Wisdom Wednesday: Banking Terminology Made Easy!

The paperwork that comes with opening a new savings account can be potentially overwhelming and intimidating. But it doesn’t have to be! Greg Spadea, Director of Retail Deposits at Sallie Mae, and Martha Holler, Sr. Vice President of Communications helped review a few of the terms you need to understand.

1.) Annual Percentage Yield

This is the number one thing you’ll see with saving accounts and may also be stated with checking accounts that earn interest. This number tells you the actual amount you may earn on the account by calculating the interest rate across a year’s time. This is important because interest rates can change daily. The difference between APY and the average percentage rate (APR) is that yield takes into account compounding interest.

2.) Compound Interest

Compounding interest is one of the most exciting parts of interest rates. It means interest earned on interest. Adding this amount to your earnings can increase your earnings quite a bit over time. Be sure to look at the frequency. Compounding interest may be done at certain intervals. For instance, interest could be calculated monthly, quarterly or annually. Use online calculators to figure out how this will effect you based on the amount you’re saving.

3.) FDIC Insured

This is the difference between a bank and non-bank products. Also, having your money insured by the Federal Deposit Insurance Corporation (FDIC) means that if the bank becomes insolvent or no longer a viable entity, your money will safely be returned to you. If FDIC does not appear, you should approach with caution. If a bank becomes the insolvent, up to $250,000 per institution of your money is protected.

*Insolvent means that the banking institution is no longer financially viable or able to give back the money they are holding.

4.) NCUA

If you are going with a credit union for your savings account, look for the NCUA symbol.  NCUA is the National Credit Union Administration.  If you do not see it listed, you may be looking at product and not a checking or savings account. Many financial institutions look like banks, but do not have insurance to protect your money.

5.) Minimum Balance

Sometimes banks may require you to maintain a minimum balance to avoid fees. On a checking account, this fee can sometimes be thwarted by utilizing direct deposit services. Savings accounts are a bit different. If the fee exists, you may be able to avoid it with automatic deposits of a certain amount. Excessive withdrawals fees might exists for a savings account if you withdraw money more than 6 times in a month. This could cost you an average of $15 per excessive transaction.

Note: While the terms are generally standard, the amount of associated fees may not be. Always read terms and conditions for the bank accounts you have and the ones you’re considering opening. You can have terms printed at brick at mortar banks (ones with physical locations). Online banks can email this document to you. You may also be able to call the bank’s customer service center to get questions answered or direct you to where to find the answer on the bank’s website.

Originally posted on iGrad.com

Wisdom Wednesday: Top 5 Things To Know About Money Before You Graduate!

Congratulations! You’re graduating from college and you’re on the cusp of making real money. It’s exciting. But it can also be frightening. If you’re like most people, you’ve focused most of your energy on grades. You haven’t had a lot of time to pay attention to your finances. No worries though. This article is about to tell you the top five things to know as soon as you walk across the stage.

1.) Student Loan Debt

Now is the time to become familiar with any student loan debt. While many loans have a grace period, it’s still important to face your loans right now. And in case you’re wondering, a grace period is a period of time between graduation and when you must start making payments. Grace periods are usually six or nine months. Contact the National Student Loan Data System if you’re shaky about the terms of your loans.

Figure out how much you can afford to pay back each month. Create an action plan. Student debt is not easy to discharge – even in bankruptcy . Therefore, paying your student loans should be a priority.

2.) Credit Scores

Your credit score is important for many reasons: employment, buying a house – even just getting a rental agreement on an apartment. The higher your score, the better.

It’s okay if you don’t know your score right now. To get started, you can go to annualcreditreport.com . It’s a government website that lets you see your credit reports. Make sure all information is accurate. Although this won’t give you a credit score, it’s good to make sure there are no errors. Then you can know your score is accurate when you do discover your score.

There are many ways to get a credit score for free. For instance, many major credit cards come with free credit score monitoring. Here are several other ways to keep an eye on your score.

3.) Retirement Plans

You can fairly easily become a millionaire if you begin contributing to your retirement plan early enough. Plus, if you start contributing to your 401(k) on day one, you won’t miss spending the money. Ask anyone who’s age 50 or older; this is a great idea.

