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The Best Credit Card for Bad Credit!



How do you get a credit card with bad or no credit? How can you rebuild your credit if no one will give you a shot? We’ve got the answers and some real-world steps that you can take if your credit isn’t so hot. Let us know what you think or if you have questions down in the comments below. +Be sure to check out our new debt management tool! It’s unique in that you can sync all of your debt (house, car, credit cards, etc) and we’ll give you recommendations based on your spending!

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Can I Afford This…TV?

Oh hello. Didn’t see you there. I was just watching my favorite show. But hey…are you looking for a new TV to watch YOUR favorite show too? I’m looking to upgrade to a 4K HD Smart TV, lemme tell you, they’re niceeee, and I’ve been looking at one from Best Buy. So, let’s talk about what a TV purchase from this retailer could look like.

If you’re new to the show, this isn’t the part where we try to sell you on a deal. Instead, we’re just using an existing deal as a teaching moment, so you guys know how to dissect and research these types of purchases before committing. So, without further ado, this is Can I Afford This…TV?

Tip #1: Search for the Best TV Financing Option

So this is a 65” 4K UHD TV from Best Buy that retails for $477.99. While this guy’s not the most expensive model out there, I totally get that not everyone has 500 bucks sitting around to pay for a purchase like this in full. 

It’s the holidays, so you’re already getting a discount at most retailers, and this one’s $52 down from $529.99. So definitely remember to shop around for deals! 

If you’ve watched our show up until now, you’ve probably noticed that we don’t talk about buying anything in full. Instead, we break down your financing options. Reason being…that’s where you can get into trouble. 

Tip #2: Read the Fine Print

It’s super tempting to just click “yes, I’ll take this for option 2…$39.84/mo. for 12 months” because it seems cheap, without really considering that you’re locked in for a 12 month subscription, essentially. The only way to get this deal at Best Buy is to sign up for a store card…and you guys know how we feel about those…So, we clicked on “show me how” and saw that this deal does not only have low monthly payments, but is also interest free if you pay the balance in full within the 12 months, and if not, you’ll be charged interest from the purchase date if the purchase balance is not paid in full within 12 months. 

That’s usually standard with store card deals, but you definitely don’t want to be stuck paying more. You’ll already pay more than the offer initially states, because it doesn’t figure in taxes or shipping.

So we dug a little deeper into the terms themselves for this store card offer and found this…”Monthly payment stated is only an estimate based on listed purchase amount excluding sales tax, and does NOT include additional payments that may be required for an existing balance. In order to pay your promotional balance by the end of the period you may have to make a payment each month that is higher than your required minimum payment.”

Tip #3: Don’t Make “Minimum Payments” on the TV

To simplify: You know you can pay the “minimum payment” each month to pay down a credit card and not get reported to the credit bureau as a missed payment. But that minimum is always less than the balance. So, say you have $1000 on your credit card that you have to pay off in 12 months. Your minimum payment is $75. If you only made the minimum payment for 12 months, you’d be $100 short at the end of the term and don’t satisfy the promo offer, meaning you didn’t meet the requirements to get the deal and you’ll be getting those monthly interest charges on top of the $477.99 + shipping + taxes. 

For example, if you bought something for $162 at a 6-month term with monthly payments of $27 and a potential 26% APR, not completing your payments by the end of the term incurs an interest fee of $31. So, you’d actually pay $193 instead of $162. On top of this, for any missed payments you may also get charged a late fee of up to $40.

Remember: No Debt, No Sweat!

Bottom line, we approve of this $39.84/mo for a 12 months purchase plan. It’s more than manageable and something that can fit into most budgets. If you’re concerned about any of the pitfalls of putting this on a store card…maybe because you already carry a balance or paying higher APRs than a regular credit card…find a cheaper option that you can pay in full. No debt, no sweat! 

DM us your store card stories or let us know your thoughts in the comments below. Thanks for tuning in to Can I Afford This…? We’re doing these all throughout December, so if you have a household item purchase you want a closer inspection for, let us know about that too. 

We’ll see you next time!

🎥 💰 👍 Catch “Ask Abby” Live on Wednesdays at 12:30PM PST on Facebook
📺 💸 👉 Subscribe to Credit & Debt on YouTube for more money management tips!

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Should you take out Parent PLUS Loans?

Have you heard of Parent PLUS Loans? Have you heard that there are some major pros and some major cons before you consider taking them out? So, if you’re an undergrad student or the parent of an undergrad student, this show is for you. 

Hello everyone thanks for tuning into another special Friday episode of Ask Abby, I’m Abby, and we are finishing up our student loan series to talk about Parent PLUS Loans. What are they? When should you take them out? And what are the advantages and disadvantages of doing so both in the short-term and long-term. If you’re a parent or student and you need some financial aid for the upcoming college years ahead, make sure you ask me questions and watch the rest of this video to get info on exactly what you should know about Parent PLUS Loans. 

First things first, what is a Parent PLUS Loan? It’s a direct federal loan that parents of undergrads can take out to help their kids pay for school. To get the loan, your school has to A. Participate in the Direct Loan program, and B. you have filled out the FAFSA form. Those are the two major qualifiers, but we will talk about a few others as well. 

