, if you want to remove the fraud alert earlier, you can. You’ll need to contact each credit bureau separately and request that the fraud alert be lifted. As was the case with setting up the alert, you’ll need to provide proof of your identity to remove the alert from your account. 

What is a credit freeze?

A credit freeze offers even more protection than a fraud alert. Essentially, a credit freeze stops anyone from accessing your credit report. This effectively prevents anyone from being able to open a new account under your name, as creditors need to review your report before approving a new application. You’ll be able to open new accounts only when you “thaw” or “unfreeze” your account.

How do you freeze your credit?

To freeze your credit, you’ll have to contact each of the three major credit bureaus separately. Note that fees are usually associated with a credit freeze, with the exact amount varying by state. On average, expect to pay around $10 per bureau for a credit freeze. You can apply for a credit freeze online or via phone for all three bureaus. 

When you’re setting up a credit freeze, you’ll be asked to set up a PIN or password, which can later be used to unfreeze your account. 

How do you unfreeze your credit?

Your report will stay frozen until you choose to “thaw” it. This means that you need to unfreeze your credit before applying for more credit, and this is usually the driving factor that motivates people to thaw their accounts. Often, people want to get a new credit card, loan, or mortgage or apply for a rental lease or some other credit account and need to give the lender access to their credit report. 

To unfreeze your account, you’ll need to contact each of the credit bureaus and provide your PIN. There may be a small fee associated with unfreezing your account with each agency. Once you put in a request to unfreeze your account, the change can take from as little as a few minutes to up to three days. As a result, it’s essential to give yourself plenty of time for the account to thaw before the lender goes to access your report. 

If you lose your PIN, unfreezing your account will still be possible, but it’ll take longer to approve. 

Do fraud alerts or credit freezes affect your credit?

No, fraud alerts and credit freezes don’t affect your credit. In fact, they can protect your credit from identity fraud attempts. Identity fraud is a serious situation that can significantly drag your credit score down and take months to years to clear up on your credit report. 

Which option is right for you? 

Ultimately, each individual needs to decide which option is right for them based on their situation. Some of the popular situations to consider that might call for either a fraud alert or a credit freeze are:

  • You’re in the process of or about to begin getting a mortgage, auto loan, lease, or another account: In this case, you don’t want to go through with a credit freeze, as access to your credit report will be necessary to approve your new application. Instead, a fraud alert should be sufficient to protect you. 
  • You’ve been a recent victim of identity theft or know your information has been compromised: If you’re seriously concerned about identity theft, you should likely opt for a credit freeze, as it’s more protective.
  • If you know you don’t need new credit for a while: Older people often are settled with all their credit needs—a mortgage, car loan, credit cards, etc. Therefore, they can comfortably assume they won’t be applying for new credit anytime soon and might feel more protected with a credit freeze. 

Note that you can have both hypothetically, although it might be somewhat redundant. Generally, most experts recommend choosing one or the other. 

Even with a credit freeze or a fraud alert on your account, it’s still crucial for you to check for fraudulent charges on your cards and look for red flags on your credit reports. You never know when something could slip through, and if it does, it’s crucial to act quickly. The longer something remains on your credit report, the longer it will impact your credit and be harder to rectify. 

If you don’t have the time or desire to check your credit reports, you can take advantage of the services provided by Lexington Law Firm. Our credit consultants will help you review your credit reports and file disputes if needed. Removing even one error from your credit report could result in a credit score increase. Get started today.

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.

Reviewed By

Paola Bergauer

Associate Attorney

Paola Bergauer was born in San Jose, California then moved with her family to Hawaii and later Arizona.

In 2012 she earned a Bachelor’s degree in both Psychology and Political Science. In 2014 she graduated from Arizona Summit Law School earning her Juris Doctor. During law school, she had the opportunity to participate in externships where she was able to assist in the representation of clients who were pleading asylum in front of Immigration Court. Paola was also a senior staff editor in her law school’s Law Review. Prior to joining Lexington Law, Paola has worked in Immigration, Criminal Defense, and Personal Injury. Paola is licensed to practice in Arizona and is an Associate Attorney in the Phoenix office.

Source: lexingtonlaw.com

Tagged: About, active, advice, agents, All, Arizona, artists, Auto, auto loan, average, before, best, california, car, car loan, choice, clear, cons, court, Credit, credit bureau, Credit Bureaus, credit card, credit cards, credit freeze, Credit Report, Credit Reports, credit score, creditors, debate, disclosure, driving, earning, Equifax, experian, experts, Family, Fees, fiduciary, Financial Wize, FinancialWize, fraud, fraud alert, Free, front, FTC, General, get started, getting a mortgage, graduated, hawaii, identity fraud, identity theft, impact, in, Insurance, Law, lease, Legal, lenders, lexington law, Links, list, lists, loan, Main, Marketing, military, More, Mortgage, needs, new, offers, office, one year, opportunity, or, Other, password, Personal, Phoenix, place, Popular, PRIOR, proof, pros, Pros and Cons, protect, protection, Psychology, rental, rental lease, Review, right, San Jose, scam, School, science, security, theft, time, TransUnion, under, will

Apache is functioning normally

May 26, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

When it comes to your financial health, what you don’t know can cost you. Just like the annual physical with your doctor keeps your body’s health on track, knowing your financial vital signs can save you money and help you keep fiscally fit. Match your financial knowledge in the categories below to see where you can shape up!

Net Worth

Do you know what your net worth is? If the answer is no, you’re not alone: most Americans don’t! But knowing your net worth, the value of your assets (your savings and retirement accounts, your house, collectibles, your car) minus your total debts (including house payments and car payments) – is key to tracking your financial health. Knowing your net worth offers a clear picture of your financial state, showing you how you spend your money. Calculate your net worth regularly—ideally once a quarter—to identify areas where there’s room for improvement.