You can also contribute up to $5,500 per year to individual retirement accounts.

As a fun illustration, let’s assume you graduate at 22. You have $0 saved for retirement. But this same year, you begin contributing $5,500 annually. You invest the money in a simple mutual fund. Let’s assume you earn 7% annually – a very realistic number. Let’s say you retire at age 65. By this time, your account will look pretty healthy. At just $5,500 per year invested, your account will have grown to $1,458,154.01. At $5,500 per year, you’re virtually guaranteed to become a millionaire.

4.) Health Care

In the United States, you’re allowed to be on the health insurance plan of your parents until age 26. So you may have a few years. But it’s best to know what’s on the horizon. If you’re curious how much your own health insurance will cost, check out healthcare.gov and run an illustration. Or ask your employer to see how much the plan would cost.

I think the biggest takeaway of this exercise is to calm your fears. I know health insurance is a hot topic in the media but it’ll likely be cheaper than you think. Being an adult doesn’t mean being broke!

5.) Budgets

While some people do like budgeting every dollar, it’s not necessary. Budgeting can just be a catch-all word for watching how you spend your money. What is it you value? In what ways do you want to spend your money? Cars? Travel? A large home? Charity? A little of each? Budgets can help you meet your goals – even if they are more of an outline than a line in the sand.

Congratulations!

If you’re responsible enough to have read this article, you’ll probably do just fine with your money. Just remember to earn, save and invest consistently. Enjoy your first ‘real’ paycheck!

Originally posted on iGrad.com

Wisdom Wednesday: What is a “Good” Credit Score?

Learn about who keeps track of your credit score, and some rules of the road when it comes to determining “good” credit.

 

Your credit score is one of the most important components of your overall finances. Whether you want to establish yours, improve it or just keep it healthy, keep these things in mind.

  • Remember that a credit score lower than 650 could impact your overall financial health, making it hard to do things like get a loan or a good mortgage interest rate
  • Pay your bills on time, especially your credit card and loan payments —late payments of 30 days or more can leave damaging marks on your credit report
  • Opening multiple credit accounts in a short period of time may negatively impact your score
  • Check your credit report for free every year with Equifax, Experian, or TransUnion.
  • Contact a credit bureau if you find any mistakes
  • Remember that your credit score is determined by length of credit history, types of credit, credit inquiries, payment history, and total owed
  • Do everything you can to keep your “creditworthiness” high—that is, how big or small of a risk you look like to lenders

Wisdom Wednesday: How to Budget When You Don’t Make Enough Money

You lose your job. You get sick. Your husband loses his job. You are going through a divorce.

These are huge life-altering challenges with relational, emotional and financial implications. Often, the result is a situation where you don’t have enough money to pay the bills. Talk about things that keep you up at night… we’ve been there. To describe the situation as ‘unfortunate’ is quite the understatement. More like “drowning without a life vest”. Over 25 million Americans are living paycheck-to-paycheck today, and just one event could cause a financial panic.

Or maybe there was no single event that resulted in your financial situation – it’s just been the accumulation of increasing bills and a paycheck that hasn’t kept pace.

Whatever the reason – not making enough money to pay your bills is a HUGE problem facing many Americans today – so what can you do to keep it from becoming an all-out financial crisis?

Here are our 5 tips:

Keep a positive mindset

This is the hardest one, but also the most important. Negativity is attacking you from every direction. Thoughts like:

  • You will never get out of this mess
  • You will never find a job
  • You will lose your home

These thoughts will become a self-fulfilling prophesy if you give into them. And I’m saying this as a person who struggles with negative self-talk – it is a KILLER. You have to find what works for you. If you are able to stay positive and focused on what you need to do to get out of your situation, then reality will follow that positivity.

Recognize that it is temporary

Yes, this is bullet number 2, and you might be thinking ‘2 points in, and nothing actionable?’ This is on purpose. The actionable items below won’t stick if you don’t keep your head in the game. You need to act knowing that your financial situation will not last forever, and that it is simply a challenge that you have to overcome. Do not let this become your lifestyle – choose to be an overcomer instead of a casualty.

