In 2019, 65.1 percent of Americans owned their homes, but for many more people homeownership remains a dream. While interest rates are low, many people will be looking into how to make that dream a reality, but it’s important that anyone calculating a budget takes note of the hidden costs of buying a home and maintenance expenses that can add up to $9,000 a year. Extra costs associated with buying a home such as one-time legal, inspection and appraisal fees, can leave a real dent in your disposable income. Property TaxProperty taxes can eat up a substantial amount of your income. A source of income for local governments to provide public transport, schools, parks, libraries and emergency services can vary greatly depending on where you live. Find out what your taxes will be by visiting your municipality’s website or by checking it on publicrecords.netronline.com. Once you have an amount, divide it by 12 and factor it into your monthly bills. These taxes can add up to $500 or $1,000 per month, and it’s important to remember that they may increase over time. The Cost of MaintenanceAccording to the Harvard University Joint Center on Housing Studies, maintenance costs will set you back between 1 and 2 percent of the value of your home, every year. So for a home worth $300,000, you could be looking at $6,000 a year. These costs can include repairs to the electrics, drains and plumbing, the Heating, Ventilation and Air Conditioning (HVAC) system, as well as things like roof repair and pest control. Homeowners’ InsuranceMany mortgage lenders will require you to take out insurance as a condition of providing the loan. While you may be used to paying for renters’ insurance, homeowners’ insurance can be substantially more. The national average amount is $1,211. Most policies won’t include ‘acts of God’, which include earthquakes, floods and hurricanes – in other words, many things you’ll definitely need to insure against. An additional policy will be needed, which will likely cost between $1000-4000 a year. Homeowners Association (HOA) or Condo FeesThese fees will cover the costs of maintaining community areas as well as building repairs. The swankier your building, the higher the fee will be—after all, someone needs to cover the cost of servicing the pool or providing a concierge service. Interest on Your MortgagePaying an interest rate of 4 percent or so may not seem like a huge sacrifice in order to own your own home, but over the years it amounts to a substantial sum. A 30-year mortgage at 4 percent on a house that costs $200,000 will incur $140,000 in interest, due to the impact of compounding interest. Like so many things in life, your credit score will affect the likelihood of securing a good deal on a mortgage. About 4 in 10 Americans don’t know how their credit score is determined, but monitoring and maintaining your score is the key to unlocking many financial freedoms. With SmartCredit, you can do everything from taking action on a negative account, to achieving your best possible score with a fun to use, gamified dashboard. It’s an easy way to control your future credit score. References:
The post The Hidden Costs of Buying a Home appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/26/hidden-costs-of-buying-a-home/
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Deferred interest is when no-interest loans or credit cards have some period of zero interest. However, you still owe interest payments if you cannot pay off the balance before the end of the stated time frame. Answering the question “what is deferred interest?” from the beginning is important, or you may pay a lot more than you expected. The following are some of the most important things you should know about deferred interest. 1. Deferred Interest Can Hurt Your CreditThe effect of deferred interest to your credit is similar to traditional financing. If you defer interest, it continues to accrue even though you don’t owe it if you pay off the balance on time. If you fail to make the payments or make late payments, your credit will be hurt just the same. Even when a credit card or loan is not being charged interest monthly, you still need to make minimum payment towards the debt. Keep this in mind if you took on deferred interest intending to delay to pay for it. In addition to your credit’s possible harm, some lenders may choose to end the deferral time before time and charge you full interest. It could make matters worse. You should only take out a deferral payment when you are sure of your ability to make payments on time before the interest payments kick in. 2. It Isn’t Always a Good IdeaOne of the biggest shortcomings of deferred interest is that it can mislead customers into believing that they can afford to make purchases, which would otherwise be too expensive. Even though they can be valuable, they are not always a good idea. The following are some of the most important precautions to take: Read the Fine PrintEnsure that you read the fine print to be sure of what you are agreeing to. You should know what happens if you are late or fail to make a payment before the end of the promotional period. Don’t Buy the OfferMake sure that you are not just buying because of the offer. The marketplace is competitive, and it is common for business people to use deferred interest promotions to stand out from competitors. If you would not normally buy something, do not buy it just because of the promotion. Commit to RepaymentCome up with a repayment plan to ensure that you do not lose track of your payments. Once you have a plan, stick to it, and make the necessary adjustments. 3. Most Major Issuers Don’t Charge Deferred InterestCredit cards from most of the top issuers do not charge deferred interest. However, co-branded cards may be able to do it. Go through your cardmember agreement’s terms and conditions and look for the terms “no interest if paid in full,” “deferred interest,” or “retroactive interest.” 4. You Can Avoid Deferred Interest ChargesIf you wish to use special financing offers with deferred interest terms, there are a few ways to avoid interest charges and setbacks. They include: Paying in Full Before the End of the Special Financing PeriodTry to make significant payments towards your debt at the end of every month. Your goal should be to have no balance left at the end of the promotion. Your payments should be above the minimum all through the special financing duration. Track Your ProgressCheck your progress before the end of the special financial period. Make sure that you remain on track to have no balance left at the end of the promotion. 