For example, to qualify for the Parent PLUS Loan, parents have to have a decent credit history. What does that mean? Well, you can’t have any late payments over 90 days on accounts with more than $2000. And if you’ve gone through bankruptcy, repossessions, foreclosure, wage garnishment, had default or charged off accounts, or a tax lien in the last five years, you won’t qualify for the loans. Now, parents, if you do have one or more of these flags on your credit report, you can still potentially take out the loan by obtaining an endorser. Which basically means someone agrees to pay for the loan if you do not. 

Now, let’s talk about interest rates. The interest rate for these loans change every year but once you take out the loan, the interest rate is fixed, meaning that it’ll never go up or down – unless there’s a weird coincidence like the COVID-19 pandemic and interest rates are reduced to 0% like they are right now, but we’ll get into that more later. Anyways, this year’s interest rate for PLUS loans is locked in at 5.3% so if you take out a PLUS loan between now and July 1 of next year, you will pay that interest rate on it. 

Another simple qualifier is that the student has to be enrolled at least half-time. Easy enough, right? 

So, let’s just quickly chat through some major bullet point for these loans, like who is responsible for paying them back, when does repayment start, etc. etc. 

First question, who is responsible for paying them back? Well, the loan is technically under the parent’s name. Unless you decide to refinance and change the name to reflect the student’s. If you’re ready to do that, I’m quickly going to put in a video about student loan refis in the comment bar, so check that out… 

So, parents, this is your loan. You’re responsible for paying it back. When? As soon as the funds have been disbursed. Unlike some other types of federal loans, these payments are not deferred until graduation, so you’ll get info on repayment from your loan servicer as soon as your child gets their money. 

Now that we’ve got some of the basics out of the way, let’s dive into some pros and cons.

One of the biggest pros of this is that you can borrow as much as you need up to the entire cost of attendance. That makes it easy to get what you need to pay for school in one application process. 

But, let’s talk about the con that goes along with that. Like I said, repayment on these doesn’t start after graduation. They start after disbursement. So the bigger the loan, the higher your monthly payment will be, like soon. So, my advice? If you have the option of taking ANY other federal aid though, take that first.

Another pro, is that you have more options for repayment and assistance if you need it, just because of the nature of federal loans. Private loans can get tricky if you run into financial trouble. Some lenders allow you a deferment or forbearance but usually not more than 3 months at a time. And, unless you refinance, there’s not really an option to adjust your monthly payment. With this type of loan though, there are a variety of repayment options. So, whether you want to stick with the standard, where you pay the same monthly payment for ten years, or a graduated payment, where you pay less at first and then the monthly payment gradually increases, those are both options. There is also an option to extend your repayment to 25 years, which would lower your payment significantly and lastly, the income-contingent repayment, which means you would consolidate your PLUS loan into a Direct consolidation loan, which would allow you to pay 20% of your income or what you’d pay on a standard 12-year plan, whichever is lower. That’s a major benefit. In the case of private students loans, you usually have a standard, fixed monthly payment, period. 

A con to all of that though is the interest rate itself. While there are more benefits on the federal level, if you’re financially stable and have good credit, you might actually find a better interest rate with a private lender. Plus, Parent PLUS loans come with an origination fee, which means they take out a percentage of your funds before disbursing it. That fee is usually between 4-6%. So, just make sure you shop around before committing to anything. 

So, Parent PLUS Loans. A lot to consider, right? If you need help navigating the world of student loans, ask me questions on FB, email me at askabby@creditanddebt.org, call our coaches, and make sure to go back and watch my other videos that I did throughout this student loan series. We’ve covered everything from student loan refis, to building your credit while in college and even tips if you’re having a hard time making your payments due to the pandemic. 

Plus, you guys be sure to like our page and opt-in for live notifications BECAUSE there’s a new stimulus bill out there and whether or not when some of the relief and aid gets distributed in still up in the air, so I’m keeping an eye out and I will update you as soon as there’s solid information.

That’s it for today’s show and that finishes up our student loan series. If you have questions that didn’t get answered, please don’t hesitate to reach out. We will start a brand new series next week so make sure to keep an eye for that! I will see you all next time on Ask Abby! 

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How do I make the most of my unemployment benefits?

We are talking about a huge problem right now! In fact, this problem is bigger than it ever has been before. There might be new unemployment benefits coming your way soon! Do you know how they’ll be distributed, and more importantly, do you know how to make the most of those funds? If you’re relying on unemployment right now, this show is for you. 

Hello everyone and welcome to another Live show, my name is Abby and this is Ask Abby, where you ask me questions about your finances and I find the right answers. Today we are kicking off a series on unemployment. Why? Because it’s a serious problem right now in the country and I have some tips and advice on how to make the most of your circumstances, regardless of where you’re at. Here’s the thing guys, 31 million Americans are receiving some sort of unemployment help right now, and even more people are in tough financial situations, so while you’re watching, do them all a favor and hit that share button so that this video reaches a few of those people! 