You are in a sprint right now because you need to be. But just like running, you can’t sprint forever. So make your sprint count!

Cut, cut, cut

Are you paying for cable? Cancel it. Do you have smartphones? Sell them and reduce your wireless bill. Do you meal plan and use coupons? Do you still go out to eat often?

I remember a time when we couldn’t pay our bills, I thought “well, what’s the point of budgeting?” That line of thinking was a huge mistake. Budgeting is more important than ever when you are running a deficit – you’ve got to drill down and figure out every single place that you can save money.

At this time in your life, you’ve got to get CRAZY (or is it more crazy to be paying for a 300+ channel cable package when you can’t pay your bills?) You are in survival mode – if you don’t need to be spending money on it, then you simply cannot afford to spend money on it.

Get More Money!

When you are running a monthly deficit in your budget, you have to attack this from both sides. Cut expenses and make more money. Yes, yes, I know. Easier said than done. But there are some things you can do from home that you might not have thought of. What if you were able to cut $300 from your monthly bills, and then also make an extra $300 through odd jobs or working from home? That’s $600 more in your pocket.

Can you work more hours at your job? Can your spouse go out and get another job? When you are in survival mode, no job should be beneath you, and any sacrifices you make are temporary because you are digging yourself out. If you had been laid off from a good paying white collar desk job, it’s ok to deliver pizza for a while before you land that next job.

Prioritize your bills

When there isn’t enough money to go around, how do you decide who gets paid and who doesn’t? Since we’ve been using the term “survival”, think of the things you would need to survive – food, shelter, clothing, transportation, energy… you’re first payments have to be the ones that keep you in your warm home, keep food on the table, and allow you to get to work.

After that, you need to figure out what creditors get paid, and which don’t. If you don’t have enough to pay some creditors, make sure to communicate with them. There are ways to negotiate with creditors, and this might be the time to do it. There are implications when settling debt, so be careful and make sure to do your research.

Here’s why I made the first 2 points mental rather than actionable – would you be willing to work those extra hours, to get rid of your smartphone, to take a job that might seem embarrassing, if you didn’t have a positive mindset?

The question we have for you today is what are you willing to do to make this happen?

Author: Mark Greutman

Wisdom Wednesday: How to set Up a Budget

Setting up a budget is a great way to help keep your finances on track and plan for the future. Without one, keeping track of how much money you bring in and spend each month can be nearly impossible! By creating a budget you will become strategic with your money and develop better spending habits that will pay off in the long term. You also will be better able to save for the future and achieve financial security. 

Check out these easy ways to get started creating a better budget for you and your family.


Wisdom Wednesday: The College Student’s Guide to Saving Money

Between buying textbooks, paying for food, and putting money towards tuition, it’s easy to see the importance of saving money in college. Getting a job isn’t always the most convenient option, especially because it means taking time away from your studies. If you have a huge course load and limited free time, finding ways to save money rather than earn more is your best bet. It’s a lot easier than you would think, and there are tons of ways to incorporate saving into your daily routine! Here are some tips on saving money in college, and ways to budget the money you’re no longer spending.

Buy used textbooks, and sell them back.

There are some great websites and stores out there that sell used textbooks at a fraction of the cost of new ones. When your course ends, you can sell them back, or find a friend that needs the same book for the upcoming semester. Check out Chegg.com for your textbook needs; it’s super convenient, and you can rent books as well!

Sell things you don’t need anymore.

If you’re like most people and have a closet stuffed with old bags, games, and random things you bought 5 years ago and never used, take some time to go through that pile of stuff, and sell it. Even if you only make a few bucks off it, you have more cash in your pocket, and less stuff in your closet.

Get rid of old clothes.

Whether it’s taking them to a store like Plato’s Closet, or selling them online at websites like Threadflip, there are tons of ways to make money off the clothes you don’t wear anymore.

Cut down on shopping, and spend less.