5. Deferred Interest Cards Allow you to Pay Off Large PurchasesCardholders with deferred interest can pay off big purchases over time, and they don’t need to pay interest. They only need to pay off the balance before the end of the payment duration. If you fail to make the payment within the stated time, you will pay its full cost plus interest. You only get to save money if you pay attention to the rules. If you need help with your credit score, consider seeking the help of SmartCredit. It is a top player in credit score and protection. Our team can help you stay in control of your future credit score. With ScoreTracker and other tools, it is possible to gain some insight into your score. We can help you come up with a 120-day plan* to take charge of your accounts. We can offer the following extra services for a small fee: Money Manager, Credit Monitoring, 3B Report & Score, and $1MM ID Fraud Insurance. It is a great way for people to maintain control of their credit scores and promote financial literacy. If you need help, contact us today, and we will be happy to help. *This feature unlocks if you have negative credit data. References:
The post 5 Things You Should Know About Deferred Interest appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/24/what-is-deferred-interest/ Merriam’s defines peer as a “one that is of equal standing with another.” You aren’t on equal standing with a bank or credit union if you want a loan, but you are on a reasonably equal standing when a peer-to-peer loan is involved. Of course, the peer lender has the money the peer borrower needs. Peer-to-peer lending differs from traditional lending, and can sometimes offer lower interest rates and Annual Percentage Rates (APRs). What Is a Peer-to-Peer Loan?Basically, peer-to-peer loans, or P2P, consist of personal loans from private individuals. You are not dealing with a formal financial institution. However, it’s not equivalent to getting a loan from a friend or relative. P2P loans, also known as crowd or social lending, derive from websites connecting potential borrowers with investors. Look into P2P loans for personal use, debt consolidation, or home improvement. Here is how a typical P2P loan works. An investor has opened an account on a P2P platform and deposited a specific amount of money. A person with $5,000 in high-interest credit card debt wants a P2P lender to lend them that amount at 10 percent, opposed to the 20 percent they are currently charged. The individual provides their financial information, and is assigned a risk category. Investors make loan term offers, and the borrower accepts the loan with the best terms for their purposes. Through a P2P lending platform, the investor provides the money and receives more interest on the loan than they could at a bank. The borrower pays off the credit card debt and pays back the new loan at a much lower rate. It’s a win-win for both sides. Expect to pay a loan origination fee of up to 8 percent. However, you won’t pay many of the other fees usually charged by banks, such as application and processing fees and the other methods used to nickel-and-dime consumers. Loan lengths generally range between two and five years. Certain P2P platforms specialize in particular borrowers, such as those dealing with medical debt or geared toward small businesses. Peer-to-Peer Loan AdvantagesPeer-to-peer loans offer advantages for both borrower and investor. For the former, it is the possibility of better terms than they could receive from a traditional lender. For the latter, it is the ability to make more money than they could by placing their funds in a bank account, CD or other conservative investment. Why are loan rates lower? First, P2P investors do not have the overhead costs burdening financial institutions, so they do not need to charge as much in interest. P2P loans are also much quicker than loans from traditional sources. Applications are less cumbersome, and you will find out whether your loan is approved in less time. In some instances, you may find yourself approved and provided access to funds within 24 hours, versus weeks for a bank. Borrowers with less than stellar credit scores can qualify for loans a bank would not consider. P2P platforms require a credit score of at least 600. The good news, though, is that borrowers with good scores can end up paying significantly less for a loan. This is the kind of borrower the P2P investor seeks, and that borrower is usually rewarded. Is Peer-to-Peer Lending Safe?P2P lending offers investors the opportunity for significant potential returns. That comes with the caveat that the investor must perform their due diligence. A certain percentage of P2P loans are going to end up as charge-offs, or bad debts, and these percentages are much higher than at banks or credit unions. Most P2P lenders will receive their money back at a good interest rate, but a small percentage will not. It is part of the risk inherent with P2P lending. Investors can protect themselves by never lending money they cannot afford to lose. Never put all of your investments into the P2P basket, or even one borrower. If you have $10,000 to invest, reduce your risk by making 10 $1,000 loans rather than just one large loan. Frequent well-established P2P platforms with a strong track record of vetting potential borrowers. Contact SmartCreditP2P lending allows borrowers with good credit scores to receive favorable terms on a loan. The gamified dashboard at SmartCredit can help you take control over your future score, so that you will qualify for lower interest rates, APRs and down payments. With SmartCredit, you can achieve the best possible terms via actionable steps. References:
The post Peer-to-Peer Lending: What It Is and How It Works appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/21/what-is-a-peer-to-peer-loan/ What is a personal loan exactly, and what is the benefit? A personal loan is one granted on the basis of your credit history and your income. If you’re 18 years of age, you simply need to have used credit in the past and have a job or other source of income that allows you to make regular payments. Whether you want to consolidate your debt, move your family across the country or finance a large purchase, a personal loan could be a viable option for you. But before you take out a loan, you’ll want to be sure it’s the right choice. Why a Personal Loan Rather Than Credit Card?Credit cards have their place. If you use a credit card and pay off the balance before the statement date, you’ll pay no interest. And if you accumulate airline miles or cash rebates on the things you buy everyday, you’ve got a sweet deal. However, at interest rates ranging from 15.38 to 22.53 percent, credit cards don’t make sense for purchases you’d like to pay off over time. Also, if you only make the minimum credit card payment, you could be in debt for years. Let’s say you borrow $15,000 at 18 percent. If you make a 2 percent minimum credit card payment, you will be in debt for over 30 years and pay $37,670 in interest alone. What Is a Benefit of a Obtaining a Personal Loan?When you need larger sums of money, it may make sense to take out a personal loan. Here are the benefits: You can pick your termsA personal loan is an ideal way to stretch out your payments without racking up huge interest charges. Although the typical term for repayment is one to five years, you may get up to seven, depending on the lender. You can negotiate a regular and consistent payment that suits your budget. Interest interest rates are lower than credit cardsThe average interest on personal loans is roughly 12 percent, but depending on your credit score can be much lower. If you borrow $15,000 for five years with an origination fee of 2 percent, you’ll pay $5,020 in interest. That may seem like a lot until you compare it to the over $37K paid to the credit card company, as in the example above. Personal loans work well for debt consolidationIf you have several high interest credit accounts, you may be able to lower your monthly debt payment. For sure, you will reduce the amount of interest you pay overall. What Are the Drawbacks?Before you run off to the nearest bank, remember that there are several reasons why a personal loan may not work. For example: It can take up to seven business days to get the money.If you need instant cash, a personal loan can be slow. Of course, it could be granted immediately, depending on the lender. Payments are higher than with a credit card.This could be an issue if, for example, you lose your job or become ill and can’t make the scheduled payments. You might pay a loan origination fee.This fee can range between 1 and 8 percent. It is either added to the loan, meaning you’ll repay it over the loan term, or you’ll make an upfront payment, in which case the fee will be deducted from the principal. In either case, the loan origination fee means that your APR is higher than the stated interest rate. Your payment remains fixed. Yes, this can also be negative. If you need flexibility due to unforeseen circumstances such as a job loss, you’ll need to contact the lender to avoid damaging your credit rating. What Is a Good Interest Rate for a Personal Loan?It depends. Personal loan rates vary widely between 5 percent and 36 percent. The interest rate you’re offered is based on two factors:
You’ll have lower interest rates if you borrow a larger amount and have an excellent credit rating. You’ll pay more if you borrow a small amount and have a spotty credit record. Shop around. Visit local banks, credit unions or online lenders to find the right option for you. But before you sign on the dotted line, make sure you educate yourself on available rates, as well as your own credit score. Let SmartCredit Help Your Get Your Best RatesIf you want the best rates, let SmartCredit help you get your finances in order. With SmartCredit you can monitor, manage and protect your credit so you can take control of your future score. Once you take your credit from good to great, you’ll have the options you need to find the right solution. After all, there are plenty of lenders who will give you the rate you deserve. References:
The post The Benefits and Drawbacks of Obtaining a Personal Loan appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/19/what-is-a-personal-loan/ Do you have a website or social media channel that you’re looking to monetize? Do you offer a service where your clients could benefit from credit monitoring or an increased credit score? If you do, this credit monitoring affiliate program may be a great way to make residual income. SmartCredit in a NutshellSmartCredit offers you tools to take control of your credit score. SmartCredit is connected to over 36,000 creditors in the United States, making its action buttons fast and effective. Members can fix credit report errors, recover from identity theft, replace a lost credit card, get a better interest rate, or settle a debt directly with their creditor. Our product integrates an innovative horizontal report, action buttons, and integrated applications. It includes 24/7 credit monitoring and identity protection, along with all credit scores. Near real-time alerts are sent to an email or mobile phone. With the simple push of a button, members can identify and take action on theft right from their phones. SmartCredit’s features are matched to the customer’s credit and lifestyle, saving them time, money, and future headache. What is an Affiliate Program?Unlike other forms of advertising and marketing, affiliates are paid when they generate a sale. As an affiliate, you are given a custom link or promotional code that is placed on your website or social media channels. For every sale that you generate from your efforts, you are paid a commission. Sometimes the links are in the form of a graphic advertisement on your website; other times, they are custom links or promotional codes. Affiliates can also use their current network and word of mouth for signups as long as a custom link or promotional code is used. The most successful affiliates already have viewership or customers, but it is not required. How Do You Become An Affiliate?Most often, an affiliate has to apply for the affiliate program. The application generally asks how the affiliate plans on promoting their content, how many website visitors, customers, or followers they have, and what those pages are. This will allow the business to look into the affiliate to ensure it’s a good fit for both parties. One of the most commonly asked questions is how