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The Beginner’s Guide to Credit Scores

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Life is better with a good credit score. This three-digit number affects nearly every facet of your financial life and makes it easier to achieve important milestones, like renting an apartment, buying a car or getting a mortgage for your first home.

In this guide, we will go over everything you need to know about building credit — even if you have no credit history whatsoever.

Whether you are a recent high school graduate or establishing credit later in life, learn how to get on the path toward stellar credit.

How to read this guide: 

Follow along from start to finish, or use the below table of contents to find the section(s) you want to learn more about.

Credit score basics

Here are the credit score basics we review in this guide:

  1. Why you need a good credit score
  2. What is a good credit score
  3. What is the difference between a good and excellent credit score
  4. What are the disadvantages of having a poor or fair credit score
  5. What are the factors that make up your credit score
  6. How to check your credit score for free
  7. How to improve your credit score if you have no credit history
  8. How to improve your credit score if you have bad credit
  9. How to maintain your good credit score
  10. The biggest credit score myths
  11. Credit score terms everyone should know
  12. Bottom line

1. Why you need a good credit score

Establishing a good credit score isn’t a complex process, but it’s vital for your overall financial picture. When you have a good or excellent credit score, you’ll have an easier time being approved for renting an apartment, you’ll get better rates on car and homeowner’s insurance and it’s cheaper to borrow money when you need it. 

Having a good credit score can be especially helpful when facing an unexpected financial crisis, like a lay off. When lenders see you as a trustworthy borrower, you’re more likely to receive favorable offers for 0% financing if you’re ever in a pinch.

Learn more: How do 0% APR credit cards work? 8 things to know.

A good credit score also unlocks access to the best rewards credit cards that offer cash back, travel perks, protection on major purchases and luxury benefits

Luckily, it’s not difficult to establish a healthy credit score once you understand how it works. This guide will walk you step-by-step through the basics, so you can fully understand how your score is calculated, how to establish good credit and how to maintain it in the long run.

2. What is a good credit score?

Credit scores fall within a range of 300 to 850, with 300 being very poor and 850 being excellent. Credit score ranges vary based on the credit scoring model used (FICO versus VantageScore) and the credit bureau (Experian, Equifax and TransUnion) that pulls the score. Below are the credit ranges for the two most popular scoring models:

FICO Score credit ranges

  • Very poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739
  • Very good: 740 to 799
  • Excellent: 800 to 850

VantageScore credit ranges

  • Very poor: 300 to 499
  • Poor: 500 to 600
  • Fair: 601 to 660
  • Good: 661 to 780
  • Excellent: 781 to 850

If your lender is pulling your score from Experian, they will see your FICO credit score. You would need to score between 670 and 739 to have a good credit score.

If the lender is checking your VantageScore with TransUnion, you need to rate between 661 and 780.

Unfortunately, there is no way to predict which credit scoring model your lender will see. Lenders request your information from one of the three credit bureaus, and they don’t always use the same one every time.

 Learn more: How does your salary and income impact your credit score?

3. What is the difference between a good and excellent credit score?

“Excellent” is the highest tier of credit scores you can have. For FICO, it falls between the range of 800 to 850, and for VantageScore, it’s between 781 to 850. A perfect credit score of 850 is hard to get, but an excellent credit score is more achievable.

Many of the best credit cards require good or excellent credit. If you want to benefit from competitive rewards, annual statement credits, luxury travel perks, 0% APR periods and more, you’ll need at least a good credit score. And if you have an excellent credit score, you can maximize approval odds.

For instance, if you’re looking to earn generous rewards on groceries and dining out, the American Express® Gold Card offers 4X Membership Rewards® points when you dine at restaurants worldwide and shop at U.S. supermarkets (on up to $25,000 per year in purchases, then 1X). But you’ll need good or excellent credit to be approved for the Amex Gold, which CNBC Select named the best rewards credit card of 2020.

And if you want to finance new purchases or get out of debt with a balance transfer card, such as the Chase Freedom Unlimited®, you’ll also need good or excellent credit.

Even if your credit score falls within the excellent range, that is not a guarantee you’ll be approved for a credit card requiring excellent credit. Card issuers look at more factors than just your credit score, including income and monthly housing payments.

American Express® Gold Card

American Express® Gold Card

On American Express’s secure site

  • Rewards

    4X Membership Rewards® points when you dine at restaurants worldwide and shop at U.S. supermarkets (on up to $25,000 per year in purchases, then 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases

  • Welcome bonus

    35,000 Membership Rewards® points after you spend $4,000 on eligible purchases within the first 3 months from account opening

  • Annual fee

  • Intro APR

  • Regular APR

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

4. What are the disadvantages of having a poor or fair credit score?

  • It’s less likely you’ll be approved for credit cards or loans
  • If you are approved, you’ll get less favorable loan terms
  • You’ll have limited credit card choices

A bad or fair credit score can have a big impact on your overall financial life, influencing the type of loans and products you’ll be approved for. 

On the FICO scoring model, a bad score is in the range of 300 to 579, and fair is in the range of 580 to 669. If you’re looking at a VantageScore credit score, a very poor score is between 300 to 499; poor falls between 500 to 600 and a fair score is between 601 to 660.

Here are three disadvantages to having a bad or fair credit score:

It’s less likely you’ll be approved for credit cards or loans

A bad credit score can reduce your approval chances for credit cards and loans, making it difficult to accomplish many goals. If you want to get out of debt with a balance transfer card, you’ll need good or excellent credit. And if you want to earn rewards or receive luxury travel perks, it’ll be near impossible to find a card that accepts bad credit.

If you are approved, you’ll get less favorable loan terms

If you’re approved for credit, odds are you’ll receive less favorable terms, such as high interest rates or annual fees, compared to applicants with good credit. For example, one of CNBC Select’s best credit cards for bad credit, the OpenSky® Secured Visa® Credit Card, has a $35 annual fee; though there are no annual fee options.

OpenSky® Secured Visa® Credit Card

OpenSky® Secured Visa® Credit Card

On OpenSky’s secure site

  • Rewards

    This card doesn’t earn cash back, points or miles

  • Welcome bonus

  • Annual fee

  • Intro APR

  • Regular APR

    17.39% variable on purchases and balance transfers

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

Pros

  • No credit check, regardless if you have a credit score

Cons

  • $35 annual fee
  • 3% fee charged on purchases made outside the U.S.

You’ll have limited credit card choices

Bad credit limits which credit cards you can qualify for; the options you have will be primarily secured cards. While a secured card, such as the Capital One® Secured Mastercard®, can help you rebuild credit, you’re required to make a security deposit — typically $200 — in order to receive an equivalent line of credit.