Now, before we dive into the nitty gritty stuff, let’s talk about some current events. As you might have heard, the president signed an executive order on Saturday that provides extra unemployment assistance to Americans. The reason it’s taken us until today to talk about it is because there are still a lot of questions in the air about the details. Like, how much is it, when does it go into effect, and how do I get the funds? 

Right now, the current additional unemployment assistance would change to $400 additional instead of the original $600 that the CARES Act provided. With that though, the federal gov’t is only providing $300 and expecting state governments to provide the other $100. That gets really complicated, so off the bat, people might only see the extra $300 from the federal side in addition to the state’s current amount. It’s a lot of work for the states to individually implement a change like this so quickly, so it’ll take some time. 

We are going to keep watching the news and keep updating you because there are also a few other caveats that could reduce the extra assistance to $300 a week, but rather than getting bogged down if the ifs and buts while there are still a lot of decisions coming out, let’s dive into the question for today’s topic which is: How do you make the most of your unemployment benefits? A lot of people don’t know that there’s a lot more to their state’s unemployment assistance than just a weekly check (while that is a helpful facet, of coure). So, let’s talk about it. 

The #1 way to make the most of your unemployment benefits is to BUDGET. Budgets aren’t fun. No one wants to be reminded that they can’t afford something, especially during hardships when it comes to putting food on the table and roof over their heads. It’s hard stuff guys, not fun to talk about, but it’s important to do the most with what you have under the current circumstances, so let’s talk about a few basic budgeting tips. 

  • Number one: Write down your necessary expenses. We aren’t talking about internet and phone bills, we are talking about bills like your rent or mortgage, your food, and utilities. 
  • Number 2: Make cuts. Do you know where all your money goes? Chances are, there might be some funds that slip past you at some point as the month rolls on. We did a whole show that talked about making budget cuts, so I’m going to through that in the comment bar: 

What are some secret budget cuts I can make? https://www.facebook.com/114214120221201/videos/703394243797791

  • Last budgeting tip is to use a tool or call a coach. We have coaches available and you can call them for free! They’ll help you organize and make the most of your budget. But, if you’d rather stay off the phone, go to creditanddebt.org and sign up for our soon-to-be-live all-in-one finance platform. It’ll sync up all of your expenses and give you custom recommendations for making some improvements. That’s enough about budgeting though, because we have more unemployment tips for you. 

Then number 2 way to make the most of your unemployment benefits is to opt to receive your benefits without the taxes withheld. Seriously, this isn’t what I would normally recommend if you don’t absolutely have to do this because eventually, you’ll have to pay the taxes, but if you need the extra funds right now, you can take unemployment tax-free and get a little more in those checks. 

So, number 3 file for extended benefits and keep filing. Most states only offer about 26 weeks of unemployment, but when you file for extended benefits, you get an extra 13 plus potentially and extra 7 after that, so file and just keep filing. 

Let’s talk about the meaning of unemployment benefits. A lot of people look at unemployment benefits as just a weekly check, but that’s why it’s called unemployment benefits not just unemployment money. Many states offer career assistance, like training programs, job centers, extra financial assistance for people looking to start their own company, and the list goes on and on. Take unemployment as an opportunity not only to continue getting some funds, but also to progress your career or at least find help looking for a job! 

Making the most of unemployment right now is important, but there are also other programs you should be looking at making the most of, too. For example, if you’re on unemployment, look into your state and federal food assistance programs. There’s no reason you should be spending a good chunk of your unemployment check on large grocery bills right, so get started on that asap. 

Also, see what options are out there for you to defer some of your bills right now. I’m talking about everything from mortgage/rent to cell phone and auto bills (like insurance). I got a letter in the mail the other from my auto insurance telling me there are options available because they care about me. Lenders and servicers are trying to provide relief options for their customers, so take advantage of those while they’re out there so you can focus on the big stuff. 

And lastly, what do you do if all of it is still not enough? We did a show a couple months ago that answers the question, What to do when your stimulus check runs out? It’s not the exact same circumstances, but in that show, I give some tips and advice for finding extra cash when you need it most and some steps you can take to get your finances in order, so definitely, watch that show. 

What to do if you need more cash and fewer bills: https://www.facebook.com/114214120221201/videos/747637762441435

Do you have questions about unemployment in your current state? Or maybe about the options you have in your specific circumstances? Please reach out to me and reach out to our coaches. If you have debt that’s building and you don’t know how you’re ever possibly get out of it, that’s what our coaches do. They help people with thousands of dollars in debt become completely debt-free in just a couple of years. So, give them a call. Or you guys know you can also ask me questions on facebook, in the comments bar or email me at askabby@creditanddebt.org

While we dive into this series on unemployment, let me know what questions you have and if you would like to hear me talk more about something or heck even less about something, I want to know. I’ll be keeping an eye out this week for more updates on pandemic financial assistance and that executive order, so make sure to like our page and opt in to get notifications for when we go live so that you don’t miss it! 

