9 Ways to Get the Most Out of Your Credit.com Account

Here's how to use the tools at Credit.com to get your financial life in order.

Chances are if you’re reading this you’re ready to take control of your financial life. Well, we want to make sure you’re getting the information and help you need to do it. That’s why we’ve put together a list of nine ways you can make the most of your Credit.com account.

1. Download the Credit.com App

Download the Credit.com app for iPhone and get updates on your latest credit score information while you’re on the go. You’ll also have access to the latest news and information from Credit.com’s blog.

2. Begin Tracking & Improving Your Credit Scores

Included with your account is a recommended plan to improve your personal credit scores. It shows you in what areas your scores could improve and offers guidance on how to achieve an attainable goal. And if you run into problems, don’t worry. You can reset your action plan at any time so you can get guidance on your real-time credit situation.

3. Get the Latest News

Besides helping you track and improve your credit, our credit experts offer regular articles on ways to cut back on your spending, get better terms on your credit cards, save money on a wide variety of everyday purchases and more. You can check the latest news on our app or on our website.

4. Follow Us on Facebook & Twitter

Beyond our daily articles, you’ll get bonus information through our Facebook and Twitter pages. And be sure to watch for our live chats on Twitter where we discuss a variety of financial topics.

5. Use Our Financial Tools

Want to know how long it will take you to pay down your credit card debt? We have a calculator for that. We also have financial tools to help you figure out the lifetime cost of your debt and how much house you can afford.

6. Get Help Fixing Your Credit

Is your credit in need of some professional help? Not sure if it is? Check out the free consultation provided by our partner Lexington Law. You can also look at getting help from a credit repair company, like our partner CreditRepair.com. Lexington Law and CreditRepair.com also have iPhone and Android apps.

7. Use Our Interactive Calculators

We’re not just about helping you improve your credit, we’re also here to help you find the best rates and terms for your particular credit standing. Whether you’re looking for a personal loan, a mortgage loan or even student loans, our tools can help you find the right product to fit your needs.

8. Compare Credit Cards

Finding the right credit card can be daunting. That’s why we’ve compiled numerous expert guides for helping you choose which cards are right for you. Do you need a rewards card? A balance transfer card? Which cards do you even qualify for? We provide you with answers so you’ll know what to look for when applying, and offer tips for the application process.

9. Ask Us Questions

Our credit experts genuinely want to help you get the guidance you need. Something isn’t clear? You want further information? Ask your question on Twitter, our Facebook page or in the comments section of our blog articles.

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The post 9 Ways to Get the Most Out of Your Credit.com Account appeared first on Credit.com.

15 ZIP Codes With the Most Underwater Properties

Mortgage debt is a desperate struggle in many areas of the country. See where underwater homes are most prevalent.

Nearly a tenth of homes with a mortgage in the United States were considered “seriously underwater” at the end of the first quarter of 2017, according to statistics from ATTOM Data Solutions.

These homes — all 5.5 million of them — are not physically flooded, though the situation is nearly as alarming: A property is seriously underwater if the amount owed on the loan secured against it is at least 25% higher than the value of the property.

The good news is that the number of seriously underwater homes is down from the same time in 2016, but up slightly from the fourth quarter.

Where Are the Trouble Spots?

“While negative equity continued to trend steadily downward in the first quarter, it remains stubbornly high in often-overlooked pockets of the housing market,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

These pockets exist in several Rust Belt cities, Las Vegas and central Florida, Blomquist said. And nearly a third of all homes nationwide valued at less than $100,000 are seriously underwater.

Using ATTOM data, we’ve compiled the ZIP codes where at least 65% of the properties are seriously underwater. They represent the worst areas in the country.

Remember, if you’re in the market for a new home, a good credit score can help prospective homeowners secure lower interest rates on their mortgages. You can check two of your scores free on Credit.com.