Even if your credit score falls within the bad range, it’s not a guarantee you’ll be approved for a credit card requiring bad credit, as card issuers consider more than just your credit score.

If you have a less-than-stellar credit score, you should take action as soon as possible, so you can work toward good credit and increase your odds of being approved for financial products like credit cards and loans. 

5. What are the factors that make up your credit score?

Credit scores are calculated differently depending on the credit scoring model used. Lenders can pull from any scoring model they choose, but most rely on either the FICO score or the VantageScore.

These are the factors that FICO considers when calculating your score, according to Experian:

  • Payment history (35%): Whether you pay your credit card bills on time
  • Amounts owed (30%): The total amount of credit and loans you’re using compared to your total credit limit, also known as your credit utilization rate
  • Length of credit history (15%): The length of time you’ve had credit
  • New credit (10%): How often you apply for and open new accounts
  • Credit mix (10%): Having a variety of installment loans and revolving credit accounts, including credit cards, auto loans, mortgages and personal loans

These factors influence your VantageScore:

  • Extremely influential: Payment history
  • Highly influential: Type and duration of credit and percent of credit limit used
  • Moderately influential: Total balances/debt
  • Less influential: Available credit and recent credit behavior and inquiries

Find out: What is considered an excellent credit score?

6. How to check your credit score for free

Once you understand how your credit score is calculated, you should check your score. This will give you insight into what products you may qualify for and what interest rates to expect. If you have a low score, you can take steps to improve it. If you have a good or excellent score, you can work to maintain it.

Checking your credit score doesn’t hurt your credit, and even if you’re not applying for a new card or a loan, it’s smart to get into the habit of checking it regularly. (Learn about when pulling your report could actually hurt your credit.)

Most credit card issuers provide free credit score access to their cardholders, making it easier than ever to check and know your score.

Some issuers, such as Citi and Discover, provide free FICO Scores, while others, such as Chase and Capital One, provide free VantageScores.

You can check your credit score in less than five minutes by logging into your credit card issuer’s site or a free credit score service and navigating to the credit score section. There will typically be a dashboard listing your score and the factors that influence it. 

FICO and VantageScore will pull your credit score from one of the three major credit bureaus, Experian, Equifax or TransUnion.

Here are some free credit score resources that you can access even if you don’t have a credit card yet:

 

The above resources also provide insight into the key factors affecting your credit score, simulators on how certain actions may affect your credit and helpful tips for improving your credit score.

Learn more: Credit bureaus report your score, but what are they?

7. How to improve your credit score if you have no credit history

  • Option 1: Become an authorized user
  • Option 2: Get credit for paying monthly utility and cell phone bills on time
  • Option 3: Open a college student card

Building good credit doesn’t happen overnight. Instead, you need to consistently practice responsible credit behavior, such as paying bills on time and limiting your credit utilization ratio. 

Here are some credit building options that can help improve your credit score over time:

Option 1: Become an authorized user

If you’re looking to build credit, becoming an authorized user on someone else’s credit card is a smart option. It can be relatively low-risk and allows you to build or boost your credit score. But before you sign up there are some things you should know:

  • How can being an authorized user affect your credit? When you’re added as an authorized user to someone else’s credit card account, you can piggyback off their credit. With that in mind, you should really only become an authorized user on an account owned by someone with good (670-799) or excellent credit (800-850). Most major card issuers report authorized user data to the three main credit bureaus — Experian, Equifax and TransUnion — but you can call your issuer to confirm.
  • What responsibilities does an authorized user have? An authorized user has no liability whatsoever. Authorized users can make charges, but they aren’t responsible for making payments. The primary cardholder has complete liability and is responsible for paying the balance, requesting credit limit increases and generally managing the account.

    That said, it’s essential for authorized users to show good financial habits when using someone else’s card. You should not spend beyond your means, and you should make a clear plan with the cardholder to pay off your balance on time and in full each month.

    You also don’t have to actually use the card to see your credit score rise as the result of being an authorized user. So if the cardholder doesn’t feel comfortable trusting you with your own card, you’ll still benefit from being linked to their account.

  • How do I add/become an authorized user on a credit card? The primary cardholder has to add you as an authorized user. You can either do it online, via your bank’s mobile app or over the phone. The process can be completed within a few minutes, and your card will likely be mailed to the primary cardholder’s address. Sometimes there’s the option to ship the card to an alternative address.
  • How much does it cost to be an authorized user? Depending on the credit card, it may cost nothing to be added as an authorized user. However, some credit cards charge a fee for authorized users. For example, the Chase Sapphire Reserve® charges $75 annually for each additional card.

    Credit cards that don’t charge authorized user fees include: Chase Sapphire Preferred® CardCapital One® Venture® Rewards Credit Card, Bank of America® Cash Rewards credit card, and Citi® Double Cash Card.

Citi® Double Cash Card

Citi® Double Cash Card

On Citi’s secure site

  • Rewards

    2% cash back: 1% on all purchases and an additional 1% after you pay your credit card bill

  • Welcome bonus

  • Annual fee

  • Intro APR

    0% for the first 18 months on balance transfers; N/A for purchases

  • Regular APR

    13.99% – 23.99% variable on purchases and balance transfers

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

Pros

  • 2% cash back on all purchases
  • Simple cash-back program that doesn’t require activation or spending caps
  • One of the longest intro periods for balance transfers at 18 months

Cons

  • No welcome bonus, so you can’t maximize rewards during the first few months of card opening
  • Minimum cash-back redemption of $25
  • 3% fee charged on purchases made outside the U.S.
  • Estimated rewards earned after 1 year: $437
  • Estimated rewards earned after 5 years: $2,185

Option 2: Get credit for paying monthly utility and cell phone bills on time

Having a credit card is not the only way to build credit. If you are already responsible about making your utility and cell phone payments on time, but you don’t have a credit card, then you should check out Experian Boost. It’s a free and easy way for consumers to improve their credit scores. Roughly two out of three people see instant increases to their credit scores, with an average increase of 10 points, and many people become scoreable for the first time as a result, according to Rod Griffin, senior director of consumer education and advocacy at Experian.

The way it works is simple: Connect your bank account(s) to Experian Boost so it can identify your utility and cell phone payment history. Once you verify the data and confirm you want it added to your Experian credit file, you’ll get an updated FICO score delivered to you in real time. Visit Experian to read more and register. By signing up, you will receive a free credit report and FICO score instantly.

Option 3: Open a college student card

Applying for a college student credit card is a smart way to start building credit early while also taking advantage of rewards and special financing offers.

There are numerous college student cards available, each providing unique benefits for different types of students — from travelers and foodies to commuters and international students. Some cards are lenient with credit history requirements, meaning you may qualify with no credit history at all. You do have to be 18 to apply for a credit card and need to have a steady source of income.

