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Bad Credit

Your FICO Score Guide | Millionacres



Your payment history speaks to how timely you are with your bills. Paying bills on time consistently will help improve your credit score, while being late will have the opposite effect — it’ll hurt your score. And, it doesn’t matter whether you’re late paying your mortgage, student loans, or credit card bills — a single late payment could result in a 90- to 110-point drop for someone with a credit score of 780, even if that’s the first late payment that borrower has on record.

Credit utilization, meanwhile, speaks to the amount of available credit you’re using at once. A utilization ratio of 30% or less will help your credit score, because it shows that you’re not racking up too much debt at once, while a ratio above 30% indicates potentially reckless borrowing.

This means that if you have a total line of credit of $10,000, you shouldn’t owe more than $3,000 on it at once. Keep in mind that your utilization ratio is based only on revolving lines of credit, like your credit cards or other lines of credit you may have secured. Your mortgage and student loans, for example, aren’t factored into your utilization.

Then there’s the length of your credit history, which speaks to how long you’ve had accounts in good standing. And in case it’s not clear, the longer those accounts are active, the better.

New credit accounts, meanwhile, refers to the number of new accounts you open in a short period of time. Opening too many at once can hurt your score, since it could be construed as reckless borrowing.

Finally, your credit mix accounts for the different types of credit accounts you have. A healthy credit mix might include:

  • A mortgage
  • An auto loan
  • Student loans
  • A couple of credit cards

Having all of your debts in credit card form would not indicate a healthy credit mix.

How do my FICO scores differ from my VantageScore?

FICO isn’t the only scoring model used to determine consumer credit scores. There’s also the VantageScore, which is another widely-used model.

Introduced in 2006, VantageScore was actually developed by the three major credit bureaus mentioned earlier. The VantageScore model uses six criteria when determining your score:

  • Payment history: most important
  • Age and type of credit: very important
  • Percentage of credit limit used: very important
  • Total balances and debt: moderately important
  • Recent credit behavior and inquiries: less important
  • Available credit: less important

As you can see, FICO and VantageScore overlap a bunch in terms of credit score calculations. Meanwhile, the initial two versions of the VantageScore had a different scoring range than FICO: 501 to 990. The latest versions, however — VantageScore 3.0 and 4.0 — use the same range as FICO.

One major difference between FICO and VantageScore is that for the former, you must have accounts open for at least six months, and at least one account that’s been reported to the major credit bureaus within the past six months, for FICO to even generate a score for you. With VantageScore, you may be able to get a credit score generated even if you’re relatively new to borrowing or paying bills — the VantageScore model will produce a score based on a single month of credit history and just one credit account being reported to the three bureaus within the past two years.

How do I access my FICO score?

Your FICO score is a big part of your personal finance picture, so it’s important to know what that number looks like. You can access your score on, but there’s a catch — you may need to pay for it. On the other hand, you may be able to get a free credit score via your credit card company, bank, or auto lender.

But remember, the number you get from one source might differ slightly from the number you get from another. Different lenders may use slightly different versions of FICO scores when determining your credit-worthiness, so the number you get from your credit card company may be a few points higher or lower than what you get from your auto lender.

How can I improve my credit score?

Bad credit won’t just make it harder to borrow money when you need to, or cost you more money when you are approved to borrow it. If your credit is poor, you may be denied an apartment lease or even a job (some industries check your credit record if the work at hand requires you to be financially responsible, such as bookkeeping or accounting). If you don’t have good credit, here are a few ways to improve your credit score:

Start paying your bills on time

All of them. This is the single most important factor that goes into a FICO score, so don’t be late. Keep in mind that if you make your minimum credit card payments by their respective due dates, they’ll count as on-time payments, even if you carry the remainder of your bill forward and pay down that balance later.

Pay off a chunk of your existing debt

The more outstanding debt you have, the higher your credit utilization ratio climbs. That’s bad news when you’re looking to help your credit score. On the other hand, eliminating some of that debt could drive your utilization ratio down into that more favorable 30% or below range.

Increase your credit limit

Asking your credit card companies for a higher credit limit may be easier than paying off a portion of your existing debt, and if you’re successful, it’ll achieve the same goal — lowering your utilization.

Imagine you owe $4,000 on a total line of credit worth $10,000. That’s 40% utilization, which isn’t great. But if you’re able to get that line of credit increased to $12,000, your $4,000 balance will only represent 30% of the amount you’re entitled to borrow. And if you’re an account holder in good standing who’s known for timely payments, there’s a good chance your credit card companies will increase your limits, especially if you’ve had the same limits for quite some time.