15. Chicago ZIP Code 60636
Properties with loans: 7,875
Properties seriously underwater: 65.6%

14. Detroit ZIP Code 48227
Properties with loans: 7,825
Properties seriously underwater: 65.8%

13. North Chicago ZIP Code 60064
Properties with loans: 2,856
Properties seriously underwater: 65.9%

12. Milwaukee ZIP Code 53206
Properties with loans: 3,189
Properties seriously underwater: 66.2%

11. Detroit ZIP Code 48234
Properties with loans: 6,096
Properties seriously underwater: 66.6%

10. Maple Heights, Ohio ZIP Code 44137
Properties with loans: 7,694
Properties seriously underwater: 66.8%

9. Detroit ZIP Code 48205
Properties with loans: 7,574
Properties seriously underwater: 67%

8. Riverdale, Illinois ZIP Code 60827
Properties with loans: 5,391
Properties seriously underwater: 67.4%

7. Dolton, Illinois ZIP Code 60419
Properties with loans: 6,673
Properties seriously underwater: 68.2%

6. Detroit ZIP Code 48228
Properties with loans: 9,993
Properties seriously underwater: 68.2%

5. Detroit ZIP Code 48224
Properties with loans: 8,974
Properties seriously underwater: 69.4%

4. Las Vegas ZIP Code 89109
Properties with loans: 6,327
Properties seriously underwater: 69.9%

3. Detroit ZIP Code 48235
Properties with loans: 9,629
Properties seriously underwater: 70%

2. St. Louis ZIP Code 63137
Properties with loans: 5,954
Properties seriously underwater: 70.6%

1. Trenton, New Jersey ZIP Code 08611
Properties with loans: 4,426
Properties seriously underwater: 74.6%

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The post 15 ZIP Codes With the Most Underwater Properties appeared first on Credit.com.

Here’s How Many People Actually Have the Worst Credit Score

It is possible to have a rock-bottom credit score. Find out exactly how many U.S. residents meet this dubious threshold.

As confusing as credit scores can be, most people get the basic concept: You want a high score, not a low one. What qualifies as a good credit score depends on the scoring model you’re talking about (and there are dozens of them), but a common range is 300 to 850. The higher your score, the better. You don’t have to aim for an 850 to get the best terms on a loan or qualify for top-tier credit cards, but anywhere in the high 700s is a good place to be.

Ideally, you’re not anywhere near the bottom of the range, but it is possible to have a 300 credit score on a 300 to 850 scale. The good news: A very small portion of the population has such a score. The bad news: Some people do.

How Many People Have the Worst Credit Score?

There are 294 million “scoreable” consumers, and only 0.01% of them had a 300 credit score, according to data credit bureau TransUnion pulled for Credit.com in March 2017. (A scoreable consumer is someone with enough information in their credit files to generate a VantageScore 3.0. TransUnion said 4.28% of the population is not scoreable.) While 0.01% is a really small portion of consumers, it still means 29,400 people have the worst credit score (on the VantageScore 3.0 scale). In other words: It’s totally possible for your credit to hit rock-bottom. (You can see where you stand by getting two of your credit scores for free on Credit.com.)

 

Though it’s uncommon to have the worst credit score, having bad credit isn’t. More than a quarter (27.66%) of consumers have a credit score between 300 and 600, which is considered bad credit or subprime credit. Conversely, 20% have a super prime credit score (781 to 850). The average credit score was 645 when TransUnion pulled the data.

How to Deal With Terrible Credit

TransUnion didn’t identify common factors among consumers with a 300 credit score, but they pointed out some characteristics of subprime credit files: “Generally speaking people with poor credit (300-600 score) usually make late payments, only contribute the minimum amount, carry high percentage balances on multiple cards and apply for multiple lines of credit within a short period of time,” said Sarah Kossek, a spokeswoman for TransUnion, noting that the factors vary by individual.

So if you want to avoid joining the population of people with bad credit (or you want to get out of the club), it’s smart to make credit card and loan payments on time, pay down your debts, use a very small portion of your credit card limits and apply for credit sparingly. It’s also a good idea to regularly review your credit reports for accuracy, as errors may be hurting your credit. You can pull your credit reports for free each year at AnnualCreditReport.com.

If your credit is the worst, figuratively or literally, well, you can find a full explainer on how to fix it right here.

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The post Here’s How Many People Actually Have the Worst Credit Score appeared first on Credit.com.

What You Should Know About Mortgage Paperwork

Yes, mortgages come with a lot of paperwork. Here's how to make it easier on yourself.