Here is our pick for the top college student credit card for supermarket shopping:

Citi Rewards+℠ Student Card

Citi Rewards+℠ Student Card

Information about the Citi Rewards+℠ Student Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

  • Rewards

    Earn 2X ThankYou® points at supermarkets and gas stations for the first $6,000 per year and then 1X points thereafter. Plus, earn 1X points on all other purchases.

  • Welcome bonus

    Earn 2,500 bonus points after you spend $500 in purchases with your card within  3 months of account opening; redeemable for $25 gift card at thankyou.com.

  • Annual fee

  • Intro APR

    0% APR for the first 7 months on purchases

  • Regular APR

    14.49% – 24.49% variable on purchases and balance transfers

  • Balance transfer fee

    3% of each balance transfer; $5 minimum

  • Foreign transaction fee

  • Credit needed

Pros

  • All purchases round up to the nearest 10 points
  • Get 10% points back on all of your redemptions for the first 100,000 ThankYou® Points you redeem each year
  • Welcome bonus worth $25 gift card

Cons

  • 3% fee on purchases made outside the U.S.
  • Short intro 0% APR period on new purchases

8. How to improve your credit score if you have bad credit

  • Option 1: Apply for a secured credit card
  • Option 2: Apply for a card marketed toward consumers with poor or average credit

Afraid you can’t improve your credit score? Think again. This expert’s credit score dropped to 547 during the last recession, but it’s back in the 800s now. Once you understand how credit scores work and what options you have to raise your credit score, you’ll be surprised to find that you don’t need to be afraid of that three-digit number if it’s currently less than desirable.

As it turns out, your credit score is quite malleable. Here are some options for improving it: 

Option 1: Apply for a secured credit card

secured card is nearly identical to an unsecured card in that you receive a credit limit, can incur interest charges and in some cases can even earn rewards. The big difference is you’re required to make a deposit in order to receive a line of credit. The amount you deposit usually becomes your credit limit.

Deposits typically start at $200 and can range up to $2,500. If you want a higher credit limit, you’ll usually need to deposit more money.

The amount you deposit acts as collateral if you default on payments, but it’s completely refundable if you pay off your balance in full and close your account or upgrade to an unsecured card.

When you use a secured card responsibly (make your payments on time and in full), this information will be sent to the credit bureaus (Experian, Equifax and TransUnion), which helps raise your credit score and put you on the path to qualifying for an unsecured card.

Here is our top pick for the best secured credit card with low interest from a major bank:

Citi® Secured Mastercard®

Citi® Secured Mastercard®

Information about the Citi® Secured Mastercard® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

  • Rewards

    This card doesn’t offer cash back, points or miles

  • Welcome bonus

  • Annual fee

  • Intro APR

    N/A for purchases and balance transfers

  • Regular APR

    22.49% variable on purchases and balance transfers

  • Balance transfer fee

    $5 or 3% of the amount of each transfer, whichever is greater

  • Foreign transaction fee

  • Credit needed

Pros

  • No annual fee
  • $200 refundable deposit
  • Flexibility to change your payment due date

Cons

  • No rewards program
  • 3% foreign transaction fee

Option 2: Apply for a card marketed toward consumers with poor or average credit

In addition to secured cards, there are some other credit card options for people with no credit or poor credit who don’t want to — or are unable to — put down a deposit. After you open a credit card, make sure you spend within your means and pay your balance on time and in full. In some cases, like with most Capital One cards, paying your bills on time for several consecutive months will automatically entitle you to a higher credit limit (be sure to read the card’s terms and conditions before signing up).

Here is our top pick for the best credit card for building credit:

Petal® Visa® Credit Card

Petal® Visa® Credit Card

Information about the Petal® Visa® Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

  • Rewards

    1% cash back on all purchases and 1.5% after you make 12 on-time monthly payments

  • Welcome bonus

  • Annual fee

  • Intro APR

  • Regular APR

    14.49% to 25.49% variable

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

9. How to maintain your good credit score

  • Tip 1: Pay bills on time and in full
  • Tip 2: Maintain a low credit utilization rate
  • Tip 3: Limit new credit applications

Once you build or improve your credit score, the next step is to maintain it. Keeping your credit score above 670 will make your life easier in many ways. To ensure it stays in the good or excellent range with minimal surprises, you’ll want to start developing these simple habits:

Tip 1: Pay bills on time and in full

Payment history is the most important factor making up your credit score. If you miss a payment, it will show up on your credit report, and multiple missed payments can make it impossible to achieve an excellent score. For this reason, you should always pay at least your minimum payment.

It’s also a good idea to pay off your bill in full each month to avoid potential late payment fees, penalty APRs and interest charges that often result from carrying a balance. (Learn when a credit card payment is considered late.)

As a rule of thumb, set up autopay for at least the minimum payment, so you can avoid forgetting a payment. You can also schedule email, text or push notifications through your card issuer.

How to set up autopay:

 

If you struggle to remember to pay your bills each month (so many different due dates, so little time), there’s an easy fix: autopay. If you’re not sure you’ll be able to pay your bill in full, you can set it so you just pay the minimum as a safeguard to avoid missed payments.

 

Here are some tips:

 

  • Login and select “Manage Autopay.” Many banks and card issuers will let you schedule autopay for the minimum due, the full balance or somewhere in between. You can also sign up for reminders through their websites, including emails, push notifications or both.
  • Put it on the calendar. You can also set up Google or Outlook calendar invites or make a note of the due date on a physical calendar. It doesn’t really matter what notification system you use so long as you pay on time.
  • Autopay also works with your utilities. Most major providers will let you set up autopay that withdraws automatically each month from your checking or savings account (or charges your credit card).
  • You might also get a discount. In the case of student loan and personal loan companies, some give you a discount on your interest rate if you set up autopay.

The sooner you start paying on time, the sooner your score will begin to improve. And just as a bit of motivation, older credit penalties, such as late payments, matter less as time passes. So start now and stay consistent. (Remember: on-time payments is the most important factor in your FICO score.)

Some credit building credit cards reward cardmembers with an automatic credit limit increase after they make six on-time payments. An example is the Capital One® Platinum Credit Card.

Capital One® Platinum Credit Card

Capital One® Platinum Credit Card

Information about the Capital One® Platinum Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

  • Rewards

  • Welcome bonus

  • Annual fee

  • Intro APR

  • Regular APR

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

Pros

  • No annual fee
  • No fee charged on purchases made outside the U.S.
  • Travel benefits, such as travel accident insurance, auto rental collision damage waiver and roadside assistance
  • Access a higher credit limit after making your first five monthly payments on time

Cons

  • 26.99% variable APR
  • No rewards program

Tip 2: Maintain a low credit utilization rate

“If your balances increase over time, your credit scores will suffer. Your credit utilization rate is the second most important factor in scores, behind your payment history,” Griffin explains.