That’s it for the show today guys, please share this video so that the other people facing unemployment can get some advice for this crazy world we live in together. Thank you so much for watching and as always, we will see you next week on Ask Abby! 

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What if I haven’t gotten my stimulus check?

The CARES Act addressed a lot of these relief options, as you might now. It also provided a $1200 stimulus check to many consumers and we have something SO important to talk about that today, which I’m going to get into first-thing so don’t tune out. I just want to answer a huge lingering question that’s been circling for a little while now and that is: What if I haven’t gotten my stimulus check? 

If you haven’t gotten your stimulus check there could be a few reasons. 

  1. The government hasn’t sent it. As of June 8, there were still about 30 million checks to be sent. 
  2. Tax return issues. If you’re a non-filer, like recipients of SS or VA benefits. You still have to file, which you can do on the site. The deadline is Oct. 15.
  3. The other reason you might not have received your check is because you did, but you threw it away. WHAT?! I know, why would you throw away a 1200 check? Because the IRS sent the funds in the form of a VISA gift card and most people were expecting a paper check. With everyone being warned time and time again to keep an eye out for scams, it’s not that unreasonable to have thrown it out, if that’s what you did. 
    • So not what, you threw out your check. The Treasury Department said those who have lost or destroyed their EIP card may request a free replacement through customer service at 1-800-240-8100.

Now that we got that figured out, let’s say that you got your check and you’ve spent it, now what? First, watch this video on what to do when your stimulus check runs out: https://www.facebook.com/creditanddebt.org/videos/747637762441435/

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How do student loans affect my credit score?

Do student loans affect your credit score? Can you still buy a car, a house, or rent an apartment if you have tens of thousands of dollars in student loan debt? Those are the questions we are answering for you today, so whether you’re looking for answers about your credit score because you want to buy the latest iphone or maybe even a house one day, this is the show for you.

Hi everyone and thank you for tuning in to Ask Abby, I’m Abby, and this is our LIVE Facebook show where we answer all of your questions about finances. It’s a tricky time we live in right now and navigating your finances is hard so, if you have questions for me as we go along, please don’t hesitate to ask.

Today we are kicking off our student loan series and saying adios (for now, at least) to our credit score series with an awesome topic that combines both subjects. So, the question is… Do loans affect your credit score?

If you’re asking this question, you’re not alone. In fact, there are 45 million people in the US with student loan debt. And all that debt adds up to a whopping $1.6 trillion. That’s more debt than people have in their car loans and their credit card debt. So, that being said, help out those 45 million people by sharing this video and punching that like button for me!

Before we dive in, I just want to throw some links out there for those students wondering why the heck they need to be concerned about their credit score. You’ve classes to register for, books to buy, apartments to find, plus, you now have to figure out how to navigate college in the world of COVID-19. So, why should you care about your credit score? Well, I’ve got that answer for you in this video that I’ll put into the comment bar now.

On the other hand, if you’re watching the beginning of this video wondering what a credit score even is, watch this awesome video by the Basic Finance team. Then, come back and I’ll let you know how your student loans play into everything.

With August right around the corner, you’re probably finalizing your financing, which for the majority of students, means taking out some more student loans.

Here’s the good news: student loan debt isn’t all bad for your credit score. In fact, student loan debt can put you on the fast-track for building your credit score.

Here’s the bad news: regardless of whether or not you get a job using your degree after college, you still have to pay them back. And if you miss payments, your credit can suffer greatly.

So, do student loans affect your credit? The short answer: yes. But, like all of the other topics we discussed in the credit score series, there are so many factors that go into determining your credit score. Probably not what you wanted to hear, I know, but we will keep it really simple.

If you pay your student loan payments on time, your score will be positively influenced. Why? Because payment history is the number one factor in determining your score. It’s weight accounts for 35% of your credit score.  Plus, if you don’t have a credit card or car payment, it might be the easiest and only way for you to start building your credit in college.

In addition to affecting the payment history factor, student loans also positively influence the credit mix factor. For example, by the time you graduate, there’s a good chance you’ll have a credit card in addition to your student loans. Some students might also have a car payment and cell phone bill. If you play your cards right, treat your accounts with the TLC, and nothing crazy happens that’s completely out of your control – like a pandemic that halts the economy – you will have a great start to a healthy credit mix.

Credit history is also a winning situation. While you might not want to face it, there’s a good chance you’ll be paying off those loans for a long while. I hate to be the bearers of bad news, so we are going to graze right over the fact that the average borrower takes 20 years to pay off their student loan debt and talk about how positively it will impact your credit history. The longer an account is in good standing, the more your credit score will benefit!

So, those are some of the ways that student loans can positively affect your credit score. Now, can student loans negatively affect your score in any way? Well, yes. Of course, if you do the opposite of anything we talked about above – like you don’t make your payments on time or your accounts are in default – that will negatively impact your score.

But, consider the fact that it could take you 20 years to pay these bad boys off, how are lenders going to look at your when you go to purchase a house or a car? Well, the short answer is, that as long as your student loan accounts are in good standing, and have been that way for a while, you’re probably in good shape to purchase a house. In fact, first-time buyers in today’s world are often in a better financial state than those who were purchasing a home prior to the student loan crisis. That’s because today’s buyers are well versed in the world of on-time payments and accruing interest over the years.