Getting a mortgage is every bit as arduous as you might think. While lax mortgage lending standards helped pave the path to the financial crisis a few years ago the pendulum has swung so far the other way in 2017 that getting as simple as a 30-year fixed rate loan is incredibly complex given the amount of paperwork and disclosures required.

Here is what you should expect if you plan to buy a home in 2017 or beyond.

Communication

What this means to you, as a homebuyer, is to trust your lender and expect the mortgage process, in terms of the paperwork, to be thorough. The mortgage process could be compared to an airplane ride. No ride, destination, flight attendant, captain or any aspect of each individual flight is the same. Every flight is different.

Every loan is different as well. If you have ever been on a flight and experienced turbulence, that turbulence is the equivalent of a lender coming back and asking you for documentation, even though you already provided it at the beginning. Asking you for documentation a handful of times is normal.

Remember, a good lender can do a thorough job examining your financials before you go house hunting. This will ensure you can get a loan at a good rate while intercepting future issues that may arise. Before you go to a lender for pre-approval, you’ll want to check your credit scores to see if there are any issues or errors weighing down your scores that you can quickly fix. You can get your two free credit scores on Credit.com.

Time

Time is not on your side when purchasing a home for two reasons: You might have a fee for every day you don’t close on time, which could be as much as $100 per day. If you close three days late, that’s $300 in the seller’s pocket. The other reason is your interest rate lock. If you don’t close on time, it might cost you as little as $500 or as much as a few thousand to extend your rate lock commitment to the investor.

Time is also not on your side because there is an expectation your lender and Realtor have that you to provide documentation to them within 24 hours. This means your answer to the request made Monday asking you for a paystub is expected by Tuesday, no later than Wednesday. Delays in the process can be costly and stressful, especially if everyone is counting on the transaction to close by a certain day and it doesn’t due to failure to receive documentation in a timely manner.

The best two things you can do for yourself when purchasing a home are one, get the needed documentation to your professional in a timely manner, and two, expect to be on call for each day of your 30-day purchase contract. Going into the transaction with those expectations up front will help ensure your transaction closes on time.

Image: PeopleImages

 

The post What You Should Know About Mortgage Paperwork appeared first on Credit.com.

What to Do When Your Parents Kick You Off Their Credit Card

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Plenty of parents make their kids authorized users on their credit cards, and for good reason. Credit cards provide a way to build credit, giving teenagers an early financial leg up (provided the card is managed responsibly) by establishing a credit history before they’re old enough to get a credit card on their own.

It can also be a great chance for parents to supervise how their children are spending and help them learn financial lessons, like making payments on time or reading a credit card statement. Even checking credit scores and reports through free credit score tools (such as those on Credit.com) and free annual credit reports at AnnualCreditReport.com can help them reach their financial goals.

But at some point, there comes a time when all parents cut the cord (and the card), kids must make it on their own in the world of credit. What now?

If that recently happened to you, there are two starting points where you’ll likely find yourself: having a good credit score or having a not-so-good credit score.

If Your Credit Scores Are Good

If your parents have been making timely payments on the card you also carry, you likely have a credit score that is good enough to get your own credit card. If that’s the case, you can consider some of these credit cards for good credit. If you’re still in school, you might want to consider a credit card specifically designed for students.

Remember, if you’re under 21, you’ll need to demonstrate an ability to repay or have a willing co-signer to qualify — federal law prohibits issuers from extending credit cards to you otherwise. You should also check your credit before applying so you know where your score stands, because the inquiry will temporarily ding it.

If your parents are only just now starting to talk about removing you as an authorized user from their card, it might be a good idea to ask them to wait until you apply for a new card in your own name. This will ensure that your credit score remains high — closing credit card accounts can have a negative impact on your credit scores — while you go through the application process.

Better yet, you can ask your parents to take your card but keep you as an authorized user on their account. As long as they are making payments on time and not carrying high balances, this will help you even further in establishing a good credit history. That’s because roughly 15% of major credit scores is based upon the length of your credit history. So the longer you’ve had credit, the more points you’ll earn toward your total credit score.

