Recently Graduated? How to Establish A Good Credit Score

Are you a recent college graduate? Are you starting your first job? While it’s extremely important to save money when you are first starting out, it’s also quite important to know how to spend money and understand the concepts behind your credit score and establishing good credit. 

As your first paycheck starts rolling in, make sure you are opening multiple lines of credit, including opening credit cards, putting your name on your school apartment lease, and signing your name on the comcast bill. However, when you open these lines of credit and sign your name, make sure you are paying your bills in full each month. If your roommate hasn’t paid your cable bill, make sure to stay on top of them so it doesn’t impact you down the road. However, if you have been impacted by the coronavirus pandemic and can’t pay the full bill, make sure you understand to pay the minimum and reach to your creditor to figure out a reasonable solution or game plan. 

Here are five important credit concepts that you should be aware of:

  1. Low credit scores can cost  you thousands 
  2. Your credit score actually measures your risk of not paying
  3. Credit repair companies charge for services that maybe you can do yourself 
  4. Your age has nothing to do with your credit score, except for how long you’ve been borrowing credit
  5. All types of companies can check your credit score

Unless you have a perfect credit score, there is always room for improvement. The bottom line is that when you are just starting out, it’s easy to overlook the small steps needed in establishing a good score. However, having a good credit score is something that should be maintained and will impact many financial decisions you are able to make in your lifetime. If you have any questions about your credit score, how to obtain credit or how to fix a bad credit score, please contact us for a free 30 minute consultation.

 

4 Financial Red Flags When Dating Someone New

It might seem strange to talk about finances when you first start dating someone new. People often try to overlook financial issues when embarking on a new relationship as it can be uncomfortable and awkward to discuss. However, if you see a future with that special someone, it’s important to know what kind of financial baggage they might be bringing with them and to be aware of any potential financial red flags.

Red Flag #1: Having Different Approaches to Saving

If your partner is a spender and you are a saver, this could be your first major red flag. It is critical that you both discuss your savings plans and goals in detail. If you share accounts or credit cards, you don’t want one person spending more than their fair share since this would not only negatively affect your savings goals, but it can also create a power struggle over financial control. It’s important to discuss how much money you’re okay spending on certain items and creating a budget that will help you compromise to meet your financial goals. It may be best to keep your finances separate for now, however, if you’re still unable to reach an agreement.

Red Flag #2: Not Discussing Your Credit Scores

Disclosing your credit scores is a must. Depending on what your partner’s credit score is, it could diminish your chances of getting a house together or making any other big purchase in the future.

Red Flag #3: Neglecting To Address Debt 

It is essential that you know what debts your partner may have accumulated and how they plan on handling them. If you’re still getting to know one another, they may not be comfortable divulging the actual amount. You should, however, have a good understanding of whether or not they’re paying it off responsibly and spending wisely. 

Red Flag #4: Not Sharing the Same Financial Goals 

While the relationship is still fairly new, you should outline what your end goals are. It is important to ensure your financial goals are aligned early enough in the relationship to avoid any future disappointment. 

 

The excitement of any new relationship might cause you to overlook some major financial red flags. But when the time is right, it’s important to address these issues (preferably sooner rather than later) – especially if you’re both in it for the long haul.  If you encounter any of these red flags in your relationship and have any questions regarding your finances, please contact us – we are here to help!  

Equifax Data Breach

Yesterday, the Wall Street Journal reported that hackers had gained access to some of the systems of Equifax Inc., one of the largest three credit reporting companies, potentially compromising the personal information of 143 million U.S. consumers.  The systems they gained access to contained customers’ names, Social Security numbers, birth dates, and addresses.  These four pieces of information are generally needed for consumers to apply for many forms of consumer credit, including credit cards and personal loans.  This raises the risk of fraud, as it means the hackers could have an easier time getting approved for credit under someone else’s name.  In addition to this information, credit card numbers, driver’s licenses, and dispute documents with sensitive information could have been compromised for some users.  Because Equifax gets its data from credit card companies, banks, retailers and lenders, you could be affected regardless of whether or not you have ever knowingly provided them information.

