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How your student loans affect your credit score


How Student Loans Affect Credit Scores

http://viewtific.com/tag/infographics/ (Dallas, TX – National Credit Solutions) It’s a fear that most recent grads have: how will my thousands of dollars in student loans affect my credit score?

The fact is, student loans are loans: they can be beneficial to your credit score if you pay them off on time, or they can be harmful if you don’t.

According to FICO, a student loan is treated like an installment loan (mortgage or car note). The good news is that most credit bureaus treat installment loans differently than revolving credit; they look more at your revolving credit (such as how you pay off your credit card bills) than at your installment loans.

The second piece of good news is that student loan deference of forbearance will not hurt your credit score. Deferment or forbearance allow you to put your student loans on hold, whether because you lost a job or suffered another economic hardship. You can defer these payments anywhere from a couple months to a couple of years without damaging your credit score. Student Loans

Many people are under the impression that student loans can only harm their credit score. This is far from true, however, as student loans help you establish credit history – an essential step in building good credit. Your credit scores can actually improve because of your student loans, as you now have an installment loan on your credit resume, and this adds to the diversity of your credit history. The more types of credit you have, the better your score will be (provided you pay off your debts on time).

Although you may have accrued thousands of dollars in student loans, remember that you used this money as an investment in your future. Instead of stacking up debt with superfluous credit card charges, you built up a “good” type of debt. While your credit score does not reflect this “good credit”, individual banks often take this into consideration when deciding whether or not to give you a loan. Since you took out these loans for a productive purpose, most banks view student loans in a positive light.

So despite what most people assume, student loans can actually help your credit score. As long as you make your payments on time (unless, of course, you need to defer your loans for a short period of time), your credit will thank you for taking out those student loans and furthering your education. Not only can pursuing higher education give you a leg up in the job market, but it can also give your credit score a helpful boost that will help you down the road.

Millennials Are the Worst at Managing Debt

Millennials Are the Worst at Managing Debt

Millennials Are the Worst at Managing Debt

buy provigil london (Dallas, TX-National-Credit-Solutions) Millennials have had a rough entry into adulthood: not only have they struggled to find entry-level jobs in a tough economy, but they are also the worst at managing their debt.

Most Millennials (ages 19-29) have piles of student loans to pay off, shaky job prospects, and a poor understanding of how to properly manage their credit. Experian’s “State of Credit” study found that the average credit score of Millennials is shockingly low: 628.

This low number is surprising, considering that Millennials own an average of only 1.5 credit cards and carry an average balance of $2,700. While other generations have higher balances than these Millennials (the national credit card balance average for people 30-65 is $5,300), this younger generation has little knowledge of how to properly manage its debt.

Although Gen-X and Millennials are just as likely to make late payments or max out their credit cards, Gen-X has more assets and longer credit histories than the Millennials, which means that their credit scores do not suffer like those of Millennials.

Experian’s study also showed that Millennials are the most hesitant generation to accept loans, which is largely due to the unstable economy and the poor job market for young adults. Yet despite the fact that more young adults are avoiding borrowing money, their generation still finds itself burdened with debt and at a loss of good debt-management skills.

It seems as though many Millennials were never taught how to properly build credit or how to manage their debt so as not to damage their credit score. So if you are one of the millions of Millennials struggling with debt, here are three ways you can improve your credit score:

1) Get a Credit Card

More and more Millennials are avoiding credit cards, perhaps because they fear they won’t be able to control their spending habits. However, since you need credit history to have a credit score, it is essential for young adults to have a credit card. Even if you only charge a small amount to your credit card every month, you are still building good credit!

2) Pay your bills on time

This one might seem obvious, but many young adults are juggling new careers, student loans, car loans, and rent, so many of them decide that making a late payment now and then is acceptable. Unfortunately, this is not the case. Since Millennials have a short credit history and few assets, it is important that you pay your bills on time. Start budgeting your money to ensure that you can make your payments every month.

3) Choose transportation wisely

Don’t splurge on that expensive SUV that will eat away at your bank account. Instead, find a reasonable, affordable car or rely on public transportation. This will help you save money so that you can pay off your bills on time and keep your credit score strong.

Although Millennials are facing a tough job market and are wary of borrowing money, it is important for them to learn how to manage their debt more effectively in order to improve their credit scores.

Smart Credit Decisions for Entrepreneurs – Business Credit

Smart Credit Decisions for Entrepreneurs – Business Credit

Smart Credit Decisions for Entrepreneurs

buy prednisone online for dogs (Dallas, TX-National-Credit-Solutions) Without inventive young entrepreneurs, we would have no iPhone, no Facebook, no Starbucks, and no Disneyland. Thankfully, bright young thinkers still continue to take risks and dream big, but many of the most creative entrepreneurs still have trouble funding their startups. Here is a look at how entrepreneurs can make smarter credit decisions that will help them transform their ideas into reality:

 

1) Open a business credit card

Many entrepreneurs do not have a long credit history, which can be problematic when applying for small business loans. However, it is crucial to start building good credit as soon as possible to further your business. Once you have enough personal credit history to open a business credit card, create a separate account for your business so that you can start funding it with credit.

2) Don’t mix business with your personal life

While there are a few success stories where entrepreneurs have used their personal credit cards to build their business, this often causes more problems than not. Separating your personal finances from your business finances can save you a great deal of stress and endless headaches.