If Your Credit Scores Aren’t So Hot

If your parent or parents are having financial difficulties and haven’t been making timely payments on the credit card or have run up a high balance — credit utilization is a big factor in credit scores — you might not have very good established credit.

The good news is, you have options, and getting disconnected from your parents’ credit could be a very good thing for your scores. Authorized users are not considered responsible for making payments, so if negative information is appearing on your credit reports because of the account, you can contact your lender and asked to be removed from it. After that, the account should stop appearing on your credit reports. If it doesn’t, you can file a dispute with the credit bureaus.

Next, you can start on your own financial road by first checking your credit scores to see exactly where you stand. You might also want to check your credit reports to make sure everything on them is accurate (see the free credit scores and reports links in the second paragraph). If afterward you’re certain you have “thin” or “bad” credit, there are some credit cards — both secured and unsecured — that you can consider applying for to help you establish or rebuild credit.

If you find out through checking your credit scores that the situation is actually not all that bad, you can try applying for a credit card for fair credit.

Credit cards can be a simple way to establish and build credit, but they’re not your only option. You can also consider credit-builder loans to get you started.

Whatever your decision, remember that your credit is an important for everything, from getting a car loan to renting an apartment, opening utilities and sometimes even landing a job. So taking care of it should be a top priority. You can build good credit in the long-term by making all loan payments on time, keeping debt levels low, limiting new credit inquiries and only adding a mix of credit accounts as your wallet and score can afford them.

More Money-Saving Reads:

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The post What to Do When Your Parents Kick You Off Their Credit Card appeared first on Credit.com.

Is There a Difference Between a Co-Signer & a Co-Applicant?

The terms “co-signer” and “co-applicant” may sound like they’re the same, but there are actually some key differences between the two that are important to understand if you’re thinking about financing a loan alongside friends or family members.

What’s the Difference?

A co-applicant, also sometimes referred to as a co-borrower “is a full-fledged partner in the account or loan transaction,” Thomas Nitzsche, media relations manager for ClearPoint Credit Counseling Solutions, said in an email. Each person has all the same rights and responsibilities pertaining to the loan and, when it comes to applying for the financing, both parties’ financials, including income, are generally used to calculate how much credit should be extended, he said.

Co-applicants are typically common when it comes time to buy a home.

“For mortgages, this divides the responsibility of repayment equally between the two property owners,” Bruce McClary, vice president of public relations and external affairs at the National Foundation for Credit Counseling, said in an email.

But, no matter what type of financing is involved, both parties are on the hook for any missteps.

“If defaulted, both parties are equally fully responsible even if it was only one of them who ran up the charges (we usually see this with credit card accounts when clients divorce),” Nitzsche said.

Co-signers, on the other hand, are generally added to an account in order to help someone with no credit or bad credit get financing.

“The healthy credit record of the co-signer can help the other person get past credit approval thresholds and qualify for more affordable rates,” McClary said. But, despite that role, a co-signer generally isn’t granted the same usage rights as the primary borrower. (For instance, a co-signer on a mortgage may not have property rights to the home.)

Still, “if the primary applicant fails to repay the account according to the terms of agreement, the lender can [pursue] the co-signer for the remaining balance,” McClary said.

It’s also possible to be a guarantor, someone who “guarantees” a loan for a friend or family member.

“A ‘guarantor’ … is similar to a co-signer except that the guarantor doesn’t become liable until the bank has exhausted all other means of collection from the primary borrower,” Nitzsche said. “With a cosigner, the bank can come after both parties right away for collection.”

Considering a Co?

Remember, in all these instances, you could ultimately be on the hook for payments and charges. Plus, any unpaid bills, defaults, collections accounts, or, if the debt is attached to a mortgage, short sale or foreclosure, will likely appear on your credit report and damage your credit score. That’s why you should always consider all your options very carefully before signing alongside someone on those dotted lines.

And, no matter what route you go, it’s important to keep an eye on your credit so you know how any co-signed or joint accounts may be affecting your credit. (You can view two of your credit scores for free each month on Credit.com.)

If a co-signed or joint account has tanked your credit, you may be able to improve your score by disputing errors on your credit report, paying down high credit card balances and limiting new credit inquiries until your score rebounds.

