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How Fast Can You Increase Your Credit Score With Self Lender

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Living with a bad credit score or minimal (if any) credit history can be difficult. Usually, you won’t qualify for favorable terms on credit products like credit cards and loans. You may get stuck with higher interest rates, large fees, or other financial penalties do to your less than ideal credit. As a result, many aspiring borrowers take active steps to improve their credit score before taking certain actions, like trying to get a mortgage or car loan. Self Lender is a company that says they can assist with building your credit, all while helping you save, too.

How Self Lender Works

With the Self Lender Credit Builder Account, you can build a better credit history. The company doesn’t conduct a hard pull on your credit report, so your score isn’t harmed by opening the account. By making your monthly payments on time, your credit score typically rises. Self Lender reports to all three major credit bureaus, so your on-time payments will show up on your Experian, TransUnion, and Equifax reports.

While that may not sound any different than other loans, Self Lender does something that’s a bit outside of the box. Instead of giving you the money from your loan, that cash is held as a Certificate of Deposit (CD), a type of savings vehicle. The bank holds onto the loaned money as a CD while you make payments. Once you finish paying off your Self Lender installment loan, that CD matures and unlocks, allowing you to receive the money.

At the end of the repayment, you receive the principal amount you borrowed (minus any interest paid). As a result, you are able to build your credit history while building a savings habit. However, in exchange for the ability to increase your credit score (and unlike many other savings options), you do have to pay fees and interest along the way.

Self Credit Builder Account Fees and Interest

Since the Self Credit Build Account is technically a lending product, you will encounter some fees and interest. First, there’s a $9 administrative fee for opening the account. Second, there is an annual percentage rate (APR) of just under 16 percent.

In comparison to many credit-building credit cards and personal loans, the Self Lender fees and interest rates are actually very low. This may make it a more affordable way to rebuild or create your credit profile.

How Fast Your Credit Score Will Increase

How quickly a Self Lender account can improve your credit score will vary. Your unique situation, prior credit history, and activity on other credit accounts all play a role. For example, if you miss a payment on a loan or credit card with another lender or issuer, that may offset any benefit from making on-time payments with Self Lender.

Similarly, how diligent you are about your Self Lender payments is a factor. Missing a payment or being late can harm your score.

It’s also important to note that a borrower’s credit score might initially drop when they open a Self Lender account. The new account reduces the average age of your accounts. However, this impact tends to be small and short.

Make On-Time Payments with Self Lender

By making on-time payments with Self Lender, you may see credit score improvements within one to six months after making your first payment. However, your results will vary.

How much your credit score improves isn’t guaranteed. Self Lender states that, on average, an account holder with an account in good standing usually sees a 45 point increase during the first six months. However, your previous credit score and history, as well as actions on other open accounts, could cause your results to be different.

For those establishing a credit score, expect it to take a minimum of six months of on-time payments to see a result. While some may see progress sooner than that, others will have to wait a bit longer than six months to make progress.

 

Do you have any tips that can help someone increase their credit score quickly? Do you believe that slow and steady is the only way to improve your credit score? Share your thoughts in the comments below.

 

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How To Conquer Debt Paralysis

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When you’re on your journey to debt-free, you might experience a moment that feels like you’ve hit a brick wall, and progress has stalled. Perhaps you can’t bring yourself to even glance at your statements to check your balance – this is debt paralysis. Unfortunately, ignoring your debt won’t make it go away. Here are five ways to get back in the game and overcome debt paralysis.

First, you have to forgive yourself for your past choices and mistakes. Getting an education is not a mistake, but maybe you could have supplemented paying for tuition with scholarships instead of student loans. Buying a car to get to work every day is not a mistake. Taking out a high-interest auto loan may not have been the best choice. Now you know, and you will do better in the future.

Next, you start doing better by removing the options for new debt. If your credit cards are paid off, you can cancel them or freeze your account. If you’re carrying credit card balances, make sure you stop using them. Save as much as you can in an emergency fund. Once you have at least $500, you can focus on your debt payments. Your emergency fund should give you some breathing room in case a situation occurs where you would want to use your credit card. If you are unable to save money, you need to review your budget for expenses to eliminate and increase your income. Once you have control over your income and budget, you will be equipped to tackle your debt.

debt paralysis

When you have been paying off debt for a long time, but your progress has fallen by the wayside, consider reversing your process. If you were using the snowball method, switch to the avalanche method or vice versa. The snowball method is advantageous for small balances because you see results quickly. The avalanche method is better if you have a considerable balance or high-interest rates, such as the annual percentage rate (APR) on a credit card.

