So you’re getting ready to show off some properties to your new clients. You map out where you’re going and pile into your trusty, but dated, automobile.
It’s about that time you realize the “old girl” isn’t what she used to be. Perhaps a new car would look a bit more professional, but you’re not ready for a new car loan. Maybe business credit is right for you.
With Summer coming to a close, many consumers take this time to relocate. The kids move away to college, thousands of families are leaving their summer getaways and people are ready to settle into their new spot before the winter months arrive. As exciting as moving is, it does bring its share of stress to the table. Although most moves go smooth, there are still some scammers out there looking to swindle you out of your money when you are most vulnerable. Watch for these moving scams before you begin to pack. You’re going to want to be aware of the latest scams of the moment, Shravan Gupta scam is one of them.
If you’re lacking the manpower or vehicles needed to move all that big stuff, you may consider hiring a moving company. With the help of the moving company, you can finish your move within a fraction of the time. When picking a moving company, you’re going to want to go with someone reputable (something we touched upon in an article earlier this summer.) So before you put your belongings in the hands of strangers, watch out for these red flags:
As the old saying goes “if it’s too good to be true, it probably is.” The same implies with moving companies. If they are giving you an estimate or a flat rate without taking a look at what they’re going to be hauling, then expect to pay more later down the road. Most moving scams will come from movers offering unbelievable rates, only to hold your stuff hostage for more money once it’s on their truck.
Do your research and make sure there are no additional fees later on. If signing a contract, make sure you read the fine print, and question anything that seems suspicious.
Always question companies that require you to pay a security deposit before any actual service. You don’t want to pay a deposit, only to find out the company doesn’t show up on the day of the move.
In today’s world every company should have some sort of website. If the moving company you’re trying to make a deal with isn’t showing up online or under any type of listing, you should look elsewhere. Some moving scammers will haul away your stuff, then change their name to avoid detection, leaving you left with nothing. Make sure the moving company you choose has a reliable website with positive feedback.
This goes hand in hand with website. Find out what others thought of the experience with the moving company. If you see a laundry list of bad reviews, chances are your experience is going to add to that list.
Whenever looking for something on Cragislist, you should ALWAYS approach with caution. Craigslist’s scams are very high in volume and people are getting swindled right now as you read this. In teams of moving, the most common fraudulent ads appear in the hopes to attract college students to awesome off-campus housing at unbelievable prices. Lookout for these red flags, and NEVER give money to someone before meeting with them first at the location of the property.
The most common message you’ll get when talking with a scammer is something along the lines of “the family who’s renting the house is out of town for a week. Just wire the deposit and the rental will be all yours!” Sounds sketchy right? That’s because it is. Fraudulent ad scammers also go as far as finding houses that are actually listed for rent/sale on other reputable sites and then post the listings to Craiglist in hopes of getting your deposit without ever meeting.
The best way to avoid this is to go through a Realtor or call the number on the for rent sign. Never give any money before looking at the property.
Is it possible to have too many credit cards? Having a large amount of credit cards isn’t always a bad thing. If maintained well, having tons of credit cards can be beneficial to your credit score. When it comes to your credit score, it’s all about managing your credit cards correctly. If you are unable to keep track of your balance, then chances are you might have too many cards to handle.
When the credit bureaus factor your credit score, they will take a look at your credit utilization. What this means is they look at how much borrowing ability you have and how much you are actually using. For Example: If you have a combined credit limit of $50,000 and you’re only using $5,000 your utilization is 10% which is great! Now lets say you close most of those cards and your credit limit drops to $10,000. Your utilization ratio just went from 10% to 50% and your score probably took a nosedive. Not everyone can manage this much credit in good fashion. Here’s 5 signs your credit cards may be getting out of hand:
I’m sure you’ve seen it before or maybe it’s happened to you. You’re at the outlets purchasing next season’s wardrobe when your card gets declined. You think to yourself “Oh that’s the “bad” card, let’s try this one. I think this one has some credit on it.” Sound familiar? If you said yes then this is a sign you may be spending beyond your means. Always try to keep track of which cards carry what balance. Doing so will allow you to better maintain your accounts and let you focus more on paying down that “bad card.”