More on Credit Reports & Credit Scores:

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Review: American Business Lending Small Business Loan

personal loan_lg

American Business Lending is a Preferred SBA non-bank lender offering SBA small business loans. SBA Loans are guaranteed by the Small Business Administration. Since the government may guarantee up to 85% of this small business loan, the lender is able to qualify business owners with more lenient standards and offer a lower interest rate than traditional loans.

You can borrow $300,000 to $5,000,000 for commercial financing. This loan can be used for expansion, refinancing, business acquisitions, start-ups, franchises, furniture, fixtures, equipment, inventory and working capital.

Loan interest on the American Business Lending SBA Loan is the prime rate + up to 2.75%. The Wall Street Journal prime rate at the time of publication is 3.50, so you can expect an interest cap of 6.25%. However, interest on this loan is floating, which is another way of saying variable. Interest rates will adjust quarterly based on the prime rate.

The loan term is 7 to 25 years. Collateral may be required. There’s a minimum 10% down payment. You may be able to avoid a down payment if you’re getting a loan for a refinance.

The American Business Lending Loan Process

There are four steps to the loan process. First, you’ll get assigned a loan officer. They’ll help you choose which loan product is the best for you and then you put in an application. During the application process you’ll turn in a few documents to qualify you for the loan including:

  • Financial statements
  • Federal tax returns for your business from the last 3 years
  • A business plan or projections for the next two years if your business is a start-up
  • A purchase agreement if you’re buying real estate or business assets
  • The franchise agreement if you run a franchise business
  • A copy of the note being refinanced if you’re refinancing a loan

From there, your application goes into underwriting where your loan request will be reviewed. An underwriter will possibly follow up with questions to qualify you. You get a credit decision within 72 hours of turning in your complete loan application.

Once approved, you’re given a commitment letter, which includes: your interest rate, loan amount, collateral required and other loan terms. You’ll have to pay a good faith deposit, which will later be used to cover the closing costs, credit reports and other fees associated with taking out a loan. After signing the commitment letter and turning in your good faith deposit, you can expect your loan to close within 30 to 45 days.

Since we just mentioned closing fees, now’s a good time to go into how much this is going to cost you.

Fees and Gotchas

American Business Lending charges a $1,500 fee for packaging the loan on top of the SBA guarantee fee charged by the Small Business Administration and other closing costs.

The Small Business Administration fee is charged to the lender and the lender can choose to eat the cost or charge it back to you. In this case, American Business Lending will charge you. The SBA guarantee fee for this loan will range from 3% to 3.75% of the guaranteed portion depending on how much you borrow.

Aside from packaging and the guarantee fee, there’s a prepayment penalty to consider. If you take out a loan that has a term less than 15 years, there’s no penalty for paying early.

If you have a loan term of 15 years or more you can prepay up to 25% of the principal during the first 3 years without penalty. Payments you make above 25% will cost you 5% of the principal the first year, 3% the second year and 1% the third year.

Pros and Cons

We’ve gone over the basics. Let’s head into the pros and cons of this loan:

Pro: Competitive interest. Loans guaranteed by the Small Business Administration have an interest cap. The prime rate has been at a low, so even though interest is variable it’s still a good deal for now.

Con: Fees. This lender is transparent with most fees there’s just many fees to consider. Particularly the closing costs and early prepayment fee. American Business Lending doesn’t say how much closing costs are exactly but you will be charged to cover appraisals and environmental reports, loan closing attorney’s fees, credit reports and lien searches. You may also get penalized if you’re able to repay this loan early.

Pro: Loan size. American Business Lending gives you the flexibility to take out a large loan amount and you can borrow for a longer time span than you can for other non-SBA business loans. We’ll cover a non-SBA business loan below so you can see the difference in loan amounts and terms.

Con: Loan size. The loan size is a plus for business owners who want to borrow over $300,000, but a negative if you’re looking for a smaller loan amount. Other SBA Loan products like the SBA Express Loan allow you to borrow $50,000 through an expedited process. American Business Lending doesn’t appear to have this option.