To calculate your utilization rate, add up the total balances on all your credit cards and divide by the total of your credit limit across all cards.

Let’s say you have two credit cards:

  • Card A: $1,000 balance and $3,000 credit limit
  • Card B: $3,000 balance and $5,000 credit limit

Your total balance would be $4,000 and total credit limit $8,000. That makes your utilization 50%, which is high. You should aim for a low utilization rate around 30% to improve your credit score.

If you find it hard to keep track of the percentage of credit you use, take advantage of various alerts card issuers set, such as when your balance exceeds a certain amount or when you’re approaching your credit limit. If you have no problem paying your balance in full each month, you can also call your card issuer and ask them to increase your credit limit. (Learn more about paying off your statement balance every month.)

Learn: What’s considered a high-limit credit card and how to get one with your credit score

Tip 3: Limit new credit applications

Each time you apply for credit, an inquiry appears on your credit report, regardless of whether you’re approved or denied. This can temporarily lower your credit score by roughly five points, though it will bounce back in a few months. While one credit inquiry isn’t likely to hurt your score, it can add up if you apply for multiple cards within a short period of time.

If you want a new card, but you’re not sure you’ll qualify, you can submit a pre-qualification form online. You can submit as many pre-qualification forms as you want, as they won’t impact your credit score.

For anyone looking to open a new card to take advantage of a sign-on bonus, make sure you space out your applications for new cards. There’s arguably no such thing as too many credit cards, but it’s not wise to apply for several cards within a short period of time — it sends a message to issuers that you might be a credit risk.

Read more: I opened 10 credit cards over a span of five years.

10. The biggest credit score myths

  • Myth 1: You should never close your oldest credit card
  • Myth 2: You need a perfect credit score
  • Myth 3: Carrying a balance helps your credit score
  • Myth 4: Checking your credit score will lower it

Like any industry, credit and lending is always changing. As the economy fluctuates up and down and federal regulations change to provide new guidelines and protections for consumers, it’s no surprise that credit card issuers change the qualifications for their financial services and products. You’ve probably heard a lot of credit card myths from people who’ve been in the game for a long time. But the truth is — you shouldn’t always listen to them.

Below, we outline some of the most persistent credit card myths and explain exactly what’s true for today’s credit card user.

Myth 1: You should never close your oldest credit card

Experts often warn against closing a credit card, especially your oldest one, since it can have a negative impact on your credit score. Closing your oldest card is bad for two reasons: It can lower your overall credit utilization ratio and shorten the length of your credit history, two major factors in determining your score. But if you have a strong mix of credit products, a big enough credit limit that you won’t go over a 30% CUR and only a few recent inquiries, the dip will likely be only a blip on the radar.

Myth 2: You need a perfect credit score

Does having a perfect credit score really matter? Experts say that a score of 760 or above will likely get you all the same benefits — and the best deals on mortgages and auto loans. In fact, only 1.6% of Americans have a perfect 850 credit score.

Here are our top picks for the best credit cards for good credit

 

Wells Fargo Propel American Express® Card

Wells Fargo Propel American Express® Card

Information about the Wells Fargo Propel American Express® Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

  • Rewards

    3X points on dining out and ordering in; gas, rideshares and transit; flights, hotels, homestays and car rentals; and popular streaming services. 1X points on all other purchases

  • Welcome bonus

    20,000 bonus points when you spend $1,000 in purchases in the first 3 months

  • Annual fee

  • Intro APR

    0% APR for 12 months on purchases and qualifying balance transfers

  • Regular APR

    14.49% to 24.99% variable on purchases and balance transfers

  • Balance transfer fee

    Introductory fee of 3% ($5 minimum) for 120 days, then 5% ($5 minimum)

  • Foreign transaction fee

  • Credit needed

Pros

  • No annual fee
  • No fee charged on purchases made outside the U.S.
  • 0% APR for the first 12 months on purchases and balance transfers
  • No blackout dates on air travel when redeemed through Go Far Rewards

Cons

  • Minimum reward redemption amount of 2,500 points
  • Balance transfers incur a 3% fee ($5 minimum)
  • Estimated rewards earned after 1 year: $584
  • Estimated rewards earned after 5 years: $2,120

Rewards totals incorporate the points earned from the welcome bonus

Myth 3: Carrying a balance helps your credit score

Carrying a balance on your credit card doesn’t help your credit score, it only has the potential to hurt it and it will end up becoming expensive over time paying interest. Not to mention, it’s a waste of money to pay interest on your balance if you can afford to pay off your credit card bill in full each month.

If you do have a credit card balance that you need to pay off over time, consider transferring it to a card with temporary 0% APR. It won’t necessarily change your credit score, but a 0% APR card can save you on interest and help you pay off your balance faster, which ultimately helps out both your score and your budget.

Here is our pick for best balance transfer credit card:

Amex EveryDay® Credit Card

Amex EveryDay® Credit Card

Information about the Amex EveryDay® Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

  • Rewards

    2X Membership Rewards® points at U.S. supermarkets on up to $6,000 per year in purchases (then 1X), 1X Membership Rewards® points per dollar spent on all other purchases

  • Welcome bonus

    Earn 10,000 Membership Rewards® points after you make $1,000 in purchases in your first 3 months

  • Annual fee

  • Intro APR

    0% for the first 15 months on purchases and balance transfers

  • Regular APR

    12.99% to 23.99% variable

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

Pros

  • 15 months of no interest on balance transfers
  • No balance transfer fee
  • No annual fee
  • Rewards program and welcome bonus, which is rare among no-fee balance transfer cards
  • 20% extra point bonus when you make 20 or more purchases in a billing period

Cons

  • 2.7% foreign transaction fee
  • Balances must be transferred within 60 days from account opening
  • Transfer timeline: Balances must be transferred within 60 days from account opening
  • Estimated total fees and interest on debt repayment: $441

Myth 4: Checking your credit score will lower it

Checking your credit score is considered a “soft pull,” which doesn’t affect your credit score. Actions, such as applying for a credit card, which requires a “hard pull,” temporarily dings your credit score.

11. Credit score terms everyone should know

It’s easy to get bogged down by the the jargon and acronyms that financial institutions throw around. But there are only a few key terms you really need to understand:

Credit bureau

credit bureau is an agency that aggregates information about your credit history and reports it to financial institutions and other parties, such as real estate and auto companies. The three main credit bureaus are ExperianEquifax and TransUnion.