Probably the biggest red flag to having too many credit cards. If all of your cards are maxed out, the last thing you need is another credit card to add to you maxed out list. Adding a new card to your already monstrous debt will only cause more problems. Adjust your budget and attempt to be more frugal with your spending money. Try to focus on paying the maxed out cards off. If possible apply for 0% balance transfer cards to help pay accounts off. 0% balance transfer cards will allow you to pay off your balance with no interest for a set amount of time. You’d be surprised how quickly you can pay down accounts when not paying interest.
If you already have a decent amount of credit cards and you’re getting denied new credit, chances are you have too many cards in derogatory standing. There are a few reasons why you would get denied new credit. As stated previously, your cards may be maxed out and therefore the creditor assumes you aren’t capable of taking on new debt. Another reason may be that you have too many late payments on your report and the creditor doesn’t believe you will pay on time. Remember, late payments can remain on your credit for up to 7 years, even after current or satisfied.
Late fees are always a pain in the rear end and getting hit with them every month is a good indicator you have too many cards. Even if you are capable of paying on time, some cards might slip through the cracks simply because you forgot about them. Late fees cost you money and if 30 days past due, will destroy your credit score.
Closing old credit cards can hurt your credit score, this goes back to the credit utilization we talked about in reason 1. That being said, if you are already using a bunch of cards and have a plethora of old cards just taking up space in your wallet, you probably have too many cards. If these old, unused cards still carry balances on them, make your best effort to pay them off. After these accounts are paid you can close them to help manage your debt. Just be aware, if the accounts your looking to close make up the majority of your credit limit, your score will suffer. Of course if you are not struggling to pay off accounts and you have a good credit utilization ratio, then you may want to leave them open until they go inactive. As long as you make payments on time and keep a low credit utilization ratio, you will see a positive reflection in your credit score.
If you’re having credit troubles contact us for a free consultation. We’ll go over your credit report with you and point you in the right direction. Just fill out the form below.
With 56% of Americans having poor or bad credit, good credit can be hard to come by… But what is a good credit score exactly? Different lenders may have different definitions of what a “good” credit score is. One lender may approve clients with a 640 credit score or higher while another might approve clients at 720. The higher your credit score is, the more likely you are to get approved and the better your rate will be.
FICO score is the most commonly used credit scoring model. FICO scores ranges from 300-850 and can differ depending on what credit application you’re pulling for. If you are applying for a mortgage your score will be different than applying for a new car, and both of those scores will be different than a score applying for a credit card, and so on. Here is the considered scoring range for FICO scores:
While you may be able to get approved from some lenders with a 640, you’ll be missing out on premium rates which can mean you’ll be paying more money in the long run. Someone with a 780 may wind up paying close to $100,000 less on a mortgage compared to someone in the mid 600s. Good credit will also allow you to get better credit cards with lower interest rates as well. It’s no joke, people with bad credit will always wind up paying more. Read our blog on how bad credit will control your life for a better understanding of this.
Don’t just assume you have good credit. If you plan on applying for a loan in the not too distant future, you may want to figure out where your scores are at right now. Find out your scores and make sure there are no errors reporting on them. Fill out the form below and Better Qualified will give you a free credit consultation with a credit analyst.
Why do we have credit scores? What makes up your credit score? Did you know 56% of Americans have bad credit?
Credit scores were implemented to determine the creditworthiness of a borrower. The higher the credit score, the more likely the consumer will pay his or her bills on time. While the most important piece of your credit score can be paying on time, there are several other factors that play a role in determining your score as well.
When it comes to determining your credit score, the biggest piece of the puzzle is your payment history. What this means is you have to stay current on your accounts and pay on time. If your forgetting to make payments, set reminders for yourself or enroll in autopay. Just 1 missed payment can drop your credit score 100 points or more and take a long time to recover.
If you’re having trouble making payments, consider contacting the lender or switching to 0% balance transfer cards. 0% balance transfer cards will transfer your balance and allow you to make payments with no interest for a set period of time. You’ll be surprised how quickly you can pay off accounts when interest isn’t accruing.