Pro: Experience with SBA loans. One of the downsides of SBA Loans is the application process. You have to qualify with the lender and also have your paperwork approved by the Small Business Association. According to the American Business Lending site, it’s a preferred SBA lender and the loan officers are experienced in processing these loans. Ideally, this experience will make the process less burdensome.

Con: Long wait time for funds. Applying and closing this loan will take awhile. Getting a credit approval will take 3 days. Then closing will take up to 45 days after you sign off on the contract. If anything should hold up the process like an appraisal you could be waiting for a few months until you get your hands on the loan.

American Business Lending

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Alternatives to American Business Lending

In our comparison section, we’re going to put the American Business Lending SBA Loan against two competitors including one that also offers the SBA Loan and another lender that doesn’t offer SBA Loans.

SmartBiz has an SBA Loan process that’s handled completely online. You can borrow $30,000 to $350,000 for 10 years. Interest ranges from variable 6.25% to 7.25%. Interest is higher at SmartBiz because the Small Business Administration sets a higher interest cap for smaller loans that have shorter loan terms.

You can pre-qualify for a SmartBiz loan within 5 minutes and get funding within 7 days of completing your application. SmartBiz doesn’t have a prepayment fee. The packaging fee is 4% in addition to closing costs. For loans above $150,000, there’s a 2.25% SBA guarantee fee.

smartbiz

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Funding Circle can get you funds quickly and with a competitive interest rate, if you have a good to excellent credit score. You can borrow $25,000 to $500,000. This is comparable to the amount you can borrow from American Business Lending. However, the loan terms are shorter.

You have between 1 and 5 years to repay your loan. If you’re taking out a six-figure loan a short repayment window could be a challenge. Interest is from 5.49% to 21.29% APR. There’s an origination fee of 1.49% to 4.99%.

Funding Circle

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Who Will Benefit the Most From an American Business Lending Loan?

SBA Loans open the door to financing for small business owners who can’t qualify for traditional financing. So, an American Business Lending SBA Loan could be a good choice if you need to borrow a large sum with a low-rate.

Instead of a percentage package fee like SmartBiz, American Business Lending has a flat $1,500 fee, which can save you money and gives it an edge. One the other hand, SmartBiz has a quick and streamlined application process that is more convenient for smaller loans.

One question you should ask a loan officer at American Business Lending and SmartBiz before borrowing is how much the closing costs will be beyond the packaging and guarantee fees for the loan you choose.

The post Review: American Business Lending Small Business Loan appeared first on MagnifyMoney.

“How I Changed My Lifestyle to Pay Off $26,000 in Loans More Quickly”

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When Heather Braggs graduated from Weber State University she still owed $14,000 in student loans. “That might not seem like much because I worked full-time through school and paid $200/month through the majority of my education,” she says,” but I also still owed over $12,000 on my car loan,” so debt obviously weighed heavily on her mind.

Braggs knew going into her education that she didn’t want to leave school in a ton of debt, so she worked full-time while earning her degree, which paid for a large portion of the fees for tuition. She also used a federal unsubsidized loan for the remaining amount she owed. “Interest was 6.8% on the unsubsidized loan and 3.4% on the subsidized one,” she recalls.

Despite working full-time throughout school and graduating with $14,000 in debt, Braggs kept up her determination to pay down her loans as quickly as possible. “I decided to attack my school loans and leave no survivors, so to speak,” she said. “I wanted them gone as soon as possible, so I figured out exactly what I needed monthly to get by — including fuel, food, etc. — and then sent the rest of my wages directly to my loan repayment.”

While Braggs was only required to pay $305 monthly on her loans, she ended up paying $300 from each pay period (or $600 monthly) instead. “It was nearly my whole income when I was making $8.50 an hour,” she said. “But as I got promoted and earned a raise, I had more income available so I upped my payments. Once I started making $600 payments each pay period, the amount started dropping rapidly, which helped me stay motivated.”

Braggs also helped cushion her income by cutting back on going out to lunch, expensive activities, shopping for clothes and makeup and basically spending on anything frivolous. “Also, I was living with my parents during this time so it helped remove the stress of rent, which I know is not possible for everyone, but is helpful if possible,” she said.