Don’t close old credit cards you don’t use

Tempting as it may be to free up space in your wallet, if you have unused credit cards in your name that aren’t charging you an annual fee, retaining them will help your credit history, provided those accounts are in good standing.

Avoid applying for too many new credit cards at once

Lenders frown upon the practice of opening too many new credit accounts at once, because it could indicate that you’re rapidly racking up debt (or on the road to doing so). Each time you apply for a new credit card, it’s considered a hard inquiry on your credit record, which could drive down your score. Space those applications out, and your score will benefit.

Check your credit report for errors

The information that gets reported to the three major credit bureaus isn’t always accurate, and when mistakes are listed that work against you, your credit score could take a hit. These mistakes could include having someone else’s debt (perhaps with the same name) land on your account, or having a paid-off debt listed as outstanding. You’re entitled to a free copy of your credit report once a year from each of the three major bureaus. Request yours online, review it for errors, and report discrepancies to the appropriate bureau at once. It’s estimated that 20% of credit reports contain mistakes, and correcting yours could bring up your score quickly.

While it’s always good to aim for as high a credit score as possible, don’t get too hung up over attaining perfect credit. Once your score is in the 800s, it generally won’t matter whether you’re applying for a loan with an 820, 830, or that hard-to-get 850. On the other hand, if your score is a 795 and you manage to raise it to 802, you propel yourself into a much more desirable category, so that’s worth doing.

Your FICO score matters

A strong FICO score could spell the difference between getting approved for a mortgage, personal loan, or credit card and getting denied. It could also spell the difference between paying more interest on the money you borrow and paying less.

Imagine you’re looking to take out a $200,000 mortgage. As of this writing, with a FICO score of 760 to 850, you could score an APR of 3.409%, resulting in a monthly payment of $888. But if your score falls between 680 and 699 — good, but not great — you’ll be looking at an APR of 3.808%, with an associated monthly payment of $933. That’s a difference of $540 annually for the same loan amount.

That’s why your credit score really does matter. Now that you know what FICO scores are and what goes into them, you can take steps to boost yours — and improve your personal financial picture as a whole.

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Bad Credit

Can I be denied a job due to bad credit?



Can I be denied a job due to bad credit?
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People often worry about their credit history when it comes to applying for a new credit card, a mortgage or a car loan. If you have poor credit, should you also be concerned about finding work? Can you be denied a job due to bad credit?

Let’s examine the facts.

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What is bad credit anyway?

Bad credit is basically a negative assessment of your finances based on your history of borrowing. Bad credit implies that you have a bad track record with lenders. This is most likely because you have a pattern of not paying your bills on time or defaulting on your loans.

Is it legal for employers to check my credit report?

Law and finance firms are legally required to perform credit checks on potential employees. However, other kinds of employers can also conduct credit checks on you before they hire you. But they must ask for your permission before they do so.

In many cases, a credit check will be performed by a company if the role you are applying for involves dealing with large amounts of cash.

Why might employers want to check my report?

There are many reasons an employer might want to check your report. For example, they might want to ensure that:

  • You are who you say you are.
  • You have a good track record of managing money.
  • It’s not too much of a risk to let your manage money.
  • Your financial behaviour will not affect your work performance.

Could you be rewarded for your everyday spending?

Rewards credit cards include schemes that reward you simply for using your credit card. When you spend money on a rewards card you could earn loyalty points, in-store vouchers airmiles, and more. MyWalletHero makes it easy for you to find a card that matches your spending habits so you can get the most value from your rewards.

Can an employer deny me a job due to bad credit?

Yes. According to credit reference agency Experian, if your prospective employer feels that your current financial situation could impact your ability to perform well in the role, or if your credit history shows poor financial planning, they may decide not to hire you.

Generally speaking, however, employers are more likely to be concerned about serious ‘red flags’ in your credit history, like bankruptcy rather than the odd missed payment.

In any case, employers only get access to your ‘public’ credit report. This contains your electoral roll information and any major red flags such as bankruptcies, individual voluntary arrangements and county court judgments.

They will not have access to your detailed credit repayments or your credit score.

How can I keep my credit history from affecting my ability to get a job?

If a prospective employer runs a credit check on you, ultimately you have no control over what they do with the information, including denying you a job due to bad credit.

The best thing you can do to minimise the impact of your credit on your chances of getting a job is to review your credit report beforehand.

You have the right to one free credit report per year from each of the three credit agencies (Experian, TransUnion and Equifax). Before you apply for a job or attend an interview, request your report and review it for any errors so that you can have them corrected ahead of time.