Mortgage Rate

According to a new Bankrate.com report, a whopping 35% of Americans don’t know their mortgage interest rate. How about you?  Rates have bounced around historical lows for years, yet many homeowners who could benefit from refinancing haven’t taken advantage of the potential savings because they were unaware of their current rate. With rates expected to rise from 4.2% to over 5% in 2015, now is the time to do some easy research and stop leaving thousands of dollars on the table.

Credit Score

Your credit score – a three-digit number that represents your credit risk with a number that ranges from about 300 to 850 – is looked at by everyone from lenders to landlords. The National Foundation for Credit Counseling recently found that 60% of adults hadn’t reviewed their credit score within the previous 12 months.  Big mistake, particularly if you’re in the market for a loan.  Why is this number so important? Score high (mid 700s) and you could save thousands of dollars in low interest rates. Score low (below 620) and when you apply for a loan you’ll be offered a higher rate, favorable terms or even worse, you may not be able to obtain financing at all. Want to know where you stand? You can get your score for free from any number of providers including Mint.com. If your score is low, work on improving it by making your payments on time (try Mint Bills to get reminders when bills are due, stay organized, and pay on the spot). Also, cut back on using credit cards; a good rule of thumb is to avoid using more than 10% of your available credit on any card.

Make Friends with Your Credit Report

Your credit report contains detailed information about your credit history including things like credit-card use, auto loans and debts that were sent for collection. For such important information, an alarming number of credit reports contain mistakes. In fact, an FTC study indicates that as many as 40 million Americans have a mistake on their credit report. Since fewer than one-in-five consumers check their reports, chances are most people don’t know about the errors. Yet if a mistake is serious, it can lower your credit score and possibly result in your being denied credit. Get a free copy of your credit report on AnnualCreditReport.com and review it carefully.

–Vera Gibbons, Mint Contributor and Personal Finance expert

This post was corrected on March 6, 2015.

Save more, spend smarter, and make your money go further

  • Previous Post
    Don’t Let a Fender Bender Break the Bank

  • Next Post
    Money Mindset: Becoming a Financially Wise Woman

Chelsea Dehner

Browse Related Articles

Source: mint.intuit.com

Posted in: Financial Planning, Investing, Money Management, Mortgage Tagged: 2, About, All, assets, Auto, Auto Loans, Bank, big, bills, Blog, car, categories, clear, Consumers, cost, Credit, credit cards, credit history, Credit Report, Credit Reports, Credit risk, credit score, credit scores, Debts, Denied Credit, Digit, Finance, financial health, Financial IQ, Financial Planning, Financial Wize, FinancialWize, financing, foundation, Free, FTC, good, health, historical, history, homeowners, house, improvement, in, interest, interest rate, interest rates, landlords, lenders, Life, loan, Loans, low, LOWER, Make, making, market, mindset, Mint, mint.com, mistake, Mistakes, money, Money Management, money mindset, More, Mortgage, mortgage interest, MORTGAGE RATE, net worth, new, offers, or, payments, Personal, personal finance, rate, Rates, refinancing, Research, retirement, retirement accounts, Review, rise, risk, room, save, savings, time, tracking, value, woman, work

Apache is functioning normally

May 25, 2023 by Brett Tams

Monitoring your credit score sounds about as appealing as writing a term paper.

But having good credit is crucial for everything from getting a loan to getting an apartment. Which means if your credit score is on the lower end, you’ll need to be proactive — not just by monitoring it, but by actively working to improve it.

The problem? There’s a lot of conflicting info out there about what you should do to improve your credit score. Which tactics will actually make a difference, versus the ones that just sound like they’ll work?

Here’s what you really need to know about improving your FICO score, which holds the key to so many financial dreams.

What’s Ahead:

1. Target Collections Accounts First

“If your credit history includes unpaid bills that are in collections, work to pay those off [first] if possible,” says Kelley Long, a member of the National CPA FinLit Commission at the AICPA.

Letting an account get so late it goes to a collections agency is never a good thing for your credit, but the good news is the credit scoring algorithms will reward you for paying these accounts in full.

With collections accounts, the key is to get everything in writing. Request a letter stating that they received your payment in full and that they will update your credit report to show this.

In some cases, a collections agency may be willing to negotiate and settle your debt for less than the full amount. Again, you’ll want to get something in writing showing that the debt was settled and the account closed. But keep in mind this kind of arrangement may appear on your credit report as a settlement, which could be less positive than if you paid in full.

Read more: When Does an Account Go to Collections, and How To Avoid It

2. Pay Off Debts That Are Close to the Credit Limit

Even if you pay your credit card bill on time, it’s never a good idea to hold a balance near the maximum limit. The magic ratio is 35%, says Kevin Gallegos, vice president of Phoenix operations with Freedom Financial Network.

“If you have a credit card with a limit of $10,000 and you owe $3,500 on it, that’s 35% utilization,” he notes. “Anything over 35% is considered high and can [negatively] impact credit scores. Over 50% will have a definite negative impact on a credit score, and a maxed-out card will very negatively impact the score.”

Read more: What’s Your Credit Utilization Ratio?

3. Get a Higher Credit Limit (If You Can)

Believe it or not, requesting a higher credit line with an existing account can actually help your credit score, says Gail Cunningham, a spokeswoman with the non-profit National Foundation for Credit Counseling (NFCC).

“Or, open a new line of credit. The idea is that you’ll owe the same amount of money but it’s against a higher credit line, thus the ratio of credit-to-debt improves,” she explains.

“This option may not help you if you’re already having credit problems, however, because it takes good credit to get more credit. If, however, your credit score is in the high 600s or low 700s and you want to improve it even more, you may be able to find a credit card that offers a good chance of approval for your credit score range.”

She adds, “I’d caution, however, that this strategy only works for a person who’s very disciplined — and knows they won’t charge more simply because they have access to a higher credit line.”

In other words, take it easy at the mall with that credit line increase.

Read more: What Credit Score Do You Need to Get Approved for a Credit Card?