With the long list of payments you need to make for college-related fees, shopping shouldn’t be on the top of your priority list. That said, when you do go shopping, here are some tips on spending as little as possible:

  • Always shop with a purpose. If you set out on a shopping trip with a specific item in mind, you’re more likely to leave with just that item, rather than a bag full of things you didn’t really need.
  • Shop at discounted stores, like Marshall’s and Ross, or other thrift stores. You can find the designer brands you love to wear at a much lower cost, leaving you with more money to put towards tuition and other fees.
  • Buy used. While this can go for clothing, it can also go for more costly items, like electronics and appliances. Craigslist.com is a fantastic place to shop for used items, because people are constantly putting up new listings, and they make it easy to find people in your area with the things you need!

Ask for student discounts.

You wouldn’t believe how many stores give out student discounts. Most are between 15 and 20 percent, which really adds up if you limit your shopping to those places. It never hurts to ask!

Make a list of things you want and their prices.

There’s a huge differences between wants and needs. On a budget, it’s harder to buy those “wants”, which is why creating a list of them may help you decide which things you can do without. I like putting an estimated price next to these items, because it’s easier to see how reasonable it is for me to buy them.

Make your own stuff.

Making your own things, like face wash, laundry detergent, and jewelry, saves a ton of money. Whenever a friend’s birthday comes around, consider making a few things for them rather than going for the typical Starbucks gift card route. It costs less, and they always love getting something unique!

Take advantage of being on campus.

Keep an eye out for events being held around campus, because they are free, and that’s always a good reason to attend! Some have free food, t-shirts, and other things you’d otherwise pay for. I mean, who doesn’t like free stuff?

Make your own coffee.

Any Starbucks lover like myself knows how expensive buying coffee can get. When you’re spending up to $7 every morning on a drink, you might as well take half the money you earn and put it on a Starbucks card. Investing in a coffee maker and making your own coffee is a much better option, and while coffee makers can be expensive, you’ll be saving money in the long run.

Avoid eating out.

Just like buying coffee, the cost of eating out can add up quickly, even if it’s only a few times a week. Try eating at home as often as possible. When you do eat out, try to limit it to the weekends, and go to places that offer student discounts.

Keep applying for scholarships.

There are always scholarships waiting to be applied for, and most only take a few minutes to fill out. Scholarships are the easiest way to gain the most money, so take the time every once in a while to apply for them. Websites like fastweb.com and zinch.com gather hundreds of scholarships together to make it easy for you to find ones that match your qualifications and apply for them. You’ll be happy you did it!

Overall, keeping up with your budget and staying on top of your spending are the best ways to save money in college. Only spend what you’re able to make up, and if you go over that, make it your priority to stop spending for a while. As long as you keep track of where your money is, you’ll find that keeping money in your pocket is easier than you thought.

Wisdom Wednesday: Powerful Habits of the Ultra Successful

Often individuals think that successful people are born with an innate ability to lead and excel at whatever they do – or that success just comes easier for some than others. However, motivational speaker Brian Tracy says, “Successful people are simply those with successful habits.” Changing poor habits and taking the time to invest in yourself will result in empowerment and positive changes. Take a look at the 10 most powerful habits of ultra successful people:   Infographic1

Wisdom Wednesday: 7 Money Mistakes to Avoid in your Twenties

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For the YOLO generation, your 20s may seem like they’re all about embracing mistakes. But when it comes to money, what you do now can make or break your future financial success. Here are seven money mistakes you’ll want to avoid in your 20s.


1. Not Budgeting
Failing to set up a monthly budget and stick to it can leave you living paycheck-to-paycheck. Worse, you may find yourself slipping into debt when you’re tempted to spend more than you earn. But with a well-planned budget, you can’t only stay in the black, but also save for emergencies or retirement.