Even if there are no errors, knowing what is on your credit report puts you in a good position to answer any questions that may arise during the hiring process.

Indeed, if there’s something in your report that employers might consider a ‘red flag’, don’t panic. Instead, begin preparing an explanation to give to them. If it was, for example, caused by financial hardship beyond your control, the employer may take this into account.

Alternatively, you can contact a credit reference agency and request that a notice of correction be added to your report. This is a brief note of up to 200 words in length that explains circumstances that a lender might otherwise question.

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Bad Credit

Refinancing Your Subprime Auto Loan



Refinancing is a wonderful way to save money on your monthly car loan payment – but it can cost you more in the long run if you’re not careful. Refinancing when you have a subprime auto loan isn’t always as easy as refinancing a vehicle when you have good credit. Working with the right lender can help, though.

What Is Refinancing?

Refinancing is when you replace your existing car loan with a different one for the same vehicle, which may have either a lower interest rate, a longer loan term, or both.

Qualifying for a lower interest rate is optimal for getting a lower monthly payment and saving money overall. If you only extend your loan term without getting a lower rate, you actually end up paying more in interest charges over the term of your loan.

Auto loans typically use a simple interest formula, meaning your interest charges add up daily. The longer your loan term, the more you pay the lender – it’s wise to choose the shortest loan term you can afford. If you only extend your loan term you may end up paying more than the vehicle’s value!

Refinancing can typically be done with your current lender or with another one. It’s a good idea to shop around for the best possible rate before going with the first offer you receive. When you shop for the same type of financing with multiple lenders in a two-week timeframe, it’s called rate shopping. When you do this only one credit inquiry impacts your credit score instead of multiple, minimizing the negative impact that hard pulls can have on your credit score.

Options for Bad Credit Borrowers

Taking out a subprime auto loan is a great way to improve your credit, so, if you’ve kept up with your loan to this point and just need a little wiggle room in your budget, refinancing could be for you. Your credit is an important factor in refinancing your auto loan because refinancing is typically reserved for people with good credit.

However, when a borrower already took out a subprime car loan, many refinancing lenders are willing to work with them as long as they’ve made improvements to their credit over the course of the loan. Better credit alone doesn’t qualify you for refinancing, though.

In order to qualify for refinancing, you, your vehicle, and your loan all need to meet the requirements of a lender. These vary, but in order to refinance your car you typically need to meet these qualifications:Refinancing Your Subprime Auto Loan

  • Have a better credit score than when you began the loan
  • Have had your auto loan for at least one year
  • Have an acceptable loan amount
  • Have no more than 100,000 miles on your vehicle
  • Car can’t be more than 10 years old
  • You must be current on your payments
  • There can’t be negative equity in the vehicle

Lenders that refinance typically prefer cars that are in good condition, that aren’t too old, and have lower mileage. Some lenders may not want to refinance a vehicle that’s at risk for breaking down or is depreciating quickly.

They’re generally looking for a loan that isn’t too new, or too close to being paid off as well. And, refinancers may also require that you haven’t missed a payment on your original car loan. A borrower whose current on their loan gives a lender confidence you’ll manage the new loan well.

Alternatives to Refinancing Your Subprime Auto Loan

If you’re not able to refinance your vehicle, you typically still have the option to trade it in for something more affordable. Even if you’re still paying on a loan, all you have to do is pay off the loan to release the lien on the car.

Even if it’s years from the end of your loan term, you may have a good chance at trading in your vehicle, especially now. Due to fluctuations in the auto market, used cars are in high demand currently, which means that dealerships may be willing to pay a higher price to get your used vehicle on their lot – even if you’re a bad credit borrower looking to trade-in.

If you still owe on an auto loan this gives you a better chance at selling your car for the amount you owe to the lender. It may even give you enough cash left over to put toward your next, more affordable vehicle!

Ready to Get Started?

If you think refinancing your subprime auto loan is the way to go, you can check out our resources, here. But, if you think that finding an affordable, used car with a lower monthly payment is the right choice for you, we want to get you started toward your goal today!

At Auto Credit Express, we’ve got a coast-to-coast network of special finance dealerships ready to work with borrowers who are struggling with credit challenges. To get connected to a dealer in your local area that’s signed up with subprime lenders, simply fill out our auto loan request form. It’s fast, free, and never carries any obligation.

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It’s Time to Break Up With Your First Credit Card



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Many of us got our first credit cards when we were either in college or in our early 20s. We likely did not have a full-time job with a steady salary, and if we did, it’s also likely we weren’t rolling in dough.