Making the minimum payments only get you so far. It might be time to overpay each month or make multiple payments a month. For example, it is taking graduates 21 years to repay their loans. The longer it takes, the more interest you will pay. Look at your amortization schedule, and you’ll see your payments barely put a dent in the principal. Making additional payments can reduce your interest and principal. Additionally, some companies will allow you to make your extra payments directly to your principal.

Finally, don’t forget to reward yourself. For every debt you pay off, find a way to celebrate. A YouTuber named Stacey Flowers has wine chilling in her refrigerator that she opens when she reaches certain milestones. Maybe you enjoy your favorite meal or dessert after you make your final payment. Families love to post photos on Instagram and tag Dave Ramsey when they have paid off their debts. He shares them on his page, so they get virtual back-pats from strangers all over the world.

Don’t let debt paralyze you. You will pay it back, one payment at a time.

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5 Financial Tips to Guide You From College to The Real World

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Nearly 4 million students are expected to earn a college degree during the 2019-2020 academic year. On average, those college graduates will likely earn just over $50,000 annually after they graduate, and that’s usually substantially more than they bring in as income while still a student. As a result, shifting from college to the real world can be a bit of a shock and surprisingly tricky. If you want to make sure you handle the adjustment properly, here are five financial tips that can help you now.

1. Figure Out a Budget (and Live Below Your Means)

Whenever your income or expenses change dramatically, it’s wise to update your budget. Or, if you were a student without a formal budget, now is the perfect time to create your first one.

For many students, their first real-world salary feels larger than it is. Plus, there is a tendency to splurge or live far beyond one means, both of which can lead to financial hardship down the line.

If you want to make sure that lifestyle inflation doesn’t harm your finances, budgeting is a must. Review all of your expenses (including student loan payments that might be on the horizon) and account for them. Additionally, dedicate some money toward an emergency fund, saving for any upcoming large purchases, and retirement. Consider living as frugally as possible and sending more money than the minimum payment toward your student loans, allowing you to rid yourself of the debt faster.

By making smart choices today, you can make sure that you are saving for the future. Plus, by living within your means, you can avoid other forms of debt.

The easiest way to budget is with automated apps that tell you in real-time how you’re tracking. Empower is a favorite because all you need to do is sign up for Empower and take a couple of minutes to customize your budget categories and set weekly or monthly spend limits, then let Empower do the hard work of monitoring and tracking your expenses. Empower classifies every expense for you and shares a monthly report for real insight into where all your money is going. Empower will also proactively alert you when it’s time to rein in your spending so you’ll never go over.

2. Get Control of Your Credit

The average graduate with a Bachelor’s degree has $29,200 in student loan debt. Plus, 36 percent of college student have at least $1,000 in credit card debt, too.

If you leave college and start living outside of your means, it’s easy for debt to get out of control. When this happens, your credit score can fall, making it hard to obtain credit in the future, leaving you with higher interest rates, and more.

Monitoring and improving your credit score now is a smart choice. That way, if you absolutely need to finance something (like a home), your score is in good shape.

Make sure you review each of your credit reports every year. At AnnualCreditReport.com, a government-supported site, you can do so for free, allowing you to spot errors or issues.

Always make your debt payments on time, as this can help your score. Additionally, avoid using credit for unnecessary expenses, opening new cards you don’t need, or maxing your cards, as those all have the potential to lead to trouble or lower scores.

3. Build an Emergency Fund

At some point, everyone faces a financial emergency. Whether it’s an unexpected car repair, medical bill, or other expense, having cash set aside gives you a safety net. Plus, if you can get three to six months of expenses stashed away, you can protect yourself against sudden job loss as well.

Start by getting at least $1,000 in an emergency fund. That way, you have a basic cushion against financial surprises. Once in place, only tap that account if you are genuinely experiencing a hardship, and replenish it as quickly as possible. Then, just keep stashing money away, allowing you to build it up over time.

4. Save for Retirement Now

As a recent college graduate, compound interest is your best friend. Since you have a substantial amount of time before you reach retirement age, even smaller contributions today can lead to big gains, all thanks to the build-up of interest or earnings over the years.

Whether you use a plan through an employer or open your own IRA, start saving for retirement now. Even if your initial contributions are small, they’ll add up and grow, making it easier to stash enough away to retire comfortably when the day arrives.