Credit limit

A credit limit is the maximum amount of money that can be charged to a credit card. Credit limit may also be known as a line of credit, credit line or spending limit.

Credit report

A credit report is an aggregation of your credit history. Credit reports include detailed information on credit accounts, such as payment history, balances, account opening date and more. The information from a credit report is summed up in a credit score. (Here’s how to get a free credit report.)

Credit score

A credit score is a three-digit number that represents your creditworthiness. The most common type of credit score is a FICO Score, and scores range from 300 to 850. The higher the credit score, the better. (Read more about how to check your credit score for free.)

Credit utilization rate

Also known as your credit utilization ratio, or CUR, this number is the amount of credit you’re using compared to the amount of credit you have available. So if you have an $800 credit card balance and you have a $2,000 credit card balance, your CUR is 40%:

($800 / $2,000 = 0.4 X 100 = 40%)

Experts recommend keeping your utilization rate below 30%.

12. Bottom line

Your credit score can have a big impact on your life, but the good news is there are simple steps you can take to improve and maintain it. There’s not a lot of mystery around what your score means and how it’s calculated, and credit bureaus and card issuers have made it easier than ever for you to regularly check your score so you can understand where you stand.

If you have a bad or fair score, there are straightforward steps you can take to improve it. It’s not always an easy process, but it is doable. And the payoff is immense, from lower APRs to better rewards programs, which makes the work all that much more worthwhile.

Our methodology

To determine which credit cards offer the best value, CNBC Select analyzed 234 of the most popular credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.

CNBC Select teamed up with location intelligence firm Esri. The company’s data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.

Esri’s data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.

CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.

While the five-year estimates we’ve included are derived from a budget similar to the average American’s spending, you may earn a higher or lower return depending on your shopping habits.

For rates and fees of the American Express® Gold Card, click here.

For rates and fees of the Amex EveryDay® Credit Card, click here.

Information about the Chase Freedom Unlimited®, Capital One® Secured Mastercard®, Capital One® Venture® Rewards Credit Card, Bank of America® Cash Rewards credit card, Citi Rewards+℠ Student Card, Citi® Secured Mastercard®, Petal® Visa® Credit Card, Capital One® Platinum Credit Card, Capital One® Venture® Rewards Credit Card, Chase Freedom®, Amex EveryDay® Credit Card, and Wells Fargo Propel American Express® Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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Inside the Highly Profitable and Secretive World of Payday Lenders

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Illustration by Sarah Maxwell, Folio Art

When Bridget Davis got started in the family’s payday lending business in 1996, there was just one Check ’n Go store in Cincinnati. She says she did it all: customer service, banking duties, even painting walls.

The company had been established two years earlier by her husband, Jared Davis, and was growing rapidly. There were 100 Check ’n Go locations by 1997, when Jared and Bridget (née Byrne) married and traveled the country together looking for more locations to open storefront outlets. They launched another 400 stores in 1998, mostly in strip malls and abandoned gas stations in low-income minority neighborhoods where the payday lending target market abounds. Bridget drove the supply truck and helped select locations and design the store layouts.

But Jared soon fired his wife for committing what may be the ultimate sin in the payday lending business: She forgave a customer’s debt. “A young woman came to pay her $20 interest payment,” Bridget wrote in court documents last year during divorce proceedings from Jared. “I pulled her file, calculated that she had already paid $320 to date on a principle [sic] loan of $100. I told her she was paid in full. [Jared] fired me, stating, ‘We are here to make money, not help customers manage theirs. If you can’t do that, you can’t work here.’ ”

Photograph by Brittany Dexter

It’s a business philosophy that pays well, especially if you’re charging fees and interest rates of 400 percent that can more than triple the amount of the loan in just five months—the typical time most payday borrowers need to repay their debt, says the Pew Charitable Trusts, a nonprofit organization focused on public policy. Cincinnati-based Check ’n Go now operates more than 1,100 locations in 25 states as well as an internet lending service with 24/7 access from the comfort of your own home, according to its website. Since its founding, the company has conducted more than 50 million transactions.

What the website doesn’t say is that many, if not most, of those transactions were for small loans of $50 to $500 to working people trying to scrape by and pay their bills. In most states—including Ohio, until it reformed its payday lending laws in 2019—borrowers typically fork over more than one-third of their paycheck to meet the deadline for repayment, usually in two weeks. To help guarantee repayment, borrowers turn over access to their checking account or deposit a check with the lender. In states that don’t offer protection, customers go back again and again to borrow more money from the same payday lender, typically up to 10 times, driving themselves into a debt trap that can lead to bankruptcy.

Jared and Bridget Davis are embroiled in a nasty court battle related to his 2019 divorce filing in Hamilton County Domestic Relations Court. Thousands of pages of filings and 433 docket entries by April 26 offer the public a rare glimpse into the business operations of Check ’n Go, one of Cincinnati’s largest privately-owned companies, as well as personal lifestyles funded by payday lending.

The company cleared $77 million in profit in 2018, a figure that dipped the following year to $55 million, according to an audit by Deloitte. That drop in revenue may have something to do with the payday lending reform laws and interest rate caps passed recently in Ohio as well as a growing number of other states.


The day-to-day business transactions that provide such profit are a depressing window into how those who live on the edge of financial security are often stuck with few options for improving their situations. If a borrower doesn’t repay or refinance his or her original loan, a lender like Check ’n Go deposits the guarantee check and lets it bounce, causing the borrower to incur charges for the bounced check and eventually lose his or her checking account, says Nick DiNardo, an attorney for the Legal Aid Society of Greater Cincinnati. After two missed payments, payday lenders usually turn over the debt to a collection agency. If the collection agency fails to collect the full amount of the original loan as well as all fees and interest, it goes to court to garnish the borrower’s wages.

That devastating experience is all too familiar to Anthony Smith, a 60-year-old Wyoming resident who says he was laid off from several management positions over a 20-year period. He turned to payday lenders as his credit rating dropped and soon found himself caught in a debt trap that took him years to escape.

Two things happened in 2019, Smith says, that turned around his financial fortunes. First, he found a stable manufacturing job with the Formica Company locally, and then he took his mother’s advice and opened a credit union account. GE Credit Union not only gave him a reasonable loan to pay off his $2,500 debt but also issued him his first credit card in a decade. “I had been a member [of the credit union] for just two months, and I had a credit rating of 520. Can you imagine?” he says. Smith says he is now debt-free for the first time in 10 years.

Consumer advocates say Check ’n Go is one of the biggest payday lending operations in the nation. But knowing its exact ranking is difficult because most payday lending companies, including Check ’n Go and its parent company CNG Holdings, are privately held and reluctant to disclose their finances.