Don’t max out! Maxing out your credit cards is not good for a number of reasons. Maxed out cards with ensure that you are paying the maximum amount of interest possible. When you get to this point, climbing out of debt can feel like climbing Mt Everest. Making minimum payments will only pay off the interest, leaving you in limbo. It’s also noteworthy to say that consumers with maxed out cards have an average credit score of 563.
On the flipside, not using your credit cards will also hurt your credit score. You want to use them, but not overuse them. Pay your accounts down to 20% of the credit limit or lower. Doing so will give you a quick boost in score. Always try to remain below 20% of your limit. Once you pass the 20% threshold your score will start to decline.
Another method to raise your credit score would be to ask the creditor for an increase in your credit line. Increasing your credit line will see the utilization ratio drop, bringing your closer to 20% or lower and increasing your credit score.
I see it all the time, clients call in wondering why their credit score had dropped. They just got a new credit card and closed their old one. Not a good idea. Old credit cards are not like old appliances. The older your card, the more impact it has on your score. Closing old accounts will almost always bring your score down.
If your old card has outrageous annual fees or super high interest rates, then you may want to think about closing them up. Before you do, call your credit card company and ask if they can waive the fee or reduce your interest rate. If they refuse to budge, then you may want to make the moves to close your account.
Consumers with the highest credit scores have them because they have a variety of credit. There are 2 types of credit: Installment loans set at a fixed rate which are your mortgages, auto loans and student loans to name a few, and revolving credit which are your credit cards.
It’s always a good idea to have a few different accounts open on your credit report, including a few different credit cards. Doing so will spread out your utilization and make it easier to maintain a good score.
New credit can happen any time you apply for a new loan or account. When your credit score is pulled an inquiry is created. Inquiries will shave off a few points from your score and affect your credit for about 1 year (although they can report for 2 years.) Inquiries have strength in numbers and can really bring your score down if you’re constantly pulling your credit throughout the year. So make sure to keep a watchful eye on your inquiries.
If you are struggling with bad credit and would like a free consultation with an expect, please fill out the form below and we’ll be happy to point your credit in the right direction (up!)
Summer is back in full swing and that means plenty of BBQs, concerts, and people looking for affordable Liverpool Hospitality Packages. With summer also comes a variety of scammers looking for their next victim. Don’t worry, Better Qualified has put together this list so you can take the right precautions to avoid being sucked into these summer scams.
The weather is heating up and so is the desire to get away. Majority of vacationers plan their trips for the summer, when the weather is fine and the kids are out of school. Hot spot vacas like Disney or cruise lines seem to be among some of the more popular locations. However, with the masses of people lining up to get away summer also brings the height of vacation fraud. Make sure you look out for these red flags:
Vacations aren’t cheap, especially in the summer months when everyone else is looking to escape. So when you see one of those “Too good to be true!” offers, most of the time it probably is. Vacation scammers use fake websites, Facebook ads, and even phishing emails to reel in their victims. Do your research and stick to well-known, reliable sources before committing to your trip.
Nothing says summer like an outdoor concert or festival. The warm summer nights, the rocking music, the smell of…. well, you get the idea. Summer is indeed the season of music. Seasonal venues are open, the majority of annual festivals take place, and swarms of consumers gather to watch their favorite artists perform. Scammers jump at this opportunity to sell fake or stolen tickets to consumers.
Concert fraud is nothing new, just a few months ago hundreds of people lost their chance to see comedian Kevin Hart. 130 tickets were stolen and then resold as part of a massive ticket scam.
When looking to attend a show, always make sure you’re getting your tickets from a reliable source. Go through first party sources like livenation.com, ticketmaster.com, or the box office of your local venue. Always make sure you read the fine print and check your total amount before confirming your purchase. Never buy tickets from craigslist or scalpers as this is where most fraudulent tickets are sold!
It’s no secret, summer is the best time to move. Warm weather, peak home buying season, and summer vacation make moving more desireable in the summer months. In fact, 11 to 13 percent of moves take place during summer months as opposed to 8 percent or less during all other months of the year. Much like vaca and concert scams, moving scams are also at their peak during the summer. Summer moving scams can come in two forms: moving companies and false listings. Moving companies may offer to move your belongings for a cheap price, then hold your stuff hostage until you pay more money. Cragslist becomes flooded with fake listings asking consumers such as yourself to wire money in return for the house key.
