3 ways to pay off debt & how doing so could impact your FICO Scores

debt payoff plan

There’s an endless supply of theories on how to manage your debt in a healthy, responsible way. Some believe not to get into debt at all while others rack up credit card after credit card with little consideration. Neither extreme will likely have a positive impact on your FICO® Scores, but luckily most people fall somewhere in the middle.   At FICO, we recommend using available credit and loans when appropriate, making regular on-time payments, paying off debt when it’s best for you and keeping your revolving debt utilization low. With that said, there are a lot of people out there that simply feel buried in debt and want to pay it off completely. That’s a fine approach, but keep in mind that it might not have the impact on your FICO Scores that you were … [Read more...]

Not all millennials are saying “no” to credit

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Recently, we published an article about millennials using less credit than their age group did in the past. While it’s true that the amount of younger millennials (under 30) opting out of credit usage has increased, the population as a whole hasn’t shunned credit altogether.   There’s a persistent theory that millennials (those U.S. individuals between 18-34 years old) have turned away from many aspects of their parents’ lifestyle.  Preferring instead to live in urban areas versus the “burbs”, use public transportation instead of owning a car and avoid credit — instead, opting for cash or debit cards.   While some research findings support these themes, with an estimated 75 million millennials in the U.S., there are bound to be large numbers within this segment who … [Read more...]

3 Things you should know about your new chip card

6 ways to maximize your Credit card

Since we last wrote about the upcoming U.S. shift to EMV “smart” cards, banks and credit card companies have continued gradually issuing microchip-embedded cards to their customers. Chances are you’ve already gotten your hands on one of these new chip-based credit cards as the EMV rollout picks up ahead of the October 1st liability shift deadline, when merchants without chip-card readers will have to eat the costs of magnetic stripe card fraud. If you haven’t received chipped EMV cards to replace your existing credit cards, you can probably expect your issuers to send them soon (or you can simply give them a call and ask for the chipped replacements).   Either way, as magnetic stripe cards start getting phased out, it’s a good idea to familiarize yourself with the new EMV … [Read more...]

What you need to know about your student loans before you graduate

Student Loans (4)

If you just earned your degree, congratulations! And welcome to your grace period – your student loan grace period, that is. This is the six months after graduation during which you typically do not need to make any payments on your loans. Most student lenders offer this option, and in almost all cases interest keeps accruing on your loans throughout these months. This means you’ll owe more in interest when your payments begin than you would have if you had made payments during grace period. Some of our borrowers ask us: Can any of this have an impact on your credit score?   The answer is that being in grace period itself will probably not have an impact on your score, but the end of grace period might, for some borrowers, have consequences for your credit. Here are two ways … [Read more...]

Dads, grads, and jobs: Thoughts on sticking to your budget while still enjoying the summer season

June budgeting

School is ending. Temperatures are rising. Some are going on vacation, some are going to camp, and some are going to work. A lot of us are still just going to work. There are also people yelling at their televisions as we are in the NBA Finals, the Stanley Cup, and Women’s World Cup. We are in June, a month that usually goes by too quick and is oft forgot – it’s the month in between Memorial Day and July 4th for us hard workers — but that doesn’t mean things aren’t happening.   Travel and credit cards   June is the start time for a lot of travel — I just had two different friends come to visit last week, and have two more visiting this week — but travel isn’t exactly cheap. Plane tickets can be hundreds of dollars, plus the cost of hotels, car rentals, dining, … [Read more...]

5 Things you should really consider when paying off debt

managing debt

It happens to the best of us and for so many different reasons: shopping addiction, unemployed, entrepreneur, medical issues, career advancement and college expenses. Whatever your reason, you’re in debt and it’s stressful.   Paying off your debt doesn’t have to be a traumatic experience. With a little planning and organization, you can develop and stick to a reasonable, executable debt-management strategy. But before you start planning and making payments, make sure you understand these five key points.   1. Paying off your revolving debt in full may not be better for your FICO® Scores While it’s true that, generally speaking, people who carry higher debt amounts are riskier compared to those that do not, research shows there is an exception.  People who have a … [Read more...]

Why identity thieves are hacking the medical system & 7 ways you can protect yourself

Dirty Deeds

  Until recently, it was widely believed that the most probable targets of cyber-attacks would be critical infrastructure like energy grids, transportation and satellites. However, the latest hack into the Office of Personnel Management (OPM) disclosed by US officials goes to highlight the fragility of our employee and medical data. We naively expect that our government, of all entities, should be able to protect its employees from cyber hijinks. If only that were true.   The latest attack estimates that the personal data of every federal worker, federal retiree and up to one million former federal employees just got pwned (geek speak meaning “owned in a humiliating and online manner”). More interestingly, there are early indicators that this group of hackers may also be … [Read more...]

Don’t ignore these 6 financial red flags before you get married

to thee i wed image

It’s summer!  Hooray for warm weather and cookouts and yes—even weddings!  June is one of the most popular wedding choices around and who can blame those of you who save a June date?   The weather in most areas is sublime and tons of brides are anxious to tie the knot and make those December engagements legal and official.  Love is a good thing but it does come with a price tag that is both emotional and financial.   How many times have you heard a divorcee proclaim that if they knew now what they didn’t know then?  I decided to ask a few people to complete this question with their own answers and I was amazed at the sage advice that was shared so openly from both happily married types and from some divorced folks as well.  Take these suggestions as simple guidance.  … [Read more...]

10 things your debt collector doesn’t want you to know

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Nobody likes to face a debt collector. A call from a debt collector could be a symptom of financial hardship, or it could simply be an irritating reminder that you forgot to pay your doctor bill. Either way, you’re not happy.   Even so, you should definitely pick up the phone.  A bill going to collections can have a substantial impact on your FICO® Scores. It’s possible for a debt collector to start calling you before the collections has hit your credit report. So if you pick up the phone and pay off the debt immediately, you may be able to avoid an impact on your FICO Scores.   If the collection has already been submitted to the credit bureaus, it’s likely you’ll see an impact on your FICO Scores. Collections stay on your credit report for about seven years — even if … [Read more...]

The scores that count in mortgage lending

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So you consider yourself a well-informed consumer. You have been educating yourself about credit scores, the credit process and how lenders evaluate credit for mortgage loan applications as you are getting ready to purchase a new home. And you already know that understanding your FICO Scores is really important as they are the credit scores most commonly used in the mortgage loan review process.   You’ve pulled your FICO® Scores and credit reports at myFICO to see where you stand, but are not sure on which FICO Score versions you should focus.  Do mortgage lenders use FICO® Score 8 from all three credit bureaus? Or FICO Score 8 from one and FICO® Score 5 from another? I know, it can be kind of confusing.   Let me explain …   When you access your credit … [Read more...]

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