much it costs to become an affiliate. The majority of affiliate programs cost $0 to join or apply. How Does An Affiliate Program Work?An online visitor will review the affiliate’s content, click on the branded affiliate link then is redirected to the advertiser’s website. Typically brands will use a tracking link to determine where the customer comes from or they use a discount code provided to the affiliate. When a purchase is made and attributed to the affiliate, the affiliate is then paid a commission. The commission amount depends on the business. An affiliate will decide which banners or ads they will place on their websites. Their decision will be based on the website traffic they generate as well as the commission structure. Pay-per-lead and pay-per-sale are the most common affiliate programs. Amongst advertising tools, affiliate programs are considered to be the least costly for driving traffic to a website. The pay for affiliate programs is performance-based, making it the ideal partnership for a business. The SmartCredit Affiliate ProgramWith the SmartCredit Affiliate Program, you partner with ConsumerDirect as a preferred SmartCredit influencer/affiliate. ConsumerDirect provides a unique, custom link that is used for SmartCredit signups. The affiliate starts earning monthly, residual revenue for each member that remains actively enrolled in SmartCredit. The prospective customer goes to the unique affiliate link. The customer is provided with access to their reports and scores through ScoreTracker, ScoreBuilder & ScoreMaster, and other essential features and tools. For the affiliate’s customers, SmartCredit is unique in that it has three powerful tools. It also has additional money and credit features to simplify their financial world. ScoreMaster is the only tool of its kind. On average, users experience a credit score increase of 61 points in less than one month. Users can see how payments or spending change their score and plan the best time to apply for more credit. The users can also compare three scores and reports for each bureau in one place. Scorebuilder also has a 120-day action plan. This personalized plan is made to understand what is hurting and helping a user’s credit score. The user can view negative accounts weighing down their score and take action directly to the source. ScoreTracker also has an in-depth look at the different types of scores and how they can change over time. This allows the user to get a better understanding of their progression. Frequently Asked Questions About Credit Monitoring Affiliate ProgramsIs there a limit on how many customers I can promote to? Is there a time-obligation? Is there a setup fee? What is the pricing structure? Are you interested in the Credit Monitoring Affiliate Program and other tools offered by SmartCredit? You can sign up here to get more information. *Legal Disclaimer – ScoreMaster is a patent-pending educational feature simulating credit utilization’s effect on credit scores via payments or spending. Your results may vary and are not guaranteed. The post Credit Monitoring Affiliate Program appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/17/credit-monitoring-affiliate-program/ Creating a sensible spending plan is one of the best ways a prospective borrower can have a positive impact on their credit score and get approved for a loan — but many people don’t budget their money. According to a Debt.com survey, 31 percent of Americans polled did not follow a budget, despite 97 percent of women and 98 percent of men admitting that “everyone” needs one. Why is there this disconnect between what we think we should do and what we actually do? While most respondents pointed to a lack of significant income as the primary reason for not budgeting, 21 percent of women and 29 percent of men said budgeting is simply too “time- consuming” to integrate into their spending habits. To make things easier, we’ve compiled some tips to help you create a spending plan that will have a direct impact on your credit score. 1. Track Money Coming InBefore you know how to spend your money wisely, you must account for how much money is coming in. Whether you use a simple Excel sheet or another money manager system, make a list of all your take-home income for a typical month. Be sure to list the net amount, which is the amount after taxes and other withholdings. If you are a freelancer or work on commission and your income varies each month, list your average monthly income. Factor in all money coming in — income, side hustles, benefits, child support, etc. 2. Itemize Monthly Expenses and Pay on TimeYour payment history accounts for approximately 35 percent of your score. Late payments hurt your score, while consistently paying your bills on time helps it. To ensure you don’t miss a payment, list your monthly expenses. What are examples of monthly expenses? We suggest making two columns: one for your debts, and the other for your basic living expenses. Since debts — from car loans to credit cards to student debt — tend to have higher interest rates, make a plan to pay these first and try to pay more than the minimum payment so you don’t end up just paying interest. Then list your basic living expenses. These tend to include rent/mortgage, utilities, phone, internet, gas, insurance and groceries. Don’t forget to also include eating out and entertainment. Once you know how much money is coming in and how much money is going out, crunch the numbers by subtracting the total monthly expenses from the total monthly income. If you have money left over, put it aside for savings. If there is a negative balance, you are overextending yourself. 3. Take Advantage of Autopayments and MicropaymentsTo help you stay on top of your financial obligations and dodge late fees, take advantage of autopay options. You can usually set these up through creditor websites/apps or directly through your bank. Micropayments, which are small payments made throughout the month, are another way you can pay down debt in a more manageable way. Just be sure you have enough money in your bank account before you set up autopayments, so you don’t run into overdraft fees. 4. Make Room for Emergency SavingsAccording to FINRA’s National Financial Capability Study, 46 percent of Americans lack a rainy day fund to cover expenses for three months. This means that in the unforeseen case of emergencies such as sickness, job loss, or economic downturn, they are likely to turn to high-interest credit cards, or fail to cover their expenses adequately, setting themselves up for credit troubles. One way to inject money into your emergency savings is to put your tax refund or year-end bonus in a savings account. 