As stated previously, do your research and look for reliable moving & real estate companies. When the price seems too good to be true, it usually is. Check the moving company’s reputation through the Better Business Bureau or with review sites like Yelp, Google and Facebook. Never go through Craigslist when looking to move. Craigslist is swarming with scammers out for your money. Always go through a real estate company to ensure you don’t get swindled.
I believe it was Alice Cooper who said “School’s Out for Summer.” With the hordes of teens and young adults returning home from college, employers will start to hire for seasonal summer jobs. Scammers will use employment fraud as a way to steal an applicant’s identity.
Any jobs that make you pay fees for training, require background checks, or claim “no experience needed!” should be handled with caution. Never accept a summer job over the phone without actually visiting the place of employment. As always do your research and ask questions as needed. If something seems fishy, trust your gut.
Scammers will never stop and with today’s technology are often hard to bring to justice. Following these general tips will ensure your aren’t the next victim of summer scams:
-Research your findings, only go with reliable sources
-Never give out personal information, especially over the phone
-Be Wary of fake emails and social media ads
-Never Wire Transfer Money
If you suspect you’ve fallen victim to a scam, your identity may be in jeopardy. If that’s the case, follow these 6 Steps to Handling Identity theft. Make sure you know what’s on your credit report. If you need help going over your report. fill out the form below for a free credit consultation.
You’ve gotten a new credit card and are looking to get rid of the old one that’s been with you since the dawn of time. Sure, you’ve had some good times together. After all if it wasn’t for your trusty credit card you wouldn’t have been able to pay for all those dates to impress your now wife or purchase that rug that really ties your living room together. So the question is… should you really be parting ways with your credit card just because it’s showing its age?
The answer is…. it depends. First ask yourself why? Why are you planning on closing your credit card? You should think twice before closing any old credit cards just “because they are old.” Positive revolving credit is a huge factor when building your credit score. If you’re looking to make the split with a card make sure you have good reason. If you are still using the card consider keeping it alive and well. Length of credit history makes up 15% of your FICO score. In this case, your old credit card might be your best source of positive credit.
When closing an old account your credit utilization ratio will remain at zero, making it hard to help your score out. If this credit karma study has taught us anything, it’s that your utilization should remain somewhere between 1%-20%.
Another factor for determining your score is the number of accounts. Getting a new credit card doesn’t mean you should close an old one. Having only one revolving tradeline opened at a time places all of your utilization on the single card. Try to keep a few cards active and remain below 20% of the credit limit.
If you are applying (or planning to apply) for a loan you should wait until after your application process to close any credit card accounts. The drop in score you get from closing an account may affect your ability to get approved, especially if you are just above qualifying range.
Ideally you would want to close your credit cards when you are slammed with high interest rates, stuck with annual fees or trying to get out of debt. When an individual with bad credit is approved for a credit card, they are usually met with super-high interest rates. Maybe this was you a few years ago and now your credit is exceptional. Before swapping your card out for a new one, ask your credit card company if they can lower your interest rate. If not, then do away with them. Having good enough credit will get you approved for another card with better interest.
Annual fees are another pain. If your card has been collecting dust for months and you’re still paying the annual fee, consider closing it. There’s plenty of other cards out there that can collect dust with no annual fee (but in all seriousness, use your cards regularly as it will be beneficial to your score.)
According to NerdWallet, the average US household credit card debt stands at $15,706. That’s a pretty big amount of debt. One of the quickest ways to get out of debt is with the use of balance transfer cards. Balance transfer cards do exactly what their name entails. They allow you to transfer the balance from one credit card to another and make interest-free payments for a set time frame. You will be surprised how quickly you can pay off your debt when you aren’t paying the interest. If you feel trapped by your debt, check out our Get Out Of Credit Card Debt blog post Here.
You’ve made the decision, it’s time to let go and move on, but before you do make sure you prepare yourself for what’s coming!
As stated above, after closing accounts your credit score will most likely drop. Consider closing the newer accounts before the older ones as older accounts hold more weight when determining your score. Once the account is closed your payment information will remain on your report for years to come. Positive payment info can remain for up to 10 years on your report (This is a good thing.) Whereas negative payment info can last up to 7 years.