Brothers Jared and David Davis own the majority of the company’s privately held stock. David bought into the company in 1995, but CNG got its game-changing infusion of capital from the brothers’ father, Allen Davis, who retired as CEO of then-Provident Bank in 1998. Allen sold off $37 million in stock options and essentially became CNG’s bank and consultant.

By 2005, however, the sons were part of a public court battle against their father. Allen accused Jared and David of treating his millions in CNG stock as compensation instead of a transfer from his ex-wife (and the brothers’ mother), sticking him with a $13 million tax bill. In turn, the brothers accused Allen of putting his mistress and his yacht captain on the company payroll, taking $1.2 million in fees without board approval, and leading the company into ventures that lost Check ’n Go a lot of money. Several years of legal fighting later, the IRS was still demanding its $13 million. CNG officials did not respond to requests for comment for this story.

Jared and David split $22 million in profit from CNG in 2018 and, according to the Deloitte audit, CNG’s balance sheet showed another $42 million that could be split between the two brothers in 2019. Jared, however, elected not to receive his $21 million distribution “in order to create this artificial financial crisis and shelter millions of dollars from an equitable split between us,” according to Bridget’s divorce filing.

Worse, she claims, Jared said they would be responsible for paying taxes out of their personal accounts rather than from CNG’s company earnings, making her personally responsible for half of the $5.5 million in taxes for 2019. She believes it wasn’t happenstance that $5.5 million was wired to Jared’s private bank account in December of that same year. Bridget has refused to sign the joint tax return, and Jared filed a complaint with the court saying a late tax filing would cost them $1 million in penalties and missed tax opportunities.

“For the duration of our marriage and to the present, Jared has full and complete control of all money paid to us from various investments we have made in addition to our main source of income, CNG,” Bridget wrote in her motion. She suspects that Jared, without her knowledge or consent, plowed the money for their taxes and from other sources of income into Black Diamond Group, the fund that invests in the Agave & Rye restaurant chain. Beyond the original restaurant opened in Covington in 2018, “they have opened four other locations in one year,” she wrote, including Louisville and Lexington. (The ninth location opened in Hamilton this spring.) Agave & Rye’s website touts its Mexican fare as “a chef-inspired take on the standard taco, elevating this simple food into something epic!”

In his response, Jared wrote, “We have very limited regular sources of income.” He says he isn’t receiving any additional distributions from CNG, the couple’s primary source of income, “and this is not within my control. The company has declared that we would not make any further distributions in 2020 given economic circumstances. This decision is based on a formula and is not discretionary.” Agave & Rye helped produce $645,000 in income for Black Diamond in 2020 but has paid out $890,000 in loans, he says. Through August 31, 2020, he wrote, the couple’s “expenses have exceeded income from all sources.”


The divorce case filings start slinging mud when the couple accuses each other of breaking up their 22-year marriage and finding new partners. Jared claims Bridget began an affair during their marriage with Brian Duncan, a contractor she employed through her house flipping business. Bridget, he says, paid Duncan’s company $75,000 in 2018 as well as giving him a personal gift of $70,000 that same year. Jared says she also bought Duncan at least one car and purchased a house for him near hers on Shawnee Run Road for $289,000, then loaned money to Duncan. Jared says Duncan has been late in repaying the note.

While Bridget says Duncan has been drug-free for several years, he has a rap sheet with Hamilton County courts from 2000 to 2017 that runs five pages long. It lists a half-dozen counts of drug abuse and drug possession, including heroin and possession of illegal drug paraphernalia; assaulting a police officer; stealing a Taser from a police officer; criminal damaging while being treated at UC Health; more than a dozen speeding and traffic violations; a half-dozen counts of driving with a suspended license; receiving stolen property; twice fleeing and resisting arrest; three counts of theft; two counts of forgery; and one count for passing bad checks.

Bridget has fired back that Jared not only is hiding his money from her but spending it lavishly on vacations, resorts, and high-end restaurants with his new girlfriend, Susanne Warner. Bridget says Jared gifted Warner with $40,000 without Bridget’s knowledge, then declared it on their joint tax return as a “contribution.” Bridget’s court filings include photocopies of social media posts of Jared and Warner globetrotting from summer 2019 to summer 2020: vacation at Beaver Creek Village in Avon, Colorado; cocktails at High Cotton in Charleston, South Carolina, and dinner at Melvyn’s Restaurant and Lounge in Palm Springs, California; getaways at resorts in Nashville and at a lakefront rental on Norris Lake ($600 per night); in the Bahamas at a Musha Cay private residence ($57,000 per night), at South Beach in Miami, and at a private beach at Fisher Island; in Mexico at Cabo San Lucas; in the U.S. Virgin Islands at Magen’s Bay and on a private yacht ($4,500 per night); in California at Desert Hot Springs, the Ritz-Carlton in Rancho Mirage, and Montage at Laguna Beach; and in the Bahamas at South Cottage ($2,175 per night).

For her part, Bridget has gone through some of the top lawyers in town faster than President Trump during an impeachment—six in all, two of whom she’s sued for malpractice. She sent four binders of evidence to the Ohio Supreme Court, asking for the recusal of Hamilton County Judge Amy Searcy and claiming Searcy was biased because of campaign donations from Jared and his companies. Rather than deal with the list of questions sent to her by Chief Justice Maureen O’Connor, Searcy stepped down. Two other judges have since stepped into the fray, and in March Bridget filed for a change of venue outside of Hamilton County, arguing she can’t get a fair trial in her hometown. At press time, a trial date had been set for June 28 in Hamilton County.

The poor-mouthing in the divorce case has reached heights of comic absurdity. Jared claims he’s “illiquid” because he didn’t get his distribution from CNG in 2019. Bridget has received debt collection notices for the nearly $21,000 owed on her American Express card and a $735 bill from Jewish Hospital. There’s no sign yet that anyone is coming to repossess her Porsche, which according to her filings has a $5,000 monthly payment. Each party has received $25,000 a month in living expenses, an amount later reduced to $15,000 under a temporary legal agreement while the divorce case is being sorted out. Court filings show that Jared’s net worth is almost $206 million and Bridget’s is $22.5 million.


In the early 1990s, Allen Davis was raising eyebrows at Provident Bank (later bought by National City), and not only because of his very unbanker-like look of beard, ponytail, and casual golf wear. He was leading the company into questionable subprime home loans for people with bad credit and a frequent-shopper program for merchants, though the bank’s charter barred him from getting involved in full-blown predatory lending practices. With guidance and funding from his father, Jared, at age 26, launched Check ’n Go in 1994 and became a pioneer in the payday lending industry. Jared and his family saw there were millions of Americans who didn’t have checking or savings accounts (“unbanked”) or an adequate credit rating (“underbanked”) but still needed loans to meet their everyday expenses. What those potential customers did have was a steady paycheck.