5. Seek Opportunities for Increases and DecreasesDo you really need that expanded cable package or that afternoon Starbucks trip? Are there any items stowed away in your garage that you can sell? Any side hustles that you may find fulfilling? Another way to create emergency savings is to look for opportunities to increase your income and decrease your expenses.By looking for novel ways to increase your income and decrease your spending and/or debt, you can improve your financial standing and emergency savings, while also improving the future of your credit score. 6. Use the SmartCredit SystemThe SmartCredit system is designed to help you control your future credit score with simple tools that allow you to track your scores, your spending and your financial obligations. With an easy-to-use interface and an actionable plan to pay down debt, SmartCredit helps you use your money wisely and improve your score in just 120 days* so you can be in the best shape possible when you decide to apply for a loan. Learn more about how SmartCredit can help you devise a money management plan that works for you. *This feature unlocks if you have negative credit data. References
The post 6 Tips for Creating a Spending Plan That Helps Your Credit Score appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/15/how-to-create-a-spending-plan/ Having a good credit score is crucial if you ever hope to be approved for credit cards or loans without sky-high APRs. Ranging from 300–850, the three-digit number proves to lenders and credit card companies that you are a trustworthy borrower who will pay back your debts in full. The higher the number, the higher your creditworthiness. But what’s the difference between a “good” credit score and an “excellent” one? Is excellent even achievable if you don’t have much of a credit history, or if you hit a rough patch in your financial past? Here is what you should know about excellent credit score status and the steps you can take to bring you closer by improving your credit score. What Is an Excellent Credit Score?What is a high credit score — and is it even achievable? Depending on the scoring model you use, a high credit score can fall into a number of ranges, including excellent (generally 800-850), very good (740-799), good (670-739), fair (580-669) and very poor (300-579). Transitioning into the above-average range is a manageable goal with even more benefits, such as lower interest rates on loans, better credit card offers and greater likelihood of having applications approved. Even more, once you’re at above average, excellence is within close reach. To achieve and maintain a higher credit score, it’s important to identify the barriers that may be keeping you from your goals before diving into an action plan to achieve your future score. From delinquency on payments to the frequency of hard inquiries about your credit, a number of factors may be hurting your credit score. By taking the following steps, you can put yourself on the path toward excellence. Avoid Accumulating Too Many Hard InquiriesThe two types of credit inquiries that may show up on a credit report are a soft inquiry and a hard inquiry. Soft inquiries can be performed by employers or a credit monitoring service. Hard inquiries are typically performed by lenders, banks or credit card companies and usually disappear from your credit report after two years. As a general rule, try to limit hard inquiries to two during any given two-year period. Pay Your Bills on TimeMaking payments on time and keeping your balances low are the two most important factors when it comes to building credit. Try to pay off your bills in full each month to avoid potential late payment fees and interest charges that often result from carrying a balance. If all you can afford are minimum payments at the moment, consider setting up autopay so you don’t miss a payment. Lower Your Credit Utilization RateThe “Amounts Owed” category of your credit report is the basis for 30 percent of your credit score. Your credit utilization ratio describes the relationship between your credit card balances and their limits, and lowering this ratio may have a positive effect on your credit score. In addition to paying off your credit card balances every month, asking your credit card issuer for a higher credit limit may also help. Use the SmartCredit SystemSmartCredit helps you optimize your credit score with actionable tools. Beyond ScoreBuilder showing you what is hurting your score and helping it, ScoreTracker allows you to track your score, and ScoreMaster allows you to pay down debt with a personalized strategy. Use SmartCredit to find out which accounts are causing the most problems, negotiate debts and know the optimum time to apply for new lines of credit. The personalized action plan is devised to achieve your best possible score in as little as 120 days*. Learn more about how SmartCredit can help you achieve your best credit score and bring you one step closer to excellence. **This feature unlocks if you have negative credit data. References:
The post What Is an Excellent Credit Score and How Do You Get One? appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/12/what-is-an-excellent-credit-score-and-how-do-you-get-one/ Credit report errors are quite common, which makes knowing how to dispute them very important. But how exactly can a credit report error affect you, and what do you do if it happens to you? If you find something in your credit report that you believe is incorrect, continue reading below to learn how to dispute your credit report properly. How a Credit Report Error Can Affect YouIs it truly necessary to keep a close eye on your credit report? Can one mistake have a drastic effect on your credit report? The answer is yes. Your credit report includes all types of information about you, such as the way you pay your debts, and if you’ve ever filed for bankruptcy. One mistake on your credit report could negatively misrepresent your ability to handle your finances. It’s also imperative that you see how credit reporting agencies sell