See: 13 Credit Cards That Every 30-Something Should Consider
Find: Surprising Uses for Your Credit Card Rewards

Given these circumstances, the first credit cards offered to us were probably of a particular kind: low credit limits, no prior credit history required, high annual percentage rate and overall easy to get. While these cards served us well as a way to build up our credit — and probably learn some lessons about money the hard way — it’s time to let go for a couple of reasons.

The Benefits of Upgrading Your Card

When you upgrade your card, it’s likely you will also upgrade the benefits. Some companies, like Discover, Credit One and Capital One, are popular choices as a first credit card. However, these companies have better options as you, and your finances, mature.

The Wall Street Journal suggests asking for an upgrade. “Customers need to phrase it as a ‘product change’ when they call the card company. A product change involves getting a new card with the same card provider and it typically allows a cardholder to keep everything else the same, including the account number and available credit.”

See: 10 Credit Cards That Have Gotten Better During the Pandemic
Find: Old-School Money Advice You Shouldn’t Follow Anymore

This could be a good idea for those who are not ready to jump ship from their first credit company just yet. It also removes the hassle of having to find a different provider, and probably the largest benefit of all — no hard credit check needed.

A “hard” credit check is when your credit is thoroughly examined, and it results in an inquiry showing up on your credit report. These are always necessary for opening a new line of credit, like a credit card or a mortgage, but too many inquiries can count against you and negatively affect your credit. A “soft” credit check, on the other hand, will not affect your credit score and is usually done for verification purposes, such as when you apply for new employment. Soft checks also happen with preapprovals.

See: Soft vs. Hard Credit Check — What’s the Difference?
Find: 30 Things You Do That Can Mess Up Your Credit Score

If you ask for a product change on a credit card, you won’t need to have that hard inquiry because the company already has a solid picture of your credit and has done an inquiry before. But it’s important to confirm that your credit history will be rolled over to the new card.

Switching credit institutions all together can be beneficial, depending on what you’re trying to achieve. While the rules of credit apply whether you have, for example, a Credit One or Chase credit card, it’s not a secret that certain credit cards have certain reputations — or that credit bureaus take notice.

For example, the Credit One Bank Visa card is “one of the most popular credit cards for people with bad credit, largely because it’s one of the few unsecured cards that applicants with poor credit scores can get approved for,” according to WalletHub.

See: Biden Wants to Shut Down Credit Bureaus – What Would That Mean for You?
Find: 10 Credit Score Myths You Need to Stop Believing

In contrast, American Express credit cards are best for people with credit scores over 700 and require at least “good” credit for approval, WalletHub adds. A good credit score is one that’s between 670 and 739, according to Fair Isaac.

So while both cards function the same way, the profile of those who own these cards might be different — or at least be perceived as such.

Theoretically, the same person could own both cards, but your money works for you more with an American Express vs. a Credit One. If you have a Credit One card but qualify for American Express, it might make sense to leave your old credit card behind. In addition to the immediate financial benefits, upgrading for a credit card company that has a reputation for being exclusive to those with good credit could help when you apply for a mortgage or apply for credit cards at specific stores.

See: This Is How Many Credit Cards You Should Have
Find: Credit Cards With the Best Incentives to Open in 2021

The first question you should ask yourself is, “What is my card doing best for me?” If the answer is helping you build your credit, getting you out of bad credit or allowing you to have credit when you otherwise would not be able to, then sticking with the same card, or at least the same credit card company, makes sense.

This allows you avoid a new credit inquiry on your credit report while still building and increasing your credit. Asking for a credit limit increase on your credit card if you’ve been with the same company for a while, you’ve been routinely paying off your card and you’re in good standing, is a good idea.

See: Expert Tips to Fix Your Credit on a Limited Income
Find: What Is a Credit Limit?

If you are shopping around for a new card that gives you rewards or benefits based on your purchases, starting small is paramount. It wouldn’t be prudent to go straight for a card that has a yearly fee, for example.

Start small, and start smart with credit limits, too. Going from a limit of $2,000 straight to a limit of $15,000 while your salary remains relatively unchanged is not always a good thing. Having a higher credit limit doesn’t necessarily mean that you are now richer or more responsible — it only means that you now have a greater risk of putting yourself into serious debt. Slowly increasing your credit limit makes your debt more manageable — and makes you look more responsible to credit bureaus.

Breaking up is hard to do, but if your finances have matured, it might be time to get a card that helps you reach your goals with cash-back rewards and points you can use for travel, groceries and other other items. Shopping around for a lower interest rate and a slightly increased credit limit can also help you move forward.

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This article originally appeared on It’s Time to Break Up With Your First Credit Card

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