To get started, you’ll want to track your expenses using a budgeting app or pen and paper. To create a budget manually, list your monthly expenses and subtract them from your total income. From there, you can figure out which unnecessary costs, like entertainment or shopping, you can cut back on in order to reach your savings goals and pay for essentials, like rent, bills, and groceries.
2. Not Saving for Emergencies
An emergency fund can spare you from getting into major debt if you suddenly lose your job, experience a medical emergency, or otherwise incur unexpected costs, like an expensive car repair. Your savings should cover six months’ living expenses. Ideally, that would give you the flexibility to bounce back from an emergency. To make saving convenient and consistent, set up an automatic transfer from your checking to your savings account around payday.
3. Postponing Retirement Savings
Just 55 percent of all millennials are saving for retirement, according to the 2014 Wells Fargo Millennial Study. But a key to building a solid nest egg is starting early enough to reap the benefits of compound interest. Compound interest allows you to earn interest on your original investment, plus any money your account accrues in interest over time. So the earlier you contribute to a Roth IRA or 401(k) the more earning potential your initial investment has.
4. Not Building Credit
Good credit helps you access the best loans, housing, and credit cards on the market. If at first you’re not approved for good credit credit-cards consider applying for a secured credit-card. Secured cards require a deposit as collateral in case you can’t pay your bill. But as you demonstrate your creditworthiness with a secured card, you can apply for cards with lower interest rates and better rewards.

Don’t apply for too many credit cards at once, though, or it will hurt your credit score. Once you have a card, make on-time payments and keep you credit utilization ratio, or ratio of debt to credit available, below 30 percent to raise your credit score. Monitor your credit with a free annual report from each of the three major credit reporting agencies: Experian, Equifax, and TransUnion. For a few bucks extra you can get your credit score, too.
5. Neglecting Student Debt
The longer you take to pay off your student loans, the more you will spend on interest over the life of the loan. For instance, if you’re like the average 2014 graduate who is $33,000 in debt, a 10-year repayment plan at a 3.4 percent rate will cost you just under $6,000 in interest over the life of your loan.

That said, if you have credit-card debt and student loans, paying off credit card debt should be the priority, since it comes with higher interest rates. But your student debt shouldn’t be ignored. And as soon as your credit card debt is paid off, your contribution should increase toward student loans.
6. Letting Your Bills Pile Up
Short-term consequences of not paying your bills could include various fees, as well as higher interest rates on loans and credit cards. Bills that remain unpaid for extended periods of time might be handed over to collection agencies, in which case your debt may be reported to the credit bureaus. Once the delinquency is reported, your credit score could suffer until the debt is paid. Even after you pay up, collections generally remain on your credit report for seven years.Setting up automatic payments on your bills is an easy way to avoid paying a heftier price for your bills in the long run.
7. Hasty Family Planning
The costs of a wedding and child-rearing can set a young couple back financially before they get the chance to harmoniously merge their finances. The average cost of a wedding was $29,858 in 2013, according to a survey conducted by The Knot. And the steady increase in those costs over the years suggests we’ll be paying even more for “I dos” in 2015. Raising a child born in 2013 costs more than $245,000, according to a U.S. Department of Agriculture report. So while considering the money angle while making family decisions is not necessarily what your heart wants, it may make sense for your long-term financial stability.

This article was originally published on NerdWallet.

Wisdom Wednesday: Budget Ideas For People Who Hate Budgets

budget

Follow these three tips to effectively budget your money, even if you hate budgeting.

Raise your hand if you think sitting down with a spreadsheet full of numbers sounds like a good time. Chances are, there aren’t many hands in the air — but if you want to do more with your money and have a positive impact on your current financial situation — it’s critical.

We’re talking about budgets. You need one so you can take charge of your finances and meet your biggest money goals.

For starters, it is important to understand that you actually have a lot of options here! Just because you hate boring spreadsheets or the hassle of keeping up with receipts does not mean you actually hate budgets.

More likely, you haven’t found the right one for you yet. Let’s explore a few budget ideas you can try.

1. Make it automatic

You don’t have to create a household budget that sucks away all your free time and mental energy. Instead, automate it with one of the tools and technologies available to help you do it.

  • Mint.com can help you track your spending and understand where your money goes each month.
  • Personal Capital combines your everyday finances with your investments so you can view the big picture of your financial situation all in one place.

Setting up these tools can help you track your expenses and review your spending each month. They make budgeting easier and lots more fun.

You can also set automatic transfers from your checking to savings accounts to fund important goals and create automatic bill pay so you never forget to handle a fixed expense.

2. Give yourself an allowance

Weekly or monthly allowances aren’t just for kids. A grown-up spending allowance can help you better manage your money each month while also eliminating the need to track every last cent with a dreaded spreadsheet.