Conventional banks share a big part of the blame for the nation’s army of unbanked borrowers by imposing checking account fees and onerous penalties for bounced checks. In 2019, the Federal Deposit Insurance Corporation estimated there were 7.1 million U.S. households without a checking or savings account.

The Davises launched Check ’n Go on the pretext that it would “fill the gap” for people who occasionally needed to borrow money in a hurry—a service for those who couldn’t get a loan any other way. But consumer advocates say the real business model for payday lending isn’t a service at all. The majority of the industry’s revenue comes from repeat business by customers trapped in debt, not from borrowers looking for a quick, one-time fix for their financial troubles.

Ohio’s payday lending lobbyists got a strong hold on the state legislature in the late 1990s, and by 2018 Democratic gubernatorial candidate Richard Cordray could rightfully claim in a campaign ad that “Ohio’s [payday lending] laws are now the worst in the nation. Things have gotten so bad that it is legal to charge 594 percent interest on loans.” His statement was based on a 2014 study by the Pew Charitable Trusts.

The frustration for consumer advocates was that Ohioans had been trying to reform those laws since 2008, when voters overwhelmingly approved a ballot initiative placing a 28 percent cap on the interest of payday loans. But—surprise!—lenders simply registered as mortgage brokers, which enabled them to charge unlimited fees.

The Davis family and five other payday lending companies controlled 90 percent of the market back then, an express gravy train ripping through the poorest communities in Ohio. The predatory feeding frenzy, especially in Ohio’s hard-hit Rust Belt communities, prompted a 2017 column at The Daily Beast titled, “America’s Worst Subprime Lender: Jared Davis vs. Allan Jones?” (Jones is founder and CEO of Tennessee-based Check Into Cash.) In 2016 and 2017, consumer advocates mustered their forces again, and this time they weren’t allowing for loopholes. The Pew Charitable Trusts joined efforts with bipartisan lawmakers and Ohioans for Payday Loan Reform, a statewide coalition of faith, business, local government, and nonprofit organizations. Consumer advocates found a legislative champion in State Rep. Kyle Koehler, a Republican from Springfield.

It no doubt helped reform efforts that former Ohio Speaker of the House Cliff Rosenberger resigned in spring 2018 amid an FBI investigation into his cozy relationship with payday lenders. Rosenberger had taken frequent overseas trips—to destinations including France, Italy, Israel, and China—in the company of payday lending lobbyists. In April 2019, Ohio’s new lending law took effect and, since then, has been called a national model for payday lending reform that balances protections for borrowers, profits for lenders, and access to credit for the poor, according to the Pew Charitable Trusts. New prices in Ohio are three to four times lower for payday loans than before the law. Borrowers now have up to three months to repay their loans with no more than 6 percent of their paycheck. Pew estimates that the cost of borrowing $400 for three months dropped from $450 to $109, saving Ohioans at least $75 million a year. And despite claims that the reforms would eliminate access to credit, lenders currently operate in communities across the state and online. “The bipartisan success shows that if you set fair rules and enforce them, lenders play by them and there’s widespread access to credit,” says Gabe Kravitz, a consumer finance officer at the Pew Charitable Trusts.

Other states like Virginia, Kansas, and Michigan are following Ohio’s lead, Kravitz says. Some states, such as Nebraska, have even capped annual interest on payday loans. As a result, Pew researchers have seen a reduction in the number of storefront lending op­erations across the country. Even better, Kravitz says, there’s no evidence that borrowers are turning instead to online payday lending operations.

Cincinnati is one of five cities chosen for a grant to replicate the success of Boston Builds Credit, an ambitious effort that city launched in 2017 to provide credit counseling in poor and minority communities by training specialists at existing social service agencies. The program also encourages consumer partnerships with credit unions, banks, and insurance companies to offer small, manageable loans that can help the unbanked and underbanked improve their credit ratings. “Right now, local organizations are all kind of working in silos on the problem in Cincinnati,” says Todd Moore of the nonprofit credit counseling agency Trinity Debt Relief. Moore, who applied for the Boston grant, says he’s looking for an agency like United Way or Strive Cincinnati to lead the effort here.

Anthony Smith is thankful that he’s escaped the downward spiral of his payday loans, especially during the pandemic’s economic turmoil. “I’m blessed for every day I can get paid and have a job during these difficult times, just to be able to pay my bills and meet my responsibilities,” he says. “I’ve always kept a job, but until now I’ve had crappy credit. That doesn’t mean I’m a bad guy.”

Can others worth millions of dollars say the same?

Inside the Highly Profitable and Secretive World of Payday Lenders Source link Inside the Highly Profitable and Secretive World of Payday Lenders



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What’s Questionable Credit and Can I Get a Car Loan With It?

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Questionable’s definition means that something’s quality is up for debate. If a lender says that your credit score is questionable, it’s likely that they mean it’s poor, or at the very least, they’re hesitant to approve you for vehicle financing. Here’s what most lenders consider questionable credit, and what auto loan options you may have.

Questionable Credit and Auto Lenders

Many auto lenders may consider questionable credit as a borrower with a credit score below 660. The credit score tiers as sorted by Experian the national credit bureau, are:

  • Super prime: 850 to 781
  • Prime: 780 to 661
  • Nonprime: 660 to 601
  • Subprime: 600 to 501
  • Deep subprime: 500 to 300

The nonprime credit tiers and below is when you start to get into bad credit territory and may struggle to meet the credit score requirements of traditional auto lenders.

This is because lenders are looking at your creditworthiness – your perceived ability to repay loans based on the information in your credit reports. Besides your actual credit score, there may be situations where the items in your credit reports are what’s making a lender question whether you’re a good candidate for an auto loan. These can include:

  • A past or active bankruptcy
  • A past or recent vehicle repossession
  • Recent missed/late payments
  • High credit card balances
  • No credit history

There are ways to get into an auto loan with questionable credit. Your options can change depending on what’s making your credit history questionable, though.

Questionable Credit Auto Loans

If your credit score is less than stellar, it may be time to look at these two lending options:

  • What Is Questionable Credit and Can I Get a Car Loan With It?Subprime financing – Done through special finance dealerships by third-party subprime lenders. These lenders can often assist with many unique credit situations, provided you can meet their requirements. A great option for new borrowers with thin files, situational bad credit, or consumers with older negative marks.
  • In-house financing – May not require a credit check, and is done through buy here pay here (BHPH) dealers. Typically, your income and down payment amount are the most important parts of eligibility. Auto loans without a credit check may not allow for credit repair and may come with a higher-than-average interest rate.