4. Look for Non-Credit Accounts That Will Report Payments to the Credit Bureaus

John Ganotis, Founder of CreditCardInsider.com, makes this remarkable point: “Rebuilding your credit doesn’t always have to involve a line of credit.”

One way is to put a utility service in your name.

“Call your providers to find who reports to the credit bureaus.”

You don’t even need to go direct to the providers if you don’t want to. Experian Boost is a free service that credits you for on-time utility payments — think cellphone, internet, cable, heating, electricity, water, etc. You just connect your bank account and let Experian do the rest.

Another is to report your living expenses to the credit bureaus, including your rent.

“Experian and TransUnion now include rent payments [in assessing FICO scores] when reported through online third party services.”

Read more: Build Credit By Paying Rent

5. Avoid For-Profit “Credit Repair” Companies

Some businesses charge a hefty sum to “repair” your credit, but they can actually do more harm than good, says Carl Robins, Vice President and Mortgage Banker with PrivatePlus Mortgage in Atlanta.

“What they don’t tell the consumer is that they’re signing up for a service to improve their scores that lenders — and current underwriting guidelines for mortgage transactions — won’t accept if there are still unresolved credit disputes on their credit report.”

He adds, “They also don’t explain the cumbersome process to have unresolved disputes removed from credit reports to qualify for a home purchase or refinance their current mortgage.”

If you feel like you need help managing your credit, look towards non-profit counseling options like the NFCC.

How to Get Approved for a Credit Line with a Less-than-Perfect Credit Score

If you follow the steps above and continue to pay all your bills on time, your credit score will improve.

Unfortunately, however, it takes time. Improving your credit score from below average (mid 600s or less) to good (720 or better) may take a couple of years. If you’re hoping to buy a home or take out other new credit in the meantime, it may be a challenge.

Here are some things to keep in mind:

1. Don’t Apply for New Credit Recklessly

The credit bureaus take note every time you apply for credit, and doing it too often will further hinder your efforts to improve your credit score.

Keep in mind that there are factors other than just your FICO score that are taken into account when you apply for a credit card, such as your income and credit utilization ratio.

Avoid applying for new credit unless you absolutely need it or are confident you will be approved.

Read more: Why You Could Be Denied a Credit Card Despite Your Excellent Score

2. Work with a Community Bank or Credit Union

If your credit score isn’t what it should be, a relationship with a community bank or credit union can really come in handy.

“A banker who knows you can perhaps look behind the poor credit history,” says Charlie Crawford, President and CEO of Private Bank of Buckhead in Atlanta. “They’ll look at the big picture rather than just a score or some other stand-alone piece of information.”

Best of all, a community banker can be straight with you and let you know your chances of being approved before you actually apply. Waiting as little as a couple months while you make some tweaks to your credit usage or budget may mean the difference between being approved or denied for a mortgage, and a knowledgable banker can tell you that.

Read more: Credit Unions vs. Banks: Think Local, Save Money?

3. Consider Secured Credit

“Establishing some cash-secured credit is one way to demonstrate your ability to pay while not putting a new bank loan at risk,” says Crawford.

If your credit score is in the low 600s, you may consider a secured credit card to help you establish a new credit line and have timely payments reported to the bureaus.

A secured credit card works just like a regular credit card except you first have to deposit money in a savings account to “secure” your credit line. Most secured credit cards can be converted to traditional credit cards (and you get your security deposit back) after a period of responsible use.

Read more: When To Consider a Secured Credit Card

The Bottom Line

The road to improving your credit isn’t always easy, but it’s well worth it. Consumers with good credit scores pay thousands less in interest over their lifetime and avoid hassles when getting jobs, apartments and, of course, loans.

Featured image: Nataliealien/Shutterstock.com

Read more:

Source: moneyunder30.com

Posted in: Credit Cards, Personal Finance, Saving And Spending Tagged: 2, About, advice, All, Amount Of Money, apartment, apartments, at risk, atlanta, average, bad credit, balance, Bank, bank account, banks, before, best, Best of, big, Big Picture, bills, Budget, build, build credit, Buy, buy a home, Cable, CEO, chance, charlie, Collections, commission, Community Bank, companies, Consumers, couple, Credit, Credit Bureaus, credit card, credit cards, credit disputes, credit history, credit limit, credit repair, Credit Report, Credit Reports, credit score, credit score range, credit scores, credit union, Credit unions, credit utilization, credit utilization ratio, credits, Debt, Debts, deposit, existing, expenses, experian, Experian Boost, experts, Featured, fico, fico score, Financial Wize, FinancialWize, foundation, Free, freedom, good, good credit, heating, history, hold, home, home purchase, How To, impact, in, Income, interest, internet, jobs, learned, lenders, line of credit, Living, living expenses, loan, Loans, Local, low, LOWER, Make, Managing Your Credit, member, money, More, Mortgage, negotiate, new, News, offers, Operations, or, Other, party, paying rent, payments, personal finance, Phoenix, poor, president, proactive, Purchase, Refinance, Rent, rent payments, repair, reward, risk, save, Save Money, savings, Savings Account, secured credit card, secured credit cards, security, security deposit, settlement, target, targeting, time, traditional, TransUnion, under, Underwriting, update, versus, will, work, working

Apache is functioning normally

May 24, 2023 by Brett Tams

.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-wrappadding:23px 23px 23px 23px;background-color:#f9fafa;border-color:#cacaca;border-width:1px 1px 1px 1px;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-contents-titlefont-size:14px;line-height:18px;letter-spacing:0.06px;font-family:-apple-system,BlinkMacSystemFont,”Segoe UI”,Roboto,Oxygen-Sans,Ubuntu,Cantarell,”Helvetica Neue”,sans-serif, “Apple Color Emoji”, “Segoe UI Emoji”, “Segoe UI Symbol”;font-weight:700;text-transform:uppercase;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-wrap .kb-table-of-content-listcolor:#001c29;font-size:14px;line-height:21px;letter-spacing:0.01px;font-family:-apple-system,BlinkMacSystemFont,”Segoe UI”,Roboto,Oxygen-Sans,Ubuntu,Cantarell,”Helvetica Neue”,sans-serif, “Apple Color Emoji”, “Segoe UI Emoji”, “Segoe UI Symbol”;font-weight:inherit;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-wrap .kb-table-of-content-list .kb-table-of-contents__entry:hovercolor:#16928d;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-list limargin-bottom:7px;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-list li .kb-table-of-contents-list-submargin-top:7px;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:beforebackground-color:#f9fafa;