For this budgeting alternative to work, you do need to put in some effort upfront. First, know how much you earn each month — and that means the amount of money hitting your checking account after taxes and withdrawals for things like your 401(k) and health insurance. Then calculate your fixed expenses. This includes things like rent, utilities, groceries, transportation, and other living costs and bills.

Subtract your expenses from your income. If you haven’t already set up an automatic transfer to savings or investments, do so now.

After taking into account your savings and expenses, what’s left over? This is your spending allowance for the month. You can spend it on whatever you want, but once that money is gone, remember, it’s gone.

3. Use various accounts for your buckets

A twist on the allowance idea is to set up three accounts: one for expenses, one for fun money, and one for savings. Deposit percentages of your paycheck into each account, and pull from the appropriate one throughout the month to cover your living costs and your discretionary spending.

You’ll need to do some legwork first to determine what percentage of your paycheck belongs in which bucket. But you don’t need to track every last cent throughout the month or worry about overspending before you get around to saving.

Budgeting doesn’t have to be all checkbook balancing and spreadsheet managing. Have a little fun with it, try out different types of budgets. Learn what works and makes the most sense for you.

Source: http://www.trulia.com/blog/budget-ideas-for-people-who-hate-budgets/

Author: Kali Hawlk

Wisdom Wednesday: Understanding Your Credit Score

When it comes to your credit, it’s important to know how you stack up. Do you have good credit? Excellent credit? Poor credit? How can you find out?

In most cases, the easiest way to determine the health of your credit is to look at your credit score, a numerical value that reflects a mathematical analysis of your debt, your payment history, and other statistical data collected by the credit bureaus. In other words, your credit score is the compact, simplified version of your entire credit history, all rolled up into one tidy three-digit number.

Why Do You Need Good Credit?

The importance of having good credit can’t be understated. From helping you get a loan, to qualifying you for a great job, good credit simply makes life easier and less expensive.

In the eyes of lenders, employers, insurance agents, and a host of other people and entities, the state of your credit represents how responsible and even how ethical you are. For example, lenders look at your credit score to determine not only your ability, but your willingness to repay a loan. Insurance companies view an individual with a good credit score as someone who is trustworthy and less likely to commit insurance fraud. Even many employers run a credit check to determine if a candidate is likely to be a responsible employee.

Bad credit can prevent you from being able to purchase a home, work in certain industries, and will wind up costing you a bundle in higher interest rates and fees. However, if you understand what hurts your credit score you can make an effort to fix bad habits and improve your credit rating.

The Three Major Credit Agencies

Experian, Equifax, and TransUnion

There are three major credit agencies that provide consumer credit information (including credit scores) to the majority of interested parties: Equifax, Experian, and Transunion. Each reporting agency collects information about your credit history from a variety of sources, including lenders, landlords, and employers, as well as other sources. These include public records, current and past loans, your payment history, and other data. They then rate your performance using a proprietary scoring system to come up with a credit score.

Because each agency may access different information and has its own formula for calculating your creditworthiness, it is not uncommon for someone to have three different credit scores.

Understanding Credit Scores

Your credit score is a three-digit number that represents the state of your credit. If you know your score, you can get a sense of how lenders, insurance agencies, and interested employers view your credit:

Excellent Credit: Credit Score Above 800

If your credit score is above 800, you have an exceptionally long credit history that is unmarred by things such as late payments, collections accounts, liens, judgments, or bankruptcies. Not only do you have multiple established lines of credit, but you have or have had experience with several different types of credit, including installment loans and revolving lines of credit. You generally have a stable work history, usually with one company.

Simply stated, you are an A+ borrower in the eyes of all lenders big and small, and will have no trouble securing a loan of your choosing. Be prepared to receive the very best interest rates, repayment terms, and lowest fees available. Insurance companies love people like you because they’re confident that you’ll pay your premiums on time and pose virtually no risk of insurance fraud. Plus, prospective employers love you because you have proven that personal and financial responsibility are of the utmost importance to you.

Very Good Credit: Credit Scores Between 750 and 800

If your credit score is between 750 and 800, you have a long and distinguished credit history that shows a responsible payment history and the ability to handle multiple types of credit responsibly. As a matter of fact, for the most part, you are regarded in the same standard as borrowers with excellent credit history, with the exception that you may have a higher debt-to-income ratio.