Here’s why student loans COULD be a barrier if you’re looking to buy a home:

  1. You might have a higher DTI
  2. You might have a hard time saving for a down payment

Your overall credit plays a huge factor into making some of these big changes. During this series we are going to talk about ways to build your credit in college, what to do if your credit isn’t looking too hot or if you can’t payback your student loans right now because of COVID or some other contributing circumstances. Is the CARES Act going to help you? AND ALSO, for those parents out there wondering how Parent PLUS loans play into all of this, we have a show for you. We will answer all of these questions and more on this upcoming student loans series.

So, that’s all I have for you on this lovely Friday. Please, share this video so all the people with a piece of the $1.6 trillion pie can get started understanding their student loan debt.  Also, make sure to follow our FB page to get notifications for when we go live, which is every Wednesday at 12:30 Pacific and sometimes, we do these special shows for you as well. So ensure you don’t miss those by hitting that like button and opting in for those live notifications.

If you have questions about student loans, whether you’re a parent or a student, please ask them now and I will answer them in this two-week series. You can message us directly on FB, comment on this post, or email me directly at askabby@creditanddebt.org . Thank you so much for watching and I’ll see you next week on Ask Abby.

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What happens once COVID 19 unemployment benefits run out?

Those additional $600 unemployment checks expire this week! Do you know what your options are after today? What about eviction and mortgage protections. Do those expire today, too? Will there be another legislation that provides extra financial relief during this pandemic? These are great questions that all require urgent answers. In fact, there are so many questions around the coming weeks, so while the information continues to update, we do have some answers for you. 

Hello everyone and welcome to a Friday Special episode of Ask Abby, my name is Abby, and It’s my goal to do the digging to provide you answers to your most pressing financial questions. And boy do we have a big one for today. Those $600 unemployment checks that Americans were receiving to aid during this pandemic are expiring today, while the country is still nowhere close to recovering from the first wave of this COVID-19 pandemic. So, if you were depending on those checks to make your bill payments and put food on the table, I’m here to provide some advice to get you through these next few weeks. 

First things first, let’s talk about exactly what the CARES Act is and what exactly is expiring today. The CARES Act was signed on March 17th, and it provided a number of things to stimulate the economy within it’s $2.2 trillion write-up. One of which was that initial $1200 stimulus check many Americans received in April. Another was providing mortgage and eviction protections for many people and the last major section, which is the one we are talking about today, is the unemployment benefit that provided furloughed and laid off employees with an extra $600s weekly on top of their state’s existing unemployment benefits. 

So, this is a big topic this week and there are a ton of questions about it so let’s get those questions rolling in the comment bar and I’ll let you know what I know. 

The first question is, will I receive any unemployment benefits? The answer to that, in short, is yes. There is still some good news here. The CARES Act not only added additional funds to your state’s existing unemployment benefits, it also added some time. The bill adds 13 weeks of coverage so if you’re about to run out, you’ll get an extra 13 weeks. Most states offer 26 weeks of unemployment, so that means you’ll have 39 weeks total of unemployment in those states. So, depending on when you started receiving benefits, you might have some additional time left. 

I know there are so many of us out there saying, well, that’s not enough. Some states weekly payouts might not be enough to cover all of your expenses, that’s true. In fact, the average state payout is about $370 per week. The CARES Act addition raised that average to $970 per week and more 25 million people were depending on that. And while there isn’t an extension on that $600 check – yet, at least. We still have to talk about potential extensions that are in the works, we will get there – no extension yet though, so what should you do if your state’s benefits alone are not enough? 

We did a show back in May to talk about some great ways to increase your cash flow and some not-so-great ways to find cash fast. So, if you’re short on funds because of this expiration in extra unemployment benefits, watch this video that I’ll put in the comment bar for you now. 

Just to summarize a few things that you should try your best to avoid right now, those are cash advances and payday loans. The fees and terms on those are not in your best interest and in that video we talk about some things that can truly help you get some cash, so check that out, start at the 11-minute mark and that’s when I dive into those things. 

You might also be eligible for food and cash assistance both at a federal and state level. So check that out sooner than later. 

If you’re trying to plan for the next week or so and you’re not exactly sure when your last $600 check will come, I will put in an image in the comment bar that shows when the last check will arrive. 

So, when it comes down to paying your bills to keep a roof over your head, we need to talk about one thing and that’s your mortgage and rent payment. The first thing to note is that there is a federal eviction moratorium that protects people in housing with a federally backed mortgage. That expires tomorrow. After that, landlords can issue a notice to evict but can’t remove tenants for another 30 days. 

A month ago, we did a show that answers the question: Can I be evicted during the pandemic? We talk a lot about who has eviction protection, what to do if you can’t make your rent or mortgage payment. Plus, we discussed how the eviction process works and some of the rights you have as a tenant. Check out that video in the comment section.