When you swipe a credit card or take out a loan to make a purchase, you probably don’t think of the experience as a test of your personal integrity or reliability. You’re more interested in how you’ll feel behind the wheel of your new car, walking through your new home’s kitchen, or sitting in front of your new flat-screen TV.

But your creditors don’t care about how your purchasing habits improve your personal happiness or quality of life. They just want to recover the money they lent you — with interest. And they know from experience that it’s more difficult to recover said money (and interest!) from some borrowers than others.

The risk that you won’t repay your loans is known as your credit risk. Lenders assess credit risk using three-digit personal credit scores. The lower your credit score, the more trouble you’ll have qualifying for a credit card, mortgage, and many other types of credit.

There are also many less well known consequences of a low credit score. Find out what they are and how they can affect your life in unpredictable, unwelcome ways.


How Your Credit Score Works

Your personal credit score is based on the information in your credit report, which is a comprehensive look at your recent financial history.

Credit reports include data on:

  • Past loan payments, including late or delinquent payments
  • Credit utilization (how much you borrow as a percentage of your approved credit lines)
  • Recent credit applications, generally stretching back two years
  • The different types of credit accounts you have, like credit cards, personal loans, auto loans, home loans, and more — with information about the credit limit, lender, and other details for each
  • Recent adverse financial events, like bankruptcies and foreclosures

In the United States, most consumer credit reports are issued by the three major credit reporting bureaus: Experian, TransUnion, and Equifax. Keep in mind that although your credit score is derived from the information in your credit report and history, your credit score is not your credit report.

Your credit score is a number that summarizes your credit risk. Consumer credit scores generally follow a scale ranging from 300 (riskiest) to 850 (least risky), although there are exceptions. The most popular credit scoring methodology was devised by FICO and is known as your “FICO score.”

Lenders often segment credit score ranges into quality classifications, such as “A,” “B,” and “C.” They may use qualitative descriptors, like “Good,” “Very Good,” and “Excellent.” They may also draw a line separating “prime” and “subprime” borrowers at a particular score — usually somewhere in the 600s, depending on the lender.

Because each bureau’s report contains slightly different information at any given time, a credit score based on your one report is likely to vary a bit from the score based on another. That said, all three bureaus are considered reliable sources of credit-related information, and your score shouldn’t vary more than a couple dozen points at any given time.


The Possible Costs of a Bad Credit Score

Your credit score and, by extension, your overall credit profile don’t just affect your personal finances. Your credit influences many aspects of your personal and public life, including plenty that don’t involve borrowing.

This list covers seven well-known and not-so-well-known consequences of bad credit, such as difficulty getting approved for a loan, higher rates and terms on approved loans, costlier insurance, and difficulty qualifying for a traditional cellphone contract.

1. Getting Approved for a Loan Can Be Difficult

You probably know already that your credit score directly affects your likelihood of securing approval for a new loan or credit application. The lower your score, the less likely you are to find a willing lender. Many lenders simply don’t make loans to subprime borrowers or those who fall below a particular quality level or numeric score.

This can feel unfair because practically speaking, a credit score of 698 isn’t much different from a credit score of 702. But 700 is an important level to many lenders, which means those four points often make a real difference — with real-world consequences for your ability to invest in your future.

2. Higher Rates and More Restrictive Terms on Approved Loans

Getting approved for a loan counts as a victory. But if your loan comes with an unfavorable interest rate or restrictive terms, it could soon feel like a hollow one.

Every lender is different, and for competitive reasons, most are reluctant to disclose exactly how they set interest rates. But most are upfront about the fact that lower credit scores mean higher interest rates. According to Bank of America, one of the biggest lenders in the United States: “A higher credit score may help you qualify for better mortgage interest rates … and some lenders may lower their down payment requirement for a new home loan.”

The impact of higher rates and more restrictive terms can be enormous. An interest rate difference of a single percentage point can add tens of thousands of dollars to the total cost of a mortgage, depending on how the loan is structured. I used a free mortgage calculator to find the lifetime interest cost difference for a 30-year, $400,000 mortgage at 6% vs. 7% interest:

Total Interest at 6% Total Interest at 7% 30-Year Difference
$463,352.76 $558,035.59 $94,682.83

A single percentage point higher and you pay nearly $100,000 more over the 30-year life of the loan. Astounding! And although the numbers aren’t quite as large, the same effect applies to auto loans, home improvement loans, personal loans, and credit cards.

In many cases, the difference between a good credit score and a not-so-good credit score is less obvious for inexperienced borrowers. For example, if you’re a first-time homebuyer with a 615 credit score, your only realistic chance at getting a mortgage might be to a FHA home loan. But FHA loans take longer to close than conventional mortgages, which can scare off sellers. They also come with expensive mortgage insurance requirements that may last the entire life of the loan, adding hundreds to your monthly payment.

3. Trouble Renting an Apartment

If you’re applying for an apartment lease and local laws don’t explicitly prevent them from doing so, the landlord is likely to run your credit. Which makes sense. Like it or not, applicants with lower credit scores are statistically less likely to make timely rent payments. Landlords are especially wary of applicants with patterns of late payments, delinquencies, foreclosures, and bankruptcies in their credit reports.