Both of these car loan options are typically available to borrowers with credit challenges. However, if you have more recent, serious delinquencies on your credit reports, a BHPH dealer may be for you. Most traditional and subprime lenders typically don’t approve financing for borrowers with a dismissed bankruptcy, a repossession less than a year old, or borrowers with multiple, recent missed/late payments.

Requirements of Bad Credit Car Loans

In many cases, your income and down payment size are the biggest factors in your overall eligibility for bad credit auto loans. Expect to need:

  • 30 days of recent computer-generated check stubs to prove you have around $1,500 to $2,500 of monthly gross income. Borrowers without W-2 income may need two to three years of professionally prepared tax returns.
  • A down payment of at least $1,000 or 10% of the vehicle’s selling price. BHPH dealers may require up to 20% of the car’s selling price.
  • Proof of residency in the form of a recent utility bill in your name.
  • Proof of a working phone (no prepaid phones), proven with a recent phone bill in your name.
  • A list of five to eight personal references with name, phone number, and address.
  • Valid driver’s license with the correct address, can’t be revoked, expired, or suspended.

Depending on your individual situation, you may need fewer or more items to apply for a bad credit auto loan. However, preparing these documents before you head to a dealership can speed up the process!

Ready to Get on the Road?

With questionable credit, finding a dealership that’s able to assist you with an auto loan is easier said than done. Here at Auto Credit Express, we want to get that done for you with our coast-to-coast network of special finance dealerships.

Complete our free auto loan request form and we’ll get right to work looking for a dealer in your local area that can assist with many tough credit situations.

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Entrepreneur Tae Lee Finds Her Fortune

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By Jasmine Shaw
For The Birmingham Times

Birmingham native Tae Lee had plans last year to visit the continent of Africa, the South American country of Columbia, and the U.S. state of Texas.

“I was going to stay in each place for like four to six weeks, and then COVID-19 happened,” she said. “So, I just was like, ‘You know what, I’m just gonna go to Mexico and stay for six months.’”

Once home from Playa Del Carmen, located on Mexico’s Yucatán Peninsula, the 33-year-old entrepreneur put the final touches on “Game of Fortune: Win in Wealth or Lose in Debt,” a financial literacy card game for ages 10 and up.

“We created ‘Game of Fortune’ because we realized there was a gap in learning the fundamentals of money,” said Lee. “We go through life not knowing anything about money and then—‘Bam!’—real life hits. Credit, debt, and bills come at us quick!”

Lee believes the game “gives players a glimpse of real life” by using everyday scenarios to teach them how to make wiser financial decisions without having to waste their own money.

“I feel like [financial literacy] can be learned in ways other than somebody standing up and preaching it to you over and over again,” she said. “You can learn it in ways that are considered fun, as well.”

Which is why “we want the schools to buy it, so we can give students a fun way to learn about financial literacy,” she added.

Lee, also called the “Money Maximizer,” is an international best-selling financial author, speaker, coach, and trainer who is known for her financial literacy books, including “Never Go Broke (NGB): An Entrepreneur’s Guide to Money and Freedom” and the “NGB Money Success Planner High School Edition.” The Birmingham-based financial guru focuses on creating diverse streams of income in the tax, real estate, insurance, and finance industries.

For Lee, it’s about building generational wealth, not debt.

Indispensable Lessons

Lee got her first glance at entrepreneurial life as a child watching her mother, Valeria Robinson, run her commercial cleaning company, V’s Cleaning. Robinson retired in 2019.

“My grandmother had a cleaning service, too,” said Lee. “So, even though I didn’t start out as an entrepreneur, watching my mom and grandma do it taught me a lot.”

Lee grew up in Birmingham and attended Riley Elementary School, Midfield Middle School, and Huffman High School. She then went on to Jacksonville State University, in Jacksonville, Alabama, where she earned bachelor’s degree in physical education. She struggled to find a career in her field and became overwhelmed by student loans.

“My credit and stuff didn’t get bad until after college,” she said. “I was going through school and taking money, but nobody told me, ‘Oh, you’re gonna have to pay all of this back.’”

Before embarking on her extensive career in money management, Lee had not learned the indispensable lessons that she now shares with clients.

“‘Don’t have bad credit.’ That’s all I learned,” she remembers. “Financial literacy just wasn’t taught much. I learned the majority of my lessons as I aged.”

In an effort to ward off collection calls and raise her credit score, Lee researched tactics to strategically eliminate her debt.

“I knew I had to pay bills on time, and I couldn’t be late with payments,” she said.

Lee eventually began helping friends revamp their finances and opened NGB Inc. in 2017 to share fun, educational methods to help her clients build solid financial foundations.

“People were always coming to me like, ‘How do I invest in this?’ and ‘How do I do that?’ So, I said to myself, ‘You know what, people should be paying to pick your brain.’”

Legacy Building

While Lee enjoyed watching her clients reach milestones, like buying a new car with cash or making their first stock market investment, she was also designing “Game of Fortune” to teach the value of legacy building.

“The game gives players the knowledge to build generational wealth, not generational debt,” she said. “It gives you a glimpse of life, money, and what can truly happen if you mismanage your coins.”

Using index cards to create her first “Game of Fortune” sample deck, Lee filled each card with pertinent terms related to debt elimination and credit and wealth building. She then called on a few friends to help her work through the kinks.

Three of her good friends—Barbara Bratton, Daña Brown, and Sha Cannon—were just a few of the people that gave feedback on the sample deck.

“From there I met with Brandon Brooks, [owner of the Birmingham-based Brooks Realty Investments LLC], and four other financial advisors to fine-tune the definitions and game logistics,” Lee said.

Though Lee was unable to land a job in physical education after graduating from college, she now sees her career with NGB Inc. as life’s unexpected opportunity to teach on her own terms.

“Bartending and waitressing taught me that working for someone else was not for me,” she replied. “In order to get the life I always wanted, I had to create my own business.”

In her entrepreneurial pursuits, Lee strives to be an open-minded leader who embraces the need for flexibility.

“COVID-19 has shown me that in entrepreneurship you have to maneuver,” she said. “When life changes, sometimes your business will, too. You may have to change the path, but your ending goal can be the same.”

“Game of Fortune: Win in Wealth or Lose in Debt” is available and sold only on the “Game of Fortune” website: gameoffortune.money. To learn more about Tae Lee and Never Go Broke Inc., visit taelee.money and nevergobroke.money or email tae@taelee.money; you also can follow her on Facebook (https://www.facebook.com/nevergobrokeinc) and Instagram (@nevergobrokeinc).

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