Now, let’s talk about whether there is more relief coming. Is the government going to renew some of the financial relief programs from the CARES Act that are expiring? The answer to that is, well, probably. There is a new bill proposal that was release on Monday called the HEALs act. H.E.A.L.S. it stands for Health, Economic Assistance, Liability, and Schools.

The Associated Press said that in this proposal, there is talk of a $200 per week supplemental unemployment check to replace that $600 check. So, you’d recieve an additional $200 per week through September and then after december you could recieve up to $500 additional but no more than 70% of your income. 

There’s also talk of some other extensive national aid including:

  • Aid for schools
  • An extension to the payroll protection programs and additional tax credits for companies who continue to hire new employees right now
  • COVID testing and tracing funds
  • Student Loan Relief for those without an income
  • And finally, a second round of stimulus checks for Americans to help drive the economy 

Those check will mirror the CARES Act in that they’ll be $1,200 for Americans who earn less than $75,000, and an extra $500 for each independent, this time with no age restriction on those independents. Just like the last round, the amount of your check with decrease by 5% of your income above that amount. 

And finally, the biggest question is, what is the timeline for this new bill? Congress has until Aug 7th to reach a deal and then from there, the president has to sign it. And if the deal is finalized, a second round of checks could be sent as early as the end of august. Here’s something to note, if congress doesn’t finalize anything by then, there could be delays in all of this until September, so, these next couple of weeks are big ones. I’m going to make sure I stay as up-to-date as possible on all of these topics, so make sure to like and follow our page because I’ll be giving updates on all this stuff as soon as I get enough information for you. 

But as of now, that’s all the updates I have on this topic. If you have any questions about this you’d like me to answer, please feel free to throw them in the comment bar, send me a FB message, or email me directly at Askabby@creditanddebt.org. If you’re facing trouble with your debt right now, please remember that our coaches are you for you now more than ever. Our coaching sessions are free, there’s no obligation, and they can give you direction that’s completely customized for your circumstances. 

If you would, please share this post. There are 25 million Americans looking for answers to these questions and it’s not always so easy to navigate the multitude of headlines that are coming our way in this COVID-19 world. Also, make sure to like and follow our page because like I said, I’ll be giving you updates on these topics as soon as I get them. Thank you again for watching the show and don’t forget to tune in next week for more tips, tricks, and updates on all things credit and debt. See you soon.

Resources

Ask Abby

How do I pay my loans during the pandemic?

Are you paying your student loan payments right now? And even bigger questions do you HAVE to be paying your student loan payment right now? With the changes in the economy due to the pandemic, there have been never-ending updates about what payments you have to make, which ones you don’t, who do you need to call? Is interest accruing?! AH! I know, it’s a wild financial world we live in but I did the research and have the answers to all of these answers for you today. 

Hello and welcome to our LIVE facebook show, Ask Abby, that makes me Abby, and you ready for some answer about this pressing topic. We are talking student loans during this crazy COVID-19 world we live in. What are your options? Do you have to make payments? Should you be making payments. Great questions, so let’s dive in with the basics. 

There are two types of student loans, federal and private, and each one has some different options. So to start, the CARES Act, which became law at the end of march, suspended all FEDERAL student loan payments and reduced interest rates to 0% until September 30. So, probably two more deferred payments on your student loans right now. If you have federal student loans, you didn’t have to make any changes to your accounts or contact your servicer, your payments were automatically delayed. That even goes for people who had auto payments. People who have auto payments set up shouldn’t have had those payments processed and if you did, between March 13and Sept 30, contact your servicer for a refund (if you need to).

The questions is, Should you be making your payment? If you can, absolutely, especially with that 0% interest rate. The more you pay it down now, the more is going directly to that principle balance, so that’s a big fat YES from us. If you had automatic payments set up, you’ll either have to go in and manually pay your loans for these months or call your servicer to let them know you’d like to continue having that auto payment processed. 

If you have more questions specifically about federal student loans and the CARES Act, through those in the comment bar, or check our this FAQ page that really goes in depth on the specifics: 

  • FAQs for Federal Students Loans: https://studentaid.gov/announcements-events/coronavirus

Now, what about private student loans and the CARES Act? Unfortunately, there are no protections for students with private student loans included in the CARES Act. That said, there are still some options out there if you’re having a hard time making those payments. Chances are that if you were impacted financially due to COVID-19 changes, you’ve been trying to find a way to reduce some of your payments. Many servicers provide borrowers the options to defer at least two payments per year. 

Some states have passed laws that call for deferment. If you’re wondering if that includes you, check out your state’s attorney general offices.

And if you’re looking for forbearance options, call your servicer, many of them are understanding of the current circumstances. One big tip, it’s best to do this BEFORE you miss a payment. If you have already missed a payment, you can’t go back and count that one as a forbearance payment and if you don’t pay that, you’ll be facing late or delinquent reports to the credit bureau. 

We talked about the HEALs Act, which is still in the works right now, but there’s no talk of extensions on any of the CARES Act protections. So, what do you do after Sept. 30th, – or even right now – if you can’t pay those loans? 