But if you’re an applicant, this arrangement may not feel fair — and it can have a major impact on where you end up living. Landlords who own well-kept, modern properties in desirable neighborhoods typically hold renters to higher credit standards because high demand for their properties affords them the luxury of picking and choosing who they rent to. I’ll never forget one of my ex-landlords telling me that he wouldn’t rent his best properties to anyone whose credit score came in below 640, but that he was more lenient about places on what he called “the wrong side of town.”

He’s not the only one. Small-time landlords like him and bigger management companies alike follow the same general pattern. So if your credit score is below prime, you could find yourself in a shabby rental in a neighborhood you’re not crazy about.

4. Trouble Getting a Job or Security Clearance

According to a study cited by the Association of Psychological Science (APS), there’s little if any correlation between employee credit and job performance. Worse, APS found that credit checks during the hiring process appeared to reinforce racial disparities in employment by disproportionately disadvantaging Black applicants.

But that doesn’t stop employers from checking applicants’ credit during the hiring process. In fact, unless you live in one of the handful of states where the practice is banned or severely restricted, you should expect to have your credit checked when applying for a job. According to a survey by Demos — a think tank that focuses on consumer finance issues — one in four job applicants have had their credit run, and one in seven has been advised that they were denied a job due to poor credit (such disclosures are required in some jurisdictions).

Applicant credit checks are especially common in government and the financial industry. And the credit check process can rear its head even after you’re hired. Government agencies and contractors may run credit checks when you apply for a promotion that requires a new or higher-level security clearance, which means your boss could pass you over for reasons that have nothing to do with your job performance.

5. Trouble Getting a Cellphone Contract

Getting a cellphone contract sounds trivial when you’re worried about finding a job or place to live. But these days, living without a cellphone isn’t really an option. Do you even have a landline anymore?

Unfortunately, cellphone carriers pay close attention to new customers’ credit when determining whether to approve a new contract. As in rental housing, they know that higher-risk customers are less likely to make timely payments or have enough money in their account on the auto-debit date. Even if you’re only interested in a month-to-month phone plan, your carrier is still likely to run your credit because they know how easy it is to rack up excessive data, roaming, and international calling charges in a single month.

If you’re disqualified for a traditional cellphone contract due to a bad credit score, you still have options. They’re just likely to be costly or inconvenient.

Some carriers accept security deposits in an arrangement similar to a secured credit card. If you make timely payments, you generally get your deposit back after a year or two.

A prepaid phone plan is another option. The catch is that you often have to pay out of pocket for your new phone or find yourself choosing from older, less fun models. Prepaid plans are more likely to have restrictions on talk and data usage, though these aren’t as common as in the past.

6. Higher Insurance Premiums

The federal Fair Credit Reporting Act allows auto and homeowners insurance companies to pull consumers’ credit reports when making underwriting decisions. Most states further govern this practice, though few outlaw or severely restrict it.

Timely payment histories and outstanding debt levels are particularly important to insurers. If you don’t stack up well on these metrics, you’re likely to pay higher premiums than someone with better credit on an otherwise identical policy.

7. Potential Strain on Personal Relationships

Your credit score and overall credit profile can put tremendous strain on your personal life, especially the relationships that matter most to you. Although your credit profile doesn’t actually merge with your spouse’s after marriage, their credit can affect your ability to qualify for or afford new loans that you’re applying for together, such as auto or home loans.

Say you have excellent credit and your spouse’s is just so-so. When you apply for a mortgage, the lender looks at both profiles and assesses your household’s overall credit risk as the riskier of the two (your spouse’s). So even if your risk is low enough to meet the lender’s qualification standards, you’re likely to pay a higher interest rate or larger down payment together than you would were it just you applying for the loan.

To take another example, if you and your spouse jointly apply for a credit card with you as the primary user and they as the authorized user, their card usage and payment history (or lack thereof) can affect your credit. Should they fall behind on payments or rack up irresponsible charges, both of your credit profiles suffer the consequences.

Situations like these can lead to tension at home — possibly threatening the relationship’s very existence.


Bad Credit Score FAQs

Still have questions about what your credit score means for your finances, career, and personal life? See our answers to some common questions about bad credit — and what to do about it.

What Counts as a Bad Credit Score?

It depends how you define “bad credit score.”

The lowest FICO credit score considered “prime” by U.S.-based lenders is 660. Scores between 620 and 659 are considered “near-prime.” On the qualitative scale, near-prime scores are considered “fair” or “average.”

Verge below 620 and you’re getting into bad credit territory. Precise cutoffs vary, and many lenders prefer “bad” to poor, but suffice to say that if your credit score is below 600, it needs work. 

Can You Get Insurance If You Have a Bad Credit Score?

Yes, you can get insurance if you have a bad credit score. But you’ll probably have to pay more for it via higher premiums. 

To find the best possible deal, follow the age-old rule of buying insurance and shop around. It takes only a few minutes to get multiple quotes using an online insurance broker, and you could save hundreds per year on big-ticket auto or home policies.

Can You Lose Your Job Due to a Bad Credit Score?

No, you’re unlikely to be fired from your job due to a bad credit score alone. It’s more likely that you won’t get the job in the first place or that you’ll be denied a promotion that requires a higher security clearance. Not that those outcomes are much better.

Can You Get Evicted If You Have a Bad Credit Score?

No, you probably won’t get evicted from your apartment just because you have a bad credit score, or because your credit score drops due to a missed loan payment. 

But you certainly can get evicted from your apartment for missing multiple rent payments, which is statistically more likely for folks with bad credit. 

This is why many landlords avoid renting to people with low credit scores and why you’ll likely have to work harder to find a place if your credit isn’t where you’d like it to be.

Does Your Spouse’s Credit Score Affect Yours?