In the eyes of lenders, insurance companies, and employers, you’re just as good as anyone with excellent credit and, for the most part, will receive the same red carpet treatment. Ultimately, having very good credit will qualify you for some of the best deals in town.

Good Credit: Credit Scores Between 700 and 750

Having good credit means that you have built a solid credit history by working hard to keep your accounts in good standing – however, there may be a late payment or two somewhere in your past. Things happen sometimes, but they are nothing you can’t handle. You might have had a collections account reported, but you’ve paid it. And you know you have some extra credit card debt, but you’ve made strides to get it under control.

Generally, lenders will have no issues loaning money to someone like you. Your good credit score will land you competitive interest rates and low origination fees, though certainly not as good as you could have gotten with a few more points on your score. You’ll also have no trouble getting an insurance policy for just about any need, but you should expect your premiums to be somewhat higher than for those with excellent or even very good credit. Furthermore, your good credit should not have any negative effect on your ability to get hired.

Fair Credit: Credit Scores Between 650 and 700

Having fair credit means that you’ve hit a few speed bumps in the past. Late payments, collections accounts, and maybe even an aged public record dot your credit history. Or, perhaps you simply have too much debt.

Regardless of the reason for the less-than-stellar score, you’ll have a harder time finding a lender willing to service a loan, especially if the low credit score is a result of slow payments. You’ll represent a higher risk of default to a lender and may therefore be required to secure the loan with a down payment or with tangible personal property (otherwise known as “collateral”) before a loan offer will be extended.

Having fair credit means that you have some work to do in order to get yourself back into good financial shape. It is imperative to take steps now to prevent any additional damage to your credit report, and get back on the road to good financial health. By reducing credit card debt, ensuring that you get your bills paid on time every month, and paying off any open collections, your credit score will move enough during the next three to six months to get you back into the realm of a good credit rating.

Bad Credit: Credit Scores Between 600 and 650

Having bad credit is not a pleasant experience. You’ve had multiple credit issues in the past, most likely involving payment history on one or more accounts. You’ve also most likely had an account or two in collections, and could have possibly had a bankruptcy filing.

It’s going to be extremely difficult to find any lenders willing to lend to you without a significant down payment or collateral to secure the loan against default. Insurance agencies will still underwrite insurance policies for you, but the products will be limited and they are going to cost significantly more than the same products for customers with better scores. You may also have higher car insurance costs.

Having bad credit means it’s time to roll up your sleeves and get real about your current financial situation. Though your current position may be of no fault of your own – thanks to a job loss, illness, or other unforeseen circumstance – it’s your responsibility to take the necessary steps to reverse the course you are on. Take a good hard look at where you are in your life and take the necessary steps to reverse the trends that led to your bad score.

Very Bad Credit: Credit Scores Below 600

If you have very bad credit, you are more than likely delinquent on more than one account. You have active collections accounts, and probably have at least one judgment, repossession, or bankruptcy in your file. If you have credit cards, they are maxed out or shut off for nonpayment.

This is as bad as it gets, as this will have many negative effects on your life. Lenders, with the exception of those who specialize in lending to borrowers with bad credit, will not approve you for any loan product, even if you can provide a sizable down payment or collateral, and insurance agencies will likely refuse you based on the risks you pose. Often, employers that check your credit will not hire you, whether there is another viable candidate or not.

Bad credit, no matter how bad it is, is still a temporary condition. Late payments will vanish from your records after 7 years, and public records are purged after 10.

While it can be tough to be patient, know that time is on your side when it comes to dealing with bad credit. Now is the time to start making good financial choices: pay accounts on time, pay off collections accounts, and refrain from taking on additional debt. In just a few years, you can say goodbye to your bad credit rating and hello to a world of financial possibilities.

Visit the websites below to get your completely free credit report today!

https://www.creditkarma.com/auth/logon/

https://www.annualcreditreport.com/index.action

Source:http://www.moneycrashers.com/good-credit-score-ratings-range/

Author: Sandra Parker