This is being called one of the largest and most threatening data breaches of recent years.  We encourage everyone to make sure they are protected and to closely monitor their credit for identity theft.  Equifax has set up a website to help consumers determine if their information has been compromised.  One also can call their dedicated call center for consumers at 1-866-447-7559.  The company offers credit-monitoring and identity-theft protection products to guard consumers’ personal information.  Consumers can also protect themselves by immediately placing fraud alerts on their credit reports.  This means that a lender must contact you to verify your identity before it issues credit in your name for the next 90 days.  

If you have any questions, don’t hesitate to reach out to us.

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.

What’s your credit score?

What is your credit score

Ok, while it may not be the most romantic pick-up line, there is something to be said for wanting to know a potential partner’s credit score. It’s the number that seems to follow you wherever you go and rears itself way more often than your SAT scores or your IQ score. While it’s something you may not think about often, it is always there. So you should be always be thinking about how to maximize your credit score. Your credit is a doorway to many aspects of your life. And if its not where it should be, those doors may remain locked.

Why Your Credit Score is important

  • With a higher credit score, you will be able to take advantage of lower interest on loans, pay less for credit, better deals on services and insurance and the opportunity to obtain better jobs and living spaces. Essentially, the higher your credit score, the less obstacles you will face in your day-to-day life.
  • Renting or buying a home First things first, you need a place to live, right? Well, before you rent, a landlord will often pull your credit report before allowing you to sign a lease. If you are looking to buy and need a bank loan, mortgage lenders will not only run your credit report, but will put a great emphasis on it in order to protect themselves from possible default. You will also need insurance on your home. Insurance companies are likely to check your credit score to predict the likelihood of you filing insurance claims. Your credit score can affect your eligibility and your rates.
  • Setting up utility accounts Once you have moved, now what? You need a phone, right? And cable? Well, what about electricity, garbage collection, and water? Yes, these are all accounts you will need to establish. If your credit score comes back too low, the utility companies may require a deposit in advance, or even a co-signer.
  • Finding a job In some states, employers are allowed to pull credit reports. Although they need your consent, wouldn’t it take some of the pressure off of the interview process and finding employment if you knew your credit score was at a decent level?
  • Financing a car Leasing a car is similar to leasing an apartment. Lenders want to be sure you will be able to pay your monthly bill. Not only will your credit report be checked for the lease, but also, again, for the auto insurance.
  • Opening credit cards You are planning an upcoming vacation and want to open a credit card that allows you to earn miles. If your credit score is not up-to-par, most likely you will not be offered credit cards with these types of perks.

I’ll tell you mine if you tell me yours

There are different ranges of credit scores based on a mathematical equation that analyzes your credit reports which include factors like payment history, debt levels, age of accounts, income etc.

Typical Credit Score rankings: Excellent: 750 plus Good: 700-749 Fair: 650-699 Poor: 600-649 Bad: 599 and below

Here’s how to maximize your Credit Score

  • Pay bills on time This is important. If you are late on your payments, not only will your credit score go down, but you will also most likely pay an unnecessary late fee which just adds to your debt balance
  • Pay more than just the minimum When you pay only the minimum, you are only paying the interest instead of paying down the debt balance. Creditors notice this. If you are unable to make payments that are larger than the interest, look for balance transfer offers from other creditors that may allow you to roll your balance over (for a minimal fee-usually 3%) in order to receive a zero percent APR for a set period of time (usually 6 months to a year). That will hopefully give you the opportunity to pay down the balance. (the pros and cons of balance transfers will be another blog post at a later date)
  • Apply for credit cards in moderation Although balance transfers are a possible option, make sure you don’t open too many credit cards at once. If you have balances on too many and continue to look for more, lenders will think you are credit-hungry and are a candidate for possible default.
  • Keep your credit card balance at 20% of the available credit or lower The lower the better.
  • Don’t close credit cards If you have paid off a credit card balance, do not close the account. A zero balance on the card will help boost your credit score. It shows good payment history and can help your debt ratio. And never close a card with an existing balance, as it will just drive your current score down.

Learn more about our Budgeting and Savings planning.

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