Not exactly. Your spouse’s credit score has no direct bearing on yours, but their actions can affect your credit and vice versa. For example:

  • You take out a joint loan (like a mortgage) and your spouse stops paying their share. Eventually, you default on the loan, damaging your credit.
  • You cosign your spouse’s loan application and they stop making payments at some point down the road. Your credit score drops along with theirs (unless you step in to make payments for them).
  • You make your spouse an authorized user on your credit card and they rack up a ton of charges they can’t pay back. You know the drill by now.

Trust is always important in a relationship, but so are boundaries. If you don’t trust your spouse to make financial decisions in your own best interest, think carefully before merging your finances completely.

How Long Does It Take to Improve Your Credit?

It depends on your starting point and on the details of your credit profile. It’s often easier and faster to build credit from the ground up than to recover after a major financial setback, like bankruptcy.


Final Word

It’s hard to overstate the importance of your personal credit. At the same time, it’s not the end of the world if your credit score isn’t exactly where you want it to be at the moment.

With such an incredible range of online credit-tracking resources, it’s easy to monitor your credit and learn how to improve it. Tracking your credit is also a great way to boost your financial self-confidence. Every incremental credit score improvement due to a timely payment or reduction in credit utilization is a minor cause for celebration. And the sooner you begin, the sooner you can start racking up those little wins.

@media (max-width: 1200px)

body .ns-buttons.ns-inline .ns-button-icon width: 100%; .ns-inline .ns-button –ns-button-color: #000000;

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

Source: moneycrashers.com

Posted in: Money Basics Tagged: 2, 30-year, About, age, All, apartment, Applications, at home, authorized user, Auto, Auto Loans, average, bad credit, bad credit score, Bank, bank of america, Banking, bankruptcy, before, best, big, black, Borrow, borrowers, borrowing, Broker, build, build credit, Buying, calculator, car, Career, chance, companies, confidence, Consumers, contractors, cost, couple, Credit, credit card, credit cards, credit check, credit limit, Credit Report, Credit Reporting, Credit Reports, Credit risk, credit score, credit scores, credit utilization, creditors, data, Debt, decisions, Delinquencies, deposit, Deposits, Digit, down payment, Employment, Equifax, events, expensive, experian, experience, Fall, FHA, FHA loans, fico, fico score, Finance, finances, Financial Wize, FinancialWize, Foreclosures, Free, front, fun, future, General, getting a job, getting a mortgage, good, good credit, good credit score, government, great, habits, Happiness, Hiring, history, hold, home, Home Improvement, home loan, home loans, homebuyer, homeowners, homeowners insurance, household, Housing, How To, impact, improvement, industry, Insurance, insurance broker, insurance premiums, interest, interest rate, interest rates, international, Invest, job, kitchen, landlord, landlords, late payments, Learn, lease, lenders, Life, list, Live, Living, loan, Loans, Local, low, LOWER, Luxury, Make, making, marriage, modern, money, More, Mortgage, mortgage calculator, Mortgage Insurance, mortgage interest, Mortgage Interest Rates, Mortgages, most popular, needs, neighborhoods, new, new home, or, Other, patterns, payment history, payments, Personal, personal finances, Personal Loans, place, plan, plans, points, policies, poor, Popular, Promotion, Purchase, quality, questions, Quotes, rate, Rates, reach, Relationships, Rent, rent payments, rental, rental housing, renters, renting, renting an apartment, risk, save, Saving, saving strategies, science, secured credit card, security, sellers, Side, single, spouse, states, Strategies, survey, time, town, tracking, traditional, TransUnion, Travel, trust, tv, Twitter, Underwriting, united, united states, walking, work, wrong

Apache is functioning normally

May 24, 2023 by Brett Tams

.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-wrappadding:23px 23px 23px 23px;background-color:#f9fafa;border-color:#cacaca;border-width:1px 1px 1px 1px;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-contents-titlefont-size:14px;line-height:18px;letter-spacing:0.06px;font-family:-apple-system,BlinkMacSystemFont,”Segoe UI”,Roboto,Oxygen-Sans,Ubuntu,Cantarell,”Helvetica Neue”,sans-serif, “Apple Color Emoji”, “Segoe UI Emoji”, “Segoe UI Symbol”;font-weight:700;text-transform:uppercase;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-wrap .kb-table-of-content-listcolor:#001c29;font-size:14px;line-height:21px;letter-spacing:0.01px;font-family:-apple-system,BlinkMacSystemFont,”Segoe UI”,Roboto,Oxygen-Sans,Ubuntu,Cantarell,”Helvetica Neue”,sans-serif, “Apple Color Emoji”, “Segoe UI Emoji”, “Segoe UI Symbol”;font-weight:inherit;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-wrap .kb-table-of-content-list .kb-table-of-contents__entry:hovercolor:#16928d;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-list limargin-bottom:7px;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-table-of-content-list li .kb-table-of-contents-list-submargin-top:7px;.kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_88a319-9a .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:beforebackground-color:#f9fafa;

Getting your first credit card can be an exciting milestone. You start to picture all the responsible things you’ll do with it, like putting your bills on autopay, getting extended warranties on vital electronics like laptops and cellphones, and collecting and cashing in all those sweet, sweet rewards points.  

But sometimes, your credit history doesn’t meet the requirements for approval. Fortunately, there are options available to help you secure a credit card and start building your credit. 

Two common approaches are having a co-signer or becoming an authorized user on someone else’s account. However, these credit relationships are more complex than they appear at first glance. It’s essential to explore the differences between co-signers and authorized users before you even ask someone.


Co-Signer vs. Authorized User: What’s the Difference?

Co-signing involves you having your own credit card, whereas an authorized user is something you become. Both could give you access to a credit card and improve your credit history, but both roles also have credit implications and unique responsibilities. 

What Is a Co-Signer?

A co-signer essentially lends their creditworthiness to support your credit application. 

If you don’t meet the issuer’s requirements, such as having insufficient income or a problematic credit history, you can find someone who has good enough credit to act as a co-signer. And even if you do qualify, having a co-signer with better credit might get you more favorable terms, such as a lower interest rate.