credit report data to other companies that utilize this information to evaluate your creditworthiness. How Common are Credit Report Errors?Finding errors in credit reports are quite common. In fact, the leading criticism of the Consumer Financial Protection Bureau in 2016 was regarding errors found in credit reports. While some of these errors are relatively benign, like a misspelled name or the listing of a former address, other credit report errors could hurt your credit and your credit score in more impactful ways. Credit report errors can cost consumers tens of thousands of dollars over their lifetime if they go unnoticed. Fortunately, as a consumer, credit laws are on your side when an error does cost you money. Credit reporting agencies have a responsibility to provide consumers with accurate information regarding their credit reports and are required to provide a dispute process so that consumers can have their credit reports corrected promptly. Under the Fair Credit Reporting Act, in the event that you dispute an item in your credit report and the credit reporting agency cannot confirm the accuracy of the item being disputed or if the item is proven to be inaccurate, the credit reporting agency is obligated to remove the item from your credit report. The Fair Credit Reporting Act gives credit reporting agencies and furnishers 30 days to complete their investigation and remove the items being disputed. In some instances, that time can extend to 45 days under certain conditions, but is dependent on several limiting factors. How Credit Report Errors OccurCredit report errors can occur for several reasons. The four common causes of credit report errors often include: Mixed FilesMixed files occur when someone with the same or similar name applies for a line of credit, and their record gets mixed with another consumer’s file. Identity TheftIdentity theft occurs when personal information has been stolen, and a new account has been started with that person’s identity. While this often occurs due to no wrongdoing of the consumer, it is particularly challenging to eliminate from a credit report. Furnisher ErrorsIn terms of credit reporting, there are three major players that each play a unique role in the process: the credit bureau, the consumer, and the data furnisher. The furnisher is responsible for supplying credit bureaus with the consumer information that appears on the credit report. In some instances, a furnisher reports inaccurate information, such as a missed payment or a collection that belongs to a different consumer. Re-Aging of Old DebtsCertain debts have a limited amount of time that they appear on your credit report. Re-aging occurs when a debt is sold to a third party collector, and the collection date to the debt’s clock is incorrect, causing your credit report to reflect the error. How to Dispute Credit Report ErrorsStep One: Identify the ErrorsBe sure to review your credit reports periodically. You are allowed to receive one free credit report from each of the three major credit bureaus per calendar year. Additionally, you can also subscribe to a credit monitoring service that will examine your credit report monthly. Step Two: Contact the FurnisherIf you find an error on your credit report, you should first contact the furnisher. Contacting the furnisher (companies that provide information about a consumer’s credit history) will help you verify their records and confirm the error. In some instances, you could be able to solve the error at this point. Step Three: Send Your Dispute to the Credit BureauIf you are unable to resolve the error with the data furnisher, you will then want to contact the credit bureau directly. In writing, provide the credit bureau with the information you believe to be inaccurate. Be sure to clearly state what you believe is incorrect, explain why, and include copies of any materials that support your dispute. Additionally, with SmartCredit’s Action Button, you can easily raise a dispute with any errors in your credit report or inquire about a transaction you have questions about all in one easy-to-find location*. Step Four: Wait for the Investigation to ConcludeOnce you’ve sent your dispute to the credit bureau, the only thing left to do is wait. Typically, this process takes fewer than 30 days to investigate the dispute and report the findings to the credit reporting agency. Step Five: Follow-up with the Credit BureauWhile the credit bureau is obligated to complete its investigation in 30 days, in some instances, the investigation can take up to 45 days to complete. If the investigation results in no changes to your credit report, you can file an official complaint with the Consumer Financial Protection Bureau, and they will contact the company with which you are submitting the dispute. In this instance, you should receive an answer within 15 days. See an Error with Your Credit Report? Contact SmartCredit TodayWhile disputing a credit report seems tedious, it’s vital that you promptly dispute any errors. Whether you have plans on buying a house or opening a new line of credit, errors in your credit report could drastically affect your chances of favorable results in either scenario. The good news is that the dispute process isn’t overly complicated, and it could help improve your financial wellbeing and help save you money in the future. If you see an error with your credit report, contact SmartCredit today to effectively and efficiently dispute your credit report error. Sign up with SmartCredit today to take back control of your credit report. *Results and timing of results may vary depending upon your circumstances. The post Simple Steps to Disputing Credit Report Errors appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/10/simple-steps-to-disputing-credit-report-errors/ The first step to joining the nearly 40% of American homes that are now “free and clear” of mortgage debt is to start making the regular monthly payments that lead to financial freedom. If you’re just beginning to navigate the homebuying market, the array of terms can be baffling. Here are the essential mortgage terms you’ll need to add to your glossary, along with some handy tips for working out how much loan you will qualify for. What Is a Mortgage?Let’s start with the obvious one. A mortgage is simply an agreement between a borrower and lender to finance the buying of a property. The