5. Leave (a Little) Room in Your Budget for Fun

If all of your money goes toward not-so-fun things, it’s easy to burn out. By dedicating some of your income towards entertainment or exciting purchases (like new furniture or a vacation), you have things to look forward to that you’ll enjoy.

While you don’t want fun to be a huge part of your budget, it should be in there. After you handle your expenses and savings goals, see how much is left and set aside a part of it for your enjoyment. That way, you can get the occasional reward for your hard work, and that will help keep you motivated.

Following these 5 financial tips can ensure a smooth transition from college to reality.

 

Do you have any financial tips that can help students transition from college to the real world? Share your thoughts in the comments below.

 

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If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Financial Advice I’d Give My Younger Self

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If I can go back in time, I would do so many things differently with my money. I’ve learned so much through experience and research. Below, I detail the financial advice I’d give my younger self.

Invest Early

Start investing as soon as possible in various approaches. Deposit the maximum amount in an individual retirement account (IRA) and a 401k annually. If the employer offers to match your contributions, then take advantage. Open a brokerage account and invest in exchange-traded funds, or ETFs, and mutual funds. These funds make it easy to invest in multiple stocks without fees for each. They often provide dividends which can be an additional income stream. The earlier you start, the longer your investments have to grow and compound.

Avoid Debt

Debt seems like an inevitable part of life, but it is unnecessary and completely avoidable. Instead of taking out student loans, apply for more scholarships and grants. Apply before and during the school year for all available funding. Before making any purchases, plan and save up for as long as needed to avoid charging the purchase. This discipline applies to a house, a car, electronics, or any other wanted item. There is no need to take out a loan or use a credit card for anything you want. It will take time and patience but will keep you debt-free.

Stick to Your Financial Goals

Set financial goals and priorities, then determine which expenditures are hindering your success. Don’t let your costs increase as your salary increases. Keeping your costs low will provide additional funding for savings and investments. Keep track of income and expenses over time. Find ways to decrease the charges when they start to creep up. Shop around for insurance, services, and groceries. If you want to travel more, then spend less elsewhere.

Allow yourself to enjoy life while being mindful of spending and splurging. It is okay to spend money because that’s why it exists. However, ensure you have added to priorities first. Saving and investments should come before eating out, shopping, and expensive travel. Find deals for dining such as restaurant week. Use bargain sites for experiences and excursions. Maximize the use of coupons, rewards, and sales to reduce spending.

Shop Smart

Try to avoid expensive purchases while in desperation. For example, don’t wait to buy a car until you need one right that second. You will be more prone to make a bad deal or pay more than you want. Everything is negotiable or found elsewhere. Don’t take an uncomfortable offer for a house, appliance, cellular phone, television, or other major purchase. Salespeople can be aggressive, but the ball is in your court. Research what you want and what you’re willing to spend. Once you have set your budget, stick to it. Don’t be afraid to walk away.

Establish Good Habits Early

Finally, more money won’t make you better at managing it. Learn to budget and save at all income levels. Building good habits earlier will save thousands of dollars later. Once you find a system that works for you, stick with it, and update as necessary.

My recommendation

A great way to crush your financial goals is by using an app that manages your finances for you. Empower is an award-winning mobile app that is perfect for people who want a complete personal finance solution all in one place. Empower combines automated saving with customizable budgeting and spend tracking, and even personalized financial coaching. I wish I had this app when I was younger as this would have greatly helped my overall financial health.

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What the New Lower Federal Interest Rate Means

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What the New Lower Federal Interest Rate Means

Interest rates are going down. The Federal Reserve has reduced its federal interest rate by 0.25%. The overnight lending rate is the basis for lending between banks and affects the rates offered to consumers for various loans. The last rate cut was almost twelve years ago after the real estate bubble burst in 2008. Conversely, rates have been raised nine times in nearly four years.

What is the Federal Reserve?

The Federal Reserve, or the Fed, was created in 1913 to stabilize the financial system in the United States. It’s also known as the central bank of the US and one of the most powerful financial institutions in the world. The Fed controls the monetary policy for the US. Its mandate, set by Congress, is “maximum sustainable employment, stable prices, and moderate long-term interest rates.” The Fed uses increasing and decreasing interest rates to combat the effects of inflation and stimulate the economy.

Reasons for the Decreased Federal Interest Rate

This latest reduction is said to mitigate global risk amid worsening relationships and trade concerns. The stock market and the current administration wanted a more significant decrease of 0.50%. The stock market reacted negatively to the news since lower rates present a weak economy. The S&P 500 decreased over 1%, to its lowest point in the last two months.