The credit card company checks both your credit before deciding to issue you a credit card. And by co-signing, they become just as legally obligated for the debt as you are. 

So expect your co-signer to want to stay informed about the account’s activity and take measures to ensure timely payments. They have a personal stake in your financial responsibility. That’s why co-signers are typically trusted family members or close friends.

Co-signing a credit card can have a significant credit score impact, both on you and your co-signer. The account activity, including payment history and credit utilization, shows up on both parties’ credit reports. 

Any late or skipped payments, high balances, or defaults can negatively affect the credit scores of both individuals. That’s because co-signed debt appears on the co-signer’s credit report just like any other financial obligation, potentially impacting their ability to take on new credit or loans of their own. 

And if you don’t pay up, the co-signer has to pay the entire debt, including any accrued fees or interest. If they don’t, you could both face lawsuits, wage garnishments, and severe credit score damage.

On the plus side, responsible credit management on your part can benefit both parties and help improve both your credit profiles.

Unfortunately, it can sometimes be difficult for them to get removed as a co-signer. Check the card agreement for a co-signer release option. Even if there is one, for them to get released, you must have a good payment history so the lender feels confident relieving them of co-signer responsibilities.

And if things go south, it can strain your relationship and have long-term financial consequences if you aren’t careful.

If you’re not 100% sure you can use the credit card responsibly, it’s probably best to seek out other options. It’s not worth destroying a relationship over.  

What Is an Authorized User?

An authorized user is someone the primary borrower adds to their credit card. 

An authorized user shares no legal responsibility for the debt, meaning they don’t necessarily make payments. They just have permission to make purchases on the account. But if you’re just trying to build your credit history, it can help to have someone add you to a card that reports on authorized users’ credit too (which is most of them).

When the primary account holder adds you to their account, you receive a card with your own name on it. The primary account holder retains control over the account and can monitor your spending activity. So it’s crucial to discuss upfront whether there are any guidelines they’d like you to follow.

For example, they may ask you to limit purchase totals to a certain amount, use the card only at certain locations or for specific reasons, or only use it if you can pay them back. They can swiftly cancel your card if you violate any of the rules.

It’s most common to become an authorized user on the cards of family members or trusted individuals. They may be willing to grant access to the account for various reasons, such as building credit, convenience, or sharing expenses.

Being an authorized user can have both positive and negative impacts on your credit. The account’s history, including payment behavior and credit utilization, is typically reported on your credit report as well. If both you and the primary account holder demonstrate responsible credit management, such as making timely payments and maintaining low balances, it can have a positive influence on your credit score.

But if the primary account holder has a history of late payments, high balances, or defaults, it can negatively affect your credit profile. You can also negatively impact their credit rating by charging too much or failing to pay them as agreed so they can afford the monthly payment.

As an authorized user, you don’t have the same level of control or decision-making power as the primary account holder. That means they can cancel the account, revoke your access, or make unexpectedly bad decisions that negatively affect your credit.

You’re not legally responsible for the debt incurred on the account, but you are ethically responsible if you agreed to pay. And there’s nothing to stop them from suing you if you don’t hold up your end of the agreement. 

Additionally, pretty much everyone else involved is going to act like the account holder is doing you a favor — probably because they are. So you’re unable to access certain account features or make changes to the account. 

It’s essential to establish clear communication with the primary account holder to understand any restrictions or guidelines associated with your authorized user status. And if your primary goal is improving your credit score, it’s critical that you become an authorized user with someone who has good or excellent credit on a card that reports on the authorized user’s credit. 


Key Differences Between Co-Signers & Authorized Users

Co-signers and authorized users are pretty much opposite in terms of their rights and responsibilities. The only thing they have in common is how it affects their credit score. 

Co-Signer  Authorized User
Definition Personally guarantees repayment Granted permission to use someone else’s credit card
Role Repays debt if you don’t Authorized to make purchases
Credit Check Yes No
Credit Impact Activity affects credit reports of both parties Activity may or may not impact the credit report of authorized user
Financial Risk Obligated to repay the debt if the borrower defaults No legal obligation for the debt
Control Has access to account information and decision-making Account control remains with the primary cardholder
Relationship Typically trusted family members or close friends Often family members or individuals with shared needs
Easy to Remove Only once you meet co-signer release threshold Yes

Should You Use a Co-Signer or Become an Authorized User?

You may find a credit card co-signer is the best option if you have credit or income issues. But you should only do it if you have no other option for getting credit. And consider whether you can just wait a bit and improve your income or credit score enough to qualify alone.

And you need someone willing to take on the risk as your co-signer. They should know you well enough to trust that you’ll pay your card on time, and you should also feel confident you can. The co-signer also needs to have good enough credit to qualify.

Using a co-signer can cause awkward situations and disagreements, so if you want to maintain a good relationship, think twice. After all, the person puts their finances and credit on the line for you. Running up charges or missing a payment can easily cause issues.

When deciding whether to add an authorized user, consider whether you trust the person to spend responsibly and pay you back as agreed. Even when they use the card, you’re the one stuck with the debt. So, you can easily end up with financial strains and a dinged credit score.

While you might intend to help a loved one build their credit as an authorized user, don’t disregard how it could affect your relationship. Arguments can happen if the person runs up your balance or doesn’t pay you back. This makes a usage agreement with the person crucial.

If you have any doubts about letting the person access your credit card, it’s safer to just not agree to make them an authorized user. Instead, you could help them create a budget and find other ways to build a credit history. That way, they can eventually get credit on their own.


How to Add a Co-Signer or Authorized User to Your Account

If you want to add a co-signer to a credit card application, first ensure your prospective creditor allows it. Unfortunately, most major banks no longer allow the practice. However, you may have better luck going through a smaller bank or credit union.

Depending on the creditor, you may have options to apply online, by phone, by mail, or even in person. In all cases, you must supply personal and financial information for yourself and the co-signer. Exactly how that works depends on how you apply.