  1. Call our coaches. We can connect you with a student loan expert who will look through all of your options to defer, reduce or maybe even forgive your student loans. Plus, if you have other debt payments that are causing your any trouble right now, they can look at that too. There’s no cost to call them, so give them a ring and they’ll talk you through your options
  2. Switch or modify your payment plan. Sometimes, you can adjust your repayment plan to be based on your income. So, if your income has been reduced and you’re having trouble making your payments, you have the option to do that without having to go through a refinance. If your income is below a certain number, these programs will change your monthly payment to $0! So, if you’ve been laid off, furloughed, or taken a major pay cut, make sure to apply for an income-driven repayment plan. If you’re already on the income-driven repayment plan and you’ve faced the same type of financial circumstance, you can apply for a recalculation of your monthly payment, potentially lowering it.
  3. Another option for reducing your student loans payments – and a potentially good one for you if you have private student loans is to consider a student loan refi. I’m not going to get too deep into refis because we did a whole show on student loan refis, which I will put into the comment bar now… 
    1. Why, when and how should you refi your student loans? https://www.facebook.com/114214120221201/videos/283553829393296

So, if you’re wondering exactly how that process works and if it’s right for you, check out that video I did earlier in our student loans series. 

There’s a lot of question whether more student loan protections will come up in the next couple of weeks, and there’s a good chance there will. If you missed Wednesday’s show last week, check it out in the link in the comment bar. It’s in there now. 

We talk about unemployment protections, eviction protections and even the potential for another stimulus check that could be headed your way. This is all based on the HEALS act which is in the hands on Congress right now. If it passes, some of these new laws could go into effect as early as this month. If not, any sort of relief could be on hold until September because there is a federal recess. So, rather than scraping through headlines and reading dozens of articles, just follow our Facebook page and opt-in for notifications when we go live because I’m staying on top of this stuff and I’ll make sure I let you know when something changes, which could be as soon as later this week! 

If you have other questions about student loan options, you can give our coaches a call or ask me question in the comment bar, on Facebook messenger, or even email me directly at askabby@creditanddebt.org

Before I log off, I have one big announcement. Our new platform, full of awesome financial tools is going LIVE this month! And we’d like some test users to explore the tools and resources before the big launch, so if you’re interested in getting a sneak peek, shoot me a message or an email and I’ll let you know how you can sign up for that sneak peek. 

That’s it for our show today guys.  I will see you Friday for a special show on Parent PLUS loans, what those are all about, whether or not you should take them out. So make sure to keep an eye out for that. And lastly, like and share this post so that your FB friends get this student loan advice during a crazy financial time. Thank you so much for tuning in and we will see you next time on Ask Abby!

Resources

Ask Abby

How do certain actions affect my credit score?

Hello everyone and thank you for tuning into Ask Abby, our live show where we answer all of your questions about credit, debt and your finances. We are waist-deep into our series on CREDIT SCORES. We have talked about the basics and done 2 full shows answering questions like; Why should you care about your credit score and How do you improve your credit score fast and quick.

This week, we have TWO great shows for you. Today we are talking about credit score specifics – answering the question: How much do certain actions affect your credit score? Someone asked this question during one of my last shows, so we are going to get this answered today. So, for example, if you close a credit card account, how many points will your score fall? If you pay your mortgage on time, how much will your score increase? These are all great questions and we have answers for you today, so don’t tune out.

But before we get into that, if you’re still thinking “why should I care about my credit score? Watch this video. Why should you care about your credit score? Here’s why: https://www.facebook.com/114214120221201/videos/666221233933527

Then come back, and let me know what you think, if I was able to convince you to care or why you still think it’s not important, I want to know! If you have no idea what a credit score is or how it works, watch this awesome video by Basic Finance: https://www.facebook.com/114214120221201/videos/297509481376175

Let’s dive into today’s topic and answer some pressing questions on EXACTLY how much each action your take or how each credit score factor affects your score.

5 major factors come into play when determining your credit score:

  1. Payment history
  2. Amount of debt (credit utilization ratio)
  3. Age of account or credit history
  4. Mix/types of accounts
  5. New credit inquiries

Today we are going to talk about the exacts of three of these, but if you have specific questions about how a certain action might affect you, make sure to throw it in the comment bar and I’ll get that answered!

Today we are going to talk about the exacts of three of these, but if you have specific questions about how a certain action might affect you, make sure to throw it in the comment bar and I’ll get that answered!

Payment history accounts for 35% of your credit score. Your creditors and lenders usually report to the credit bureaus every 30 days. So, the question is, how much will one late payment affect my score? Well of course, it depends. And it depends on a variety of factors.

  1. How long ago did the most recent late payment occur?
  2. How severe were the late payments (30 days, 60 days, charged off, etc.)?
  3. How many accounts on the credit report have had late payments?

So, while all of those are factors in this case, the weird part about all of this is, that the better your score is, the more your score will decrease due to the effects of something like a missed payment. For example, credit.com said that a FICO score of 780 could drop by 90 to 110 points due to a late payment.