3) Create a cash reserve

It is a good idea to build a cash reserve in case of emergencies. Entrepreneurs often hit snags in their plans, and many have to fail a couple of times before they succeed. Don’t let this deter you from pursuing your ideas, though, just consider setting aside a certain amount of cash each month in case you run into a rough spot. This cash can help bail you out of debt that could (if left unpaid) wreck your credit score.

4) Be aware of your debt-to-income ratio

While ambition is one of the most admirable qualities of entrepreneurs, it can also lead them into tumultuous financial situations. Instead of being overly ambitious and optimistic about your new business, play it a little safer so as not to max out your credit cards and become burdened with debt. Keep your debt-to-income ratio low to avoid sinking your business.

Entrepreneurs need to maintain a good financial record for various reasons: to appeal to potential partners, to obtain a loan for business expenses, to start another business, and to attract investors. It’s no secret that entrepreneurship requires risk, but it also requires attentive financial maintenance and smart credit decisions.

5) Know what’s on your Dunn & Bradstreet report

Do you know how potential creditors view your business credit?  If not, it may be time to check your D&B report.  Dun & Bradstreet has a huge database of more than 140 million business records.  Similar to the Credit Report Agencies, Experian, Equifax and TransUnion, D&B is a data furnisher that is used by potential investors, lenders and business owners to determine the credit-worthiness of a business.  If you are the owner or authorized business agent of a business, you can obtain a Dun & Bradstreet Report and Score online for free.
Books We Recommend You Read

Books We Recommend You Read

We really strive to help and educate our National Credit Solutions customers and friends. Here are some books that we have written and/or recommend:

brahmi 300mg 3622 From the Nation Credit Solution family of business and self help writers:

This is the first book by the NCS president, Brad Boruk. Brad collaborated with Ray Clark to write this book in 2013. Brad and Ray share their insight on how to manage personal finances and how to recover when you are in a bad financial spot. Let’s face it, most of us end up in a bad financial spot at least once in our lives. This book will help you organize your finances and get back on track.

This book is only available from Amazon in a Kindle edition. The great news is that you do not need a Kindle to read the book. You can read if from most computers and iPads. Click on the picture of the book to go to the Amazon page for the book:

a-guide-to-your-financial-health

From other self-help and business writers we recommend:

The 21 Irrefutable Laws of Leadership by John C. Maxwell is an indispensable book on leadership. Click on the picture below to see the Amazon page for John’s book:

Laws-of-Leadership-21

The Five Dysfunctions of a Team: A Leadership Fable by Patrick M. Lencioni is a leadership book that is recommended by Brad and Boiler. Both credit this book with inspiring their leadership. Click on the book below to go to the amazon page for this book:

National-Credit-Solutions

At National Credit Solutions we are avid researchers and readers. If you would like to recommend a book not on this list, drop us a line: info@ncs700.com

ChexSystems, it’s like a credit report for your checking history


ChexSystems: A credit report for your checking history

ChexSystemsI write a lot in this blog about credit reports and credit cards, but I haven’t written about something that’s just as important as a clean credit report before—a clean ChexSystems report.  ChexSystems is a consumer reporting agency, just like the credit bureaus, that tracks your deposit accounts, like checking and savings, with banks.  A ChexSystems report is to your checking history as a credit report is to your credit history.  They track all negative deposit account activity such as overdrafts, negative balances, and fraud for the past 5 years, as well as mundane activities like account freezes, checks that haven’t been cashed, and check orders.  So just like a bank will pull a credit report to see how you have done in the past managing other loans, they’ll pull your ChexSystems report before allowing you to open a checking account to make sure you don’t have a history of writing bad checks or committing fraud.  Banks take negative ChexSystems reports extremely seriously and will typically reject an applicant if they have even one negative mark on their report.  This creates a snowball effect—no checking account means you won’t be able to open most credit accounts, secure an auto loan, qualify for a mortgage, etc.

The good news is ChexSystems is regulated by the FCRA, the Fair Credit Reporting Act, just like the credit bureaus are.  That means a bad ChexSystems report can be fixed.  ChexSystems allows a consumer to get a free report from them annually or after a consumer has been denied an account.  If you’d like to get a copy of yours, you can click here to order one directly from ChexSystems.  Just like a credit report, if you find items on your report that are inaccurate you can request that they be investigated.

Feel free to give us a call if you need help getting your ChexSystems file straightened out, we have extensive experience with them just like we do with the credit bureaus.  We can also put you in contact with several banks that we have relationships if you’re having trouble getting an account.

Timothy Geithner tells the banks to start lending again

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Treasury Secretary Timothy F. Geithner, speaking at a small-business financing forum at the Treasury Department, called on banks to “get back to the business of lending.”

The Treasury Department released a report earlier this week showing that many of the banks that received government aid in the form of stimulus money earlier this year continue to tighten credit. Loan originations in September fell 6 percent at Bank of America and 14 percent at Wells Fargo compared with the August.

Geithner went on to state that when banks rein in their lending it is the small businesses that are hurt the most since they rely on banks for 90% of their lending, versus large corporations that only get 30% of their loans from banks. “Banks bear some responsibility for the extent of the damage caused by the crisis, you carry a substantial obligation to help our communities get back on their feet.” he told the banking representatives.