The Fed Chairman, Jerome Powell, alluded to the possibility of more cuts. However, there are no long-term cuts planned. The rate decrease was to prepare for future economic uncertainties. The administration is not particularly happy with the initial reduction and blames Mr. Powell’s policy decisions for slow economic growth. However, unemployment has been low for quite some time, and inflation has been steady. Conservative decreases as a preventative measure may contribute to more prolonged results.

What It Means When Interest Rates are Low

Federal interest rates affect how much it costs to borrow debt. Consumers are more likely to make big purchases when rates are lower. The hope is that lower rates will decrease spending on debt and increase consumer spending elsewhere. Lower rates also incentivize businesses to take out loans for expansion, equipment, and other enterprising efforts. Rates usually are reduced when the economy is in a recession, so this an unusual situation. The economy is strong, yet the Fed decreased the rate. The Fed previously reduced the rate to combat recession in 2003. The rate was 1.25% then. The current rate range is 2 to 2.25%

If you’re looking to finance a property, a car, or business expenses, now may be the time to strike. Also, now be a great time to refinance. If you took out a loan within the last four year, when the rates were increasing, the lower rates might be especially appealing. You may see a significant reduction in your monthly payments or total interest paid over the life of your loan. However, don’t feel pressured to accrue unnecessary debt because rates are low. The economy and markets are cyclical. Stick to your goals and financial plan.

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Are You Owed Money From The Equifax Breach?

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Equifax breach

It was two years ago when Equifax announced hackers had gotten ahold of more than 147 million people’s personal information. While the Equifax breach itself is nothing new, this week the major credit bureau announced a settlement of $700 million. Individuals could get up to $20,000 each.

About The Equifax Breach

As mentioned above, nearly half of United States citizens had their information stolen in the breach. Equifax reported this data collected included birth dates, names, and around 146 million Social Security numbers.

After two years, Equifax has come to a settlement of $700 million. Immediately, the company will pay $300 million into the consumer fund. Additionally, funding for reimbursement will be paid out-of-pocket.

Consumers can receive up to $20,000 in reimbursement for documented loses traced back to the Equifax breach. These costs may include time spent monitoring your credit score, hiring attorneys, or the cost of freezing and unfreezing your credit. Documentation will be required to prove these loses and preventative measures and consumers will be paid accordingly.

Why It Happened

Equifax CEO Mark Begor was quoted saying the settlement is the largest ever. “It reflects, from our perspective, the seriousness in which we took this matter,” he said. The company still denies any wrongdoing in the matter. It also plans to invest $1.25 billion into bettering its security.

According to Equifax, there have been no instances of identity theft that stemmed from the stolen data from the company in September 2017. There is an attorney out to prove otherwise though. Pennsylvania Attorney General Josh Shapiro stated some individuals had their identity stolen, but he was unable to quote any specific numbers. His office also reported receiving more consumer complaints during the period following the breach.

“This breach happened because Equifax was more interested in profits than in infrastructure to protect our data.,” said Shapiro. Before you get ahead of yourself, submitting a claim won’t always get you paid. Not everyone is owed money from Equifax.

Are You Owed Money?

Equifax plans to set up free credit monitoring for consumers and, for some, individual cash payments will be made.

Many people froze their credit after receiving the news, which impacts your ability to do some things financially (if anyone needs to pull your credit). Consumers affected by the Equifax breach will receive up to 10 years of free credit monitoring and identity protection. If individuals impacted by the breach already have a credit monitoring service, they are entitled to a $125 payment.

After the breach, many people spent more time looking at their credit report than they did before. Anyone who spent time taking preventative steps against identity theft or dealing with identity theft in any way can get up to $500. You must be able to prove you have spent time doing this to receive that payment. However, ten hours ($250) can be self-certified and requires no documentation. If you want the full $500, you will need bank and credit statements.

When Will The Claims Process Begin?

Once the settlement Equifax announced has been approved by a judge, the claims process will begin. This will likely take a number of months. The company expects a decision will be reached by the end of the year.

Are You Getting Money?

Four emails will be sent to class members that may be entitled to reimbursement through the settlement. Equifax also plans to put social media and advertising action behind educating consumers about the settlement as well.

It has already created a website pertaining to the breach where you can get information. On the website, you can enter your name and see if you are included in the class action lawsuit. If you’d prefer, you can also call the toll-free number Equifax set up for people with questions about the settlement. The number is  1 (833) 759-2982.

Photo: Flickr: GotCredit

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