That said, because a missed payment accounts for such a huge percentage of your score, other actions might not negatively or positively affect your score more than that. According to Vantage Score – a credit scoring model- payments are the #1 impacting factor, followed by credit utilization ratio, closing an account and lastly, applying for/opening an account.

So, while your score might not go up or down by an EXACT number of points with a late or on-time payment, you can assume that to increase your score to your started place will probably take about 9-12 months. Which means in the case of the person with a 780-score, they will increase by about 10-12 points for every month of on-time payments if you’re trying to repair.

The next factor that really affects your score is your credit utilization ratio. So, let’s say that you have a maxed-out card. What effect does that have on your score every month and if you pay it off, how much will your score change?

Well, credit utilization accounts for 30% of your overall score, which means that it has about as much effect as your payment history. So, if you have a maxed-out card, that means your credit card utilization is at least 100%. The magic number for credit utilization is 30% or lower. So, if you have a credit card with a limit of $1000 and you pay off $700, your credit score will increase – assuming that all of your other accounts are in good standing or moving in the right direction.

In a particular study, someone had a maxed-out credit card with a balance $3600 in October. By December, they paid off the account and their credit score increase by 42 points. They still have a fairly significant balance on one of their other cards, in fact, had increased that balance a bit and were still able to improve their score by focusing on that one card with the highest credit utilization rate.

As you can probably see by now, the calculation of your credit score is very circumstantial. If you’re wondering exactly how some of this will affect you based on your credit score, Credit Karma has a really cool free tool that will take your credit report into account and give you options to simulate these different articles. Credit score simulator tool: https://www.creditkarma.com/tools/credit-score-simulator

Paying off debt to improve y our credit score is much easier said than done and I get that. So, if you’re looking at your total debt, facing a layoff or furlough, and realizing you’re not in a position to just start paying down your cards, Credit and Debt has free credit and debt coaching available. If you call us, our coaches will talk through your situation, work to understand your exact circumstance, and then lay out some options for you. We have different programs available and will explain in detail how each of them works and walk you through the process and how your credit score can improve and your debt can be reduced.

  • Call our coaches at 866-250-6624 or go to creditanddebt.org to learn about our free credit and debt coaching.

If you’re just curious about how you can improve your finances, go to our site and sign up to be one of the first people to be notified when our platform goes live! You’ll be able to sync your accounts and use some awesome tools that you can’t find anywhere else. The tool basically gives you all the benefits of coaching without taking the time to make a call if you’re too busy! The best part? If you end up having questions, our coaches are all available.

Our platform is launching SO SOON. So, if you want to be included in the first release, with free access to our tools and calculators, go to the site and sign up!

Another factor that will change your credit score measurably is applying for new credit. This factor only accounts for about 10% of your total score, but it’s still something to watch out for. If you’re applying for a credit card, your score will likely drop by about 5 or 10 points. In the case of credit card applications, sometimes your score will decrease even less than 10 points but sometimes more like if you have a lot of other recent inquiries (1 year or less). If you’re new to building credit, a hard inquiry can affect your score more, but don’t be discouraged! It will still bounce back.

It takes 2 years for a hard inquiry to fall off your report and there’s nothing you can do to speed up that process. But, if you are keeping an eye on the amount your score dropped after a hard inquiry, it usually only takes about 3-6 months for your score to bounce back. The big question is: let’s say you had 6 hard inquiries this year for just credit cards– which can be a big red flag on your report – in 2 years, when those fall off your report, how much will your score go up? The short answer in this case is, it probably (and hopefully) won’t. Why do I say hopefully? Because usually, hard inquiries have less effect on your score the longer they are on your report. So hopefully, by the time they drop off after two years, your score has already fully recovered. Ultimately, the bigger factors after about 1 year fall back to your payment history and credit utilization and credit history. If you rack up major balances on those 6 new credit cards, your score will go down. If you utilize your cards under the magic 30% number and keep them paid off, your score will increase. Keep in mind, this example is just relative to credit card inquiries, home loans, personal loans and auto loans are another topic that we will talk about!

So, we only talked about those three main factors today in regards to how actions relative to each of them affect your score. Just to summarize, if you have a late payment but then continue to make payments on time from there, your score will increase by about 10-12 points for every month of on-time payments. If you decrease your credit utilization ratio significantly by paying off a maxed-out card, your score could increase dozens of points! Remember that magic number is 30% for credit utilization. And lastly, your hard inquiries for credit cards, which are much easier to keep a handle on, can decrease your score by about 5-10 points each time, so just make sure to keep track of those and try to avoid applying for more than 2 cards per year!

That’s our show today guys. I hope I answer some pressing questions about credit score factors but if you still have questions, please don’t hesitate to ask! You can post a comment on this post or email me directly at askabby@creditanddebt.org. Please share this video because I have gotten so many questions about this topic. And take just 1 second to punch that thumbs up button! Lastly, don’t forget to tune in on Friday for our Ask Abby special feature going out to all those college students out there. Thank you again for watching – see you soon!

Resources

Basic Finance

The Importance of Planning Your College Finances
The Cost of Your Degree (Part 1)

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