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How long do negative items stay on your credit report?

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It can take a while for some negative events to fall off your credit report. Here’s how long you can expect them to have an impact on your score. (iStock)

Many Americans are struggling to put their personal finances in order amid the pandemic as they are dealing with debt and other credit issues. If you’re one of them, you’re not alone and there are credit repair steps you can take. Often, the first step is determining where your credit score currently stands by checking credit reports from the three credit bureaus.

Once you’ve had a chance to look at a copy of your credit report, it’s important to check for errors. Assuming the information listed is correct, it may take some time for negative items (or derogatory marks) to fall off your credit report. Read on for a look at four common negative items — foreclosurebankruptcy, missed payments and collections — and how long they will appear on your credit report.

To get information on your credit, turn to a credit monitoring service. Credible’s partners can help you find your credit score, history, alert you to potential identity theft or fraud, and more.

6 COMMON CREDIT MISTAKES TO AVOID

What are common negative items on a credit report?

1. Negative event: Foreclosure

How long it will stay on your report: 7 years

What to do to improve your credit score: After foreclosure, you want to send as much positive information to the credit reporting agencies as possible in order to improve your score as much as possible. With that in mind, be sure to keep on top of your balances and payments. Make an effort to avoid late or missing payments, and to pay as much above the minimum payment as possible. While you’re working to pay off debt, try to keep your balances as low as possible since maintaining a low credit utilization rate also raises your FICO score.

If you want to track changes to your FICO score, Credible can help you get started for free.

IS IT WORTH PAYING FOR CREDIT MONITORING?

2. Negative event: Bankruptcy 

How long it will stay on your report: 7-10 years, depending on the type of bankruptcy. A Chapter 7 bankruptcy remains on your credit report for 10 years while a Chapter 13 bankruptcy will only be part of your credit history for seven years.

What to do to improve your credit score: After bankruptcy, it’s important to start to re-establish credit. While you may not qualify for a traditional credit card at this point and too many hard inquiries may further damage your score, getting a secured credit card may be a good option. Since secured credit cards require a deposit to open instead of checking in with the credit reporting agencies, they may be a good place to start,

HOW TO REBUILD YOUR CREDIT AFTER BANKRUPTCY

3. Negative event: Missed payments

How long it will stay on your report: 7 years

What to do to improve your credit score: Unfortunately, your payment history is one of the most important factors in determining your credit score, so being more than 30 days late in making a payment will have a negative impact on your credit score. However, since your most recent payment history is weighted the heaviest, the impact will fade over time as long as you can make a commitment to keeping up with your payments.

In the meantime, you can also focus on strengthening other aspects of your credit score. For example, you can stop opening new accounts or only open lines of credit that require soft inquiries rather than hard inquiries.

AVERAGE US CREDIT SCORES ARE RISING — HOW TO KEEP YOUR CREDIT SCORE HIGH

4. Negative event: Collections 

How long it will stay on your report: 7 years

What to do to improve your credit score: According to Experian, newer credit scoring models ignore collection accounts with a zero balance. With that in mind, a good way to improve your credit score is to settle the debt as soon as possible. However, keep in mind that not all lenders use newer credit scoring models, so your score may still be impacted.

Experian, also a Credible marketing partner, can also offer other tips to potentially help you improve your credit score. You can learn more by visit Credible’s website.

WHAT HAPPENS WHEN YOU HAVE DEBT IN COLLECTIONS?

The bottom line

While negative events will impact your credit score, they won’t last forever. Additionally, if the negative event is due to identity theft or fraud, you can always work to dispute the credit report. In that case, your best bet would be to sign up for a security freeze and credit monitoring services. Many of the credit card issuers also offer free credit monitoring if you were the victim of a security breach under their watch.

However, even if you weren’t a victim of fraud, it’s a good idea to monitor your credit at all times. Be sure to check your reports often, including public records, and to be careful with where you share your personal information. Ultimately, practicing smart financial habits and valuing online security are the keys to minimizing the impact of negative items on your credit report.

If you’re looking for fast ways to improve your score, visit Credible to learn how their marketing partner Experian may be able to help.

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.

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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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