Braggs graduated in August of 2013 and paid her final debt payment (which was over $26,000, including her car loan), on March 27, 2015. “The trick is learning self-control and spending less on temporary things,” she said. “Packing a lunch every day instead of going out to eat with coworkers, not going to stores when you are feeling impulsive and don’t have a list of exactly what you need, and other sacrifices like that have made the biggest difference.”

In Braggs’ case, the small efforts added up quickly. For recent grads facing a similar student loan situation, she suggests admitting what your weaknesses are and facing them head on. Consolidation also helps, which she did with her car and student loans (check out this piece for the best debt consolidation personal loan options). “It makes it less stressful when you only have one payment to make, and if you do it right, the interest rates will be a ton lower,” she added.

Braggs estimates she saved about $2,375 by consolidating and making larger payments to pay her loans off more quickly than she would have otherwise (her original projected date of final payment was some time in 2018, more than five years after she graduated).

After her experience Braggs’ biggest piece of advice is to not wait to start paying off loans. “If you can send even $10/month to your lending company while you are in school, do it,” she suggests. “Work hard and do your best to have control over your money. If you don’t spend as much, there will be more available to send to your loan. The feeling of being debt free is amazing. It is like a huge weight has been lifted off your shoulders, so trust me … it’s worth it!”

The post “How I Changed My Lifestyle to Pay Off $26,000 in Loans More Quickly” appeared first on MagnifyMoney.

High School Dropout Tries to Get Out of Paying $67K in Student Loans

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A 44-year-old Florida man is making local headlines for his unconventional approach to getting out of student loan debt: a legal loophole. Ian Torch Locklear of Tampa graduated from the University of South Florida more than 20 years ago with a degree in interdisciplinary social sciences, despite never having finished high school, the Tampa Tribune reported.

Locklear’s filed a lawsuit and it hinges on that lack of a high school diploma. In the complaint filed March 17, Locklear’s attorney, Nancy L. Cavey, argues that his $67,375 of federal education loans (including interest as of the filing date) should be discharged under a provision in the Higher Education Act of 1965. It says the Secretary of Education must discharge student loans if the student’s school “falsely certified that the student had the ability to benefit from program for which the student’s loan were taken out [stet].”

Locklear withdrew from high school in 1989 while he was in the 11th grade, after receiving acceptance from USF. At the time he left high school, he had a GPA of 3.51 and a 1210 SAT score. The Department of Education cited those accomplishments when it denied Locklear’s application for student loan discharge, saying that “The University has also stated that with your recorded high school GPA and SAT score, you exceeded the state and institutional minimum requirements.” (This lawsuit challenges that denial). Still, Cavey argues, that without a high school diploma, GED or entrance exam at USF, Locklear qualifies for the False Certification Discharge. (Attempts by Credit.com to reach Locklear were unsuccessful, though he declined to comment to the Tampa Tribune. Cavey, his lawyer, did not immediately respond to a request for comment.)

Given that Locklear chose to drop out of high school in order to jump-start his college education, pinning his student loan debt on his school seems like a cop-out to some (just read the comments on the Tampa Tribune article). Almost every student loan borrower has to repay their debt, whether or not they graduate college or find any success after getting an education.

Even falling on hard times usually doesn’t get you out of student loan debt, which Locklear likely knows from personal experience: Florida court records show that Locklear filed for Chapter 7 bankruptcy in 2008, though student loan debt is generally not dischargeable in bankruptcy.

The lawsuit calls for the Education Department to cease debt collection activity on Locklear’s unpaid loans, reimburse Locklear for the student loan payments he’s already made and remove the loan information from his credit reports. Meanwhile, interest will continue to pile up on his outstanding loan balance, and the defaulted student loans will continue to damage his credit.

If you’re struggling with student loan debt, you can review these little-known ways to get your student loan debt forgiven to see if any are right for you, or you can try to defer or forbear your loans while you shore up your finances. Remember, missing payments will impact your credit. If you’ve already done so, you can see how bad the damage is by checking your free credit report summary on Credit.com.

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Car Leasing Is All the Rage. Is It a Good Deal?

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Old Betsy’s reign in the American driveway may be over. After all, why would you name a leased car?