lender finances the purchase and the borrower repays the debt with interest. Typically, a mortgage will have a fixed term — usually 15 to 30 years — until the balance is cleared. The balance will incorporate any closing costs, such as fees, credit report costs and other expenses on top of the price of the property. Fixed Rate vs. Adjustable RateThe vast majority of mortgages in the U.S. are fixed rate, meaning that the monthly repayment stays the same throughout the loan term of the mortgage. Choose this option if you want stability in your monthly budgeting. Adjustable rate mortgages (ARMs) vary according to the interest rate index, and often start off with lower monthly repayments. If interest rates go up, so will monthly repayments. Your repayments will also be affected by several elements. Loan TermThe length of time a borrower makes payments will depend on their age at the start of the loan and how much they borrow. The shorter the loan term, the lower the amount of interest paid. PITIThe monthly repayment comprises four key elements, known as PITI, representing the principal, interest, taxes and insurance respectively. APRThe Annual Percentage Rate (APR) is the cost of borrowing from the lender, shown as a percentage of the mortgage total. The APR is more than just the interest rate; it includes broker fees and other charges. AppraisalSince a mortgage is a serious financial commitment, it’s important to have a professional, transparent assessment of the property value. This is the appraisal. The cost is covered by the borrower, and it will establish the fair market value of the investment, taking into consideration the property size and condition, local area, and market trends. Co-signer vs. Co-borrowerThe average home price in the USA is just under $250,000, a figure that is out of reach for many younger buyers, particularly when it comes to meeting the usual 10% to 20% downpayment. Many buyers join forces with a family member or partner as a co-signatory to fortify their borrowing power. A co-signatory can be a co-signer or co-borrower.
Both types of co-signatory are liable for the loan. Understanding AmortizationThe amount you will repay over the term of a mortgage is significantly more than the value of the property, due to interest. With amortization, the amount owed reduces with each (monthly) repayment, as opposed to interest-only or non-amortized loans, in which the borrower merely repays the interest each month and repays the principal balance at maturity as a balloon payment. These loans have two downsides: Monthly payments could end up being less than the amount of interest that accrues each month (negative amortization) and the final balloon payment to cover the outstanding balance can be much higher than expected. Credit Report — How Much Loan Can You Qualify For?Any mortgage lender will want to see a full credit report on a borrower before proceeding with a loan. The credit report will give details of the borrower’s credit history and payment habits, as well as their existing monthly expenses and debt. Find out more about how to take control of your future score with SmartCredit here. Debt-to-income RatioA key element of your credit score will be your debt-to-income ratio. It is calculated from your monthly debt payments divided by your gross monthly income. As a rule of thumb, it is extremely difficult to secure a mortgage from a lender once your debt-to-income ratio goes beyond 43%, given that the proportion of your income for servicing debt would be precarious. PrincipalThe principal is the amount of debt left on a loan, not counting interest. If you’re buying a house, for example, the initial principal represents the value of its bricks and mortar. Ideally, the Loan to Value (LTV) ratio will improve during the term of your loan, meaning that the market value of the property you are buying rises faster than the principal you originally borrowed to finance. DownpaymentIn exceptional cases, it might be possible to secure a 100% mortgage on a property, meaning that the lender advances the entire cost of the purchase. In reality, most borrowers will have to save around 10% to 20% of the property value as a downpayment: the upfront lump sum paid to the lender to secure the loan. The more you can afford as a downpayment, the lower the interest you will pay over the term, and the more likely you are to be approved for that mortgage. EquityTechnically, you are not a homeowner until you make the final payment on your mortgage. The degree to which you own the home you are financing is referred to as the equity. The longer you have been making payments, the greater your equity, since you will have been paying off not only the interest but also the principal. When Foreclosure HappensUnfortunately, some borrowers encounter financial difficulties at certain points in their mortgage terms, often because of changes in their employment status or a medical condition. If a borrower cannot make monthly payments as agreed, some lenders will allow forbearance, a temporary hiatus or reduction in payments until normal service — payment — resumes. If a borrower is deemed to be delinquent, meaning that they have stopped making payments, the lender can apply to reclaim or foreclose the property. In some states, this requires a court process, but in others, it is non-judicial. Before hitting the classified ads and interviewing real estate vendors, it would be prudent to learn the lingo as you work out exactly how much you will be able to borrow and what your budget can stretch to. That means reviewing your finances and obtaining your credit score. SmartCredit can help you take control of your future credit score with a consolidated monitoring and reporting dashboard that can provide you with actionable steps. Learn more about SmartCredit here. References:
The post 10 Mortgage Terms Every Borrower Needs to Know appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/07/10-common-mortgage-terms/ Credit monitoring is essential to your financial health. Regularly checking your credit report along with your credit rating provides you vital information about your financial wellness, and can serve as an early warning of possible problems such as missed payments or identity theft. However, making sure to always monitor your accounts can be tedious and time-consuming. With several companies offering free and paid credit monitoring services, it can be challenging to choose which option to go with. Let’s take a look at what credit monitoring entails and if it’s worth paying for. What Is Credit Monitoring?Typically, when talking about credit monitoring, it is referring to a professional service that monitors your credit score for unusual activity, such as new account openings and information breaches. Credit monitoring means keeping an eye on your credit by routinely checking your credit reports and your credit score. Since a good credit score affects the interest rates you can potentially receive on different types of loans, mortgages, and credit cards, you always want to know your status before making a significant purchase. By monitoring your credit, you are more likely to find out whether or not there’s been a data breach or if you’ve been a victim of identity theft, both of which could result in credit card fraud and cost you much more money in the future. You’ll also be able to discover if someone has applied for credit in your name or has charged on your credit cards. By law, you can receive a free copy of your credit report every 12 months from each of the three major credit reporting agencies. In addition, if you are denied credit for any reason, you are also entitled to a new copy of your credit report. If this occurs to you, you will want to speak directly to the credit bureau whose report was used to deny you credit. Moreover, many credit card issuers now offer credit scores and other types of free credit monitoring services. For instance, some credit card companies provide both customers and non-customers accessibility to particular services for free. What Do Credit Monitoring Services Offer?With the expansion of free credit monitoring services, many people might ask what additional features do paid credit monitoring services offer? Many professional credit monitoring services provide their customers with additional services such as identity recovery, identity theft insurance, lost wallet coverage, and fraud settlement support. SmartCredit monitors not only for new accounts and unusual activity, but your daily credit card and bank transactions as well in order to give you a complete picture of what is going on with your money, credit and identity. Should an alert raise a suspicion for error, customers can click the Action button and send their dispute or communication directly to the source. What Should I Look for in a Paid Credit Monitoring Service?When shopping around for professional credit monitoring services, there are a few things you should be looking for with each company. Here are a few tips to help you find a reputable credit monitoring service. Ensure All Bases are CoveredFirst, find out if the credit monitoring service provides your credit report from all three major credit bureaus: Equifax, Experian, and TransUnion. In many instances, information is not always identical between each credit reporting bureau, which makes it essential to verify the information with all three. Research Their BackgroundLearn more about how long the credit monitoring service has been in business. Before trusting your personal information with any professional service, it’s critical to know that they know what they’re doing and that you can trust them with your data, as well as your hard-earned money. Check CredentialsBe sure also to verify the credit monitoring service with the Better Business Bureau and your state attorney general. During this process, check to see if any complaints have been filed against the credit monitoring service. This will also help you understand the legitimacy of the service provider. Avoid False ClaimsIn addition, stay away from companies that make absolute promises about your credit. Some services may make claims that they can prevent you from becoming a victim of identity theft, which should be an immediate red flag to consumers. While the sentiment seems excellent to consumers, no legitimate company will claim to do anything that is impossible. Free Ways to Monitor Your CreditIf a paid credit monitoring service isn’t something you have space for at the moment, there are several ways in which you can still monitor your credit. While it may take a small amount of additional work, the free approach is undoubtedly an option for every consumer. Here are a couple of steps that you can take to help monitor your credit at no cost. Request Your Credit Report RegularlyAs previously mentioned, you can receive a credit report from each of the three major credit bureaus every 12 months. That means you could potentially obtain your credit report three times a year. This is a great option to consider if you’d rather not pay for additional monitoring services. Freeze Credit ReportsAdditionally, freezing your credit reports might help prevent unwanted individuals from opening an account under your name. Once your account is frozen, no activity can occur without your approval, and you will be provided with a PIN that will be needed to “thaw” your account. In the event that you need to apply for a loan or additional line of credit, you can quickly unfreeze your report for a specific period of time to allow yourself to apply for new credit. Secure Your Credit Monitoring with SmartCreditWhile there are several options available to monitor your credit, the decision to go with a free or paid credit monitoring service depends on the consumer. While free credit monitoring is undoubtedly possible, paid services such as SmartCredit offer customers additional benefits that make the process of monitoring money, credit and identity much more accessible. If you’re looking for credit monitoring services with a proven track record, sign up with SmartCredit today to take back control of your credit score. The post When to Get Free vs. Paid Credit Monitoring appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/08/05/when-to-get-free-vs-paid-credit-monitoring/ |
About UsWe are a group of fun and creative people building unique and patented technologies for the consumer money, credit & identity space. We started in 2003 with the idea that technology should allow consumers to interact with their banks, creditors and other institutions using a simple button. So, we noodled a lot and built the SmartCredit.com® system to make better users of money & credit. Archives
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