  • Online: You both digitally sign and submit the application. 
  • Phone: The creditor may need to speak with the co-signer in addition to the borrower.
  • Mail: You must both fill out and sign the application, then mail it to the listed address.
  • In Person: You must both fill out and sign the application, then you must both go to a branch in person.

The creditor runs both your credit files. Then depending on how you applied, you may find out instantly whether you’re approved or have to wait for an email or even a letter.

If you want to add an authorized user, you’ll have better luck since most card companies allow it. You can either do it when you fill out your application or after you’ve opened the account. Either way, the process is straightforward, and you can do it online, by phone, by mail or in person

When applying, there’s a step to add authorized users. If it’s an existing account, you can log into your online portal, contact customer service, or if it’s at your bank, just walk in. 

The creditor won’t run a credit check, but they do need some information about the user. Common information requested includes the authorized user’s full name, birth date, Social Security number, address, and relationship to you. The user should receive their card upon approval.


Final Word 

Becoming or adding a co-signer or authorized user is not a decision you should take lightly. Both parties must feel comfortable with the responsibility and trust they’ll act in each other’s best interest. Otherwise, you risk a messy situation in which both parties’ finances and relationships are at risk. 

Communication and financial planning is key. If you use a co-signer, budget for your monthly payment and don’t carry a high balance that can harm you both. And if you add an authorized user, set limits with them and don’t hesitate to revoke their access if needed.

If your finances or relationships are too big a risk, other options exist for those who struggle to qualify for regular credit cards. Backed by a security deposit, a secured credit card involves a much easier approval process and can help with building credit for easier borrowing experiences later.

@media (max-width: 1200px)

body .ns-buttons.ns-inline .ns-button-icon width: 100%; .ns-inline .ns-button –ns-button-color: #000000;

Heather Barnett has been an editor and writer for over 20 years, with over a decade committed to the financial services industry. She joined the Money Crashers team in 2020, covering banking and credit content for banking- and credit-weary readers. In her off time, she enjoys baking, binge-watching crime dramas, and doting on her beloved pets.

Source: moneycrashers.com

Posted in: House Architecture Tagged: About, All, ask, at risk, authorized user, balance, Bank, Banking, banks, before, Behavior, best, big, bills, borrowing, Budget, build, building, Building Credit, clear, co-signer, collecting, communication, companies, company, Convenience, create a budget, Credit, credit card, credit card company, credit cards, credit check, credit history, credit rating, Credit Report, Credit Reports, credit score, credit scores, credit union, credit utilization, crime, customer service, Debt, decision, decisions, deposit, Electronics, existing, expenses, Family, Features, Fees, finances, Financial Planning, Financial Services, Financial Wize, FinancialWize, goal, good, history, hold, How To, impact, Income, industry, interest, interest rate, late payments, Lawsuits, Legal, Loans, low, LOWER, luck, Make, making, messy, money, More, needs, new, or, Other, payment history, payments, Personal, pets, Planning, points, pretty, Purchase, rate, Relationships, rewards, risk, running, secured credit card, security, security deposit, shares, Side, social, social security, South, Spending, stake, time, trust, unique
1 2 … 57 Next »

Archives

  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • October 2020

Categories

  • Account Management
  • Airlines
  • Apartment Communities
  • Apartment Decorating
  • Apartment Hunting
  • Apartment Life
  • Apartment Safety
  • Auto
  • Auto Insurance
  • Auto Loans
  • Bank Accounts
  • Banking
  • Borrowing Money
  • Breaking News
  • Budgeting
  • Building Credit
  • Building Wealth
  • Business
  • Car Insurance
  • Car Loans
  • Careers
  • Cash Back
  • Celebrity Homes
  • Checking Account
  • Cleaning And Maintenance
  • College
  • Commercial Real Estate
  • Credit 101
  • Credit Card Guide
  • Credit Card News
  • Credit Cards
  • Credit Repair
  • Debt
  • DIY
  • Early Career
  • Education
  • Estate Planning
  • Extra Income
  • Family Finance
  • FHA Loans
  • Financial Advisor
  • Financial Clarity
  • Financial Freedom
  • Financial Planning
  • Financing A Home
  • Find An Apartment
  • Finishing Your Degree
  • First Time Home Buyers
  • Fix And Flip
  • Flood Insurance
  • Food Budgets
  • Frugal Living
  • Growing Wealth
  • Health Insurance
  • Home
  • Home Buying
  • Home Buying Tips
  • Home Decor
  • Home Design
  • Home Improvement
  • Home Loans
  • Home Loans Guide
  • Home Ownership
  • Home Repair
  • House Architecture
  • Identity Theft
  • Insurance
  • Investing
  • Investment Properties
  • Liefstyle
  • Life Hacks
  • Life Insurance
  • Loans
  • Luxury Homes
  • Making Money
  • Managing Debts
  • Market News
  • Minimalist LIfestyle
  • Money
  • Money Basics
  • Money Etiquette
  • Money Management
  • Money Tips
  • Mortgage
  • Mortgage News
  • Mortgage Rates
  • Mortgage Refinance
  • Mortgage Tips
  • Moving Guide
  • Paying Off Debts
  • Personal Finance
  • Personal Loans
  • Pets
  • Podcasts
  • Quick Cash
  • Real Estate
  • Real Estate News
  • Refinance
  • Renting
  • Retirement
  • Roommate Tips
  • Saving And Spending
  • Saving Energy
  • Savings Account
  • Side Gigs
  • Small Business
  • Spending Money Wisely
  • Starting A Business
  • Starting A Family
  • Student Finances
  • Student Loans
  • Taxes
  • Travel
  • Uncategorized
  • Unemployment
  • Unique Homes
  • VA Loans
  • Work From Home
hanovermortgages.com
Home | Contact | Site Map

Copyright © 2023 Hanover Mortgages.

Omega WordPress Theme by ThemeHall