Americans are no longer looking for a long-term relationship with their cars. Auto leasing is in the midst of a historic rise, setting all-time records quarter after quarter, and now makes up nearly one-third of the new car market, with millennial leasers leading the way. Consumers have begun to treat cars the way they treat cellphones — holding on to them until contracts run out, then happily exchanging them for the newest thing.

The records come just a few short years after leasing was all but left for dead during the Great Recession, when auto sellers shunned the practice, and leasing fell to only about 10% of the market. At the end of last year, auto leases made up 33.6% of all new car financing during the quarter — and 28.9% of all purchases — according to Experian Automotive.

A Nicer Car for Less

The appeal of leasing to consumers is obvious: The monthly payments are less. Experian offers these examples: An average new Toyota Rav4 loan last year cost $431 per month, while a lease cost $322; a Chevy Silverado costs even less per month, $544 vs. $384.

Many consumers use that savings to end up in nicer cars, and leasing can really expand consumers’ options. Here’s a calculation from Edmunds.com: Buyers with a $3,000 down payment and willing to pay only $300 per month can buy a $20,000 car, but they can lease a $35,000 car.

“People shop for vehicles largely based on monthly price, and right now, average dollar amounts for new-vehicle loans are soaring,” Melinda Zabritski, senior director of automotive credit for Experian Automotive, said. “In order to stay within their budget goals, we have seen that more consumers — even those within the prime and super-prime risk categories — are turning to leasing.”

Millennials are even more likely to opt for leasing, according to Edmonds. Leasing among younger adults is up 46% in the past five years, the firm says.

“Most millennials understand and accept that they’re on a tight budget and that they need to stick to it,” said Jessica Caldwell, director of industry analysis for Edmunds.com. “But it doesn’t mean that their financial constraints limit them only to the most basic vehicles to get from Point A to Point B. If they see a chance to get into a nicer car while staying within their budget, they’re likely to explore that opportunity. In most cases, leasing opens the door to the bells and whistles that they couldn’t otherwise afford.”

The Drawbacks of Leasing

Of course, leasing is hardly perfect, and has a well-earned reputation for causing consumer headaches. The biggest bugaboo is mileage limits: Many limit drivers to 12,000 miles annually, a serious disincentive for road trips. Also, while it’s easy to turn in a leased car and get into a new lease, it can be harrowing to drop off a leased car at the end of a term and face potential damage claims from the dealer or mileage overage payments. Many drivers find their insurance rates go up when they lease because of increases in mandatory coverage (check with your insurance company before you shop around).

And while leasing is attractive to people with long-term car commitment issues, a lease can be even more of an anchor than an owned car. Consumers who move and can’t take their car find out the hard way that getting out of a lease is even worse than getting out of a cellphone contract. Car leases can be transferred, but it’s easier to sell a car you own.

Still, leasing has become mainstream. Once more popular with luxury car drivers, leasing is now common for mid-level and discount brands. The Honda Civic was the most-leased car last year, followed by the Accord, Camry and Rav4, Experian says.

So, should you lease? One truth overrides all the details about leases: In the end, leasing costs more than buying. You pay for those lower payments by not owning anything at the end of the lease term. The best deal, financially, is buying the car. But the difference can be only a few thousand dollars, and that may not matter to you.

On the other hand, if you are leasing mainly because it feels cheaper than buying, you are almost certainly making a mistake. Long-term, buying is the cheaper option, especially if you don’t mind holding onto your car for more than a few years.

Luxury cars that lose value quickly (and often aren’t needed as “everyday” cars) still make the most sense to lease. People who live very close to work (or work at home) and don’t pile up telecommuting miles are good lease candidates. And if you really do want a new car every three years, and don’t mind knowing that you haven’t gotten the absolute best deal you can, consider leasing. But know that there is always a risk when you turn the car in at lease’s end that a dealer in a bad mood may try to nickel-and-dime you for every carpet stain. If you tread very lightly on your floor mats, you’ll probably be fine. But if you drive hard, a surprise end-of-lease wear-and-tear bill could make those lower monthly payments seem pretty expensive.

Remember, your credit score can directly impact your ability to get the best deal on a car lease. You can check your scores, along with the major factors impacting them, with your free credit report summary each month on Credit.com.

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