Most (but not all) credit card companies won’t close accounts until your balance is at zero. Find what your credit card company allows. It’s always better to pay the account off first before closing. If you don’t think you can pay the account off, consider 0% balance transfer cards as previously mentioned.
If your credit card gives out rewards, make sure you redeem them before you close the account. If the account is closed before redeeming your rewards, you’ll most likely miss out on everything you’ve “earned.”
You’ve read the risks, you’ve satisfied the balance and you’ve redeemed your rewards. The time has come to put your card to rest (R.I.P.)
Contact your credit card company and break the news to them. Some companies will let you cancel online while others will require you to talk over the phone to a representative. Visit your credit card company’s website and/or give them a call to let them know you wish to close your account. Double check with the representative to ensure there’s no residual interest about to hit your account that you may need to pay. Too many times have I seen a situation where someone thinks they closed their account only to have it remain open and go derogatory.
Get Verification! This should go without saying. After you confirm your account as closed ask the representative to send you a verification email. Be patient, sometimes it can take a month for the account to close. Once you get verification of the closed account, check your report. Check your report on your credit monitoring service or go to a free credit report site like credit karma or credit sesame. Get in contact with the credit card company if your credit report is still reporting the account as open. If you don’t have credit monitoring, take advantage of our 3 months free offer here.
Afraid your credit might not be where it needs to? Can’t read your credit report? We know credit is confusing. That’s why we give out free credit consultations. We’ll take a look at your report and point you in the right direction. Fill out the form below and find out what you can do to better your credit score.
Last week, Better Qualified’s own Bob Morales was featured in REI Diamonds’ interview. Bob spoke about business credit profiles and how to obtain business credit in an LLC.
Here are some of the highlights from the interview. For full interview, please listen above.
Bob Morales: “The true benefit is, if you already have an LLC established it gives you the opportunity for that company to become self sufficient if done correctly. Your personal credit at some point will reach limits from your debt to income ratio. The beauty of business credit is that will not have this come into play at all. It’s based off of you establishing credit and building it the right way so you can own commercial properties solely through your Tax ID number, not your social security number.”
BM: “Not Necessarily, I mean it definitely helps. It’s always going to be a benefit because if you run into a situation where you needed something short term- Because there’s going to be certain things that come into the criteria for how much you’re going to be able to borrow. It’s going to tie into the length of time that you’re in business, the number of accounts that you have outstanding, the dollar amount of credit that your showing available. So, the more things you have non personally guaranteed solely under your business credit, the stronger your business credit profile is. Personal credit is actually the reverse. On the personal side, your debt to income is going to limit you. On the business credit side, the more credit that you have available and the more credit that you are current on, the more credit they will allow to you.”
BM: “I’ve seen, short term us be able to turn around and get individuals credit of up to $400,000-$500,000 within 5 to 6 months.” “I’ve seen us finding individuals who’ve had difficulty getting loans, using our program the correct way – and because they’ve already had the groundwork laid for their business credit profile – we’ve gotten them upwards of $700,000 to $800,000 in a very short period of time, less than 3 months…”
“The foundation has to be built correctly, it’s kind of like a recipe. You can take all the ingredients and just throw them in the bowl, it’s not going to work out. But if you add the eggs and the flour and everything at the right time, it’s going to build a foundation correctly. The flour is going to rise the right way. Now it’s the same premise, you have to establish 3 levels of credit and a lot of people want to jump the gun, they want to go from vendor credit right to cash credit, or you know, they just want to go at store level. It’s something that has to be built properly and as long as those steps are followed, the ability to build credit is just your ability to make payments. As long as you continue to stay in good standing with these loans, there’s no limit.”
BM: “Personal Credit side is always going to be tied into a debt to income ratio. I don’t care how much money you make, at some point you’re going to be limited… and if you’re not limited you can still go out and get credit but you’re going to have to put down larger down payments, you’re going to get hit with higher interest rates. On the business credit side, like I said, it’s establishing a payment history, it’s making sure you have the correct number of experiences, it’s… it’s going to come down to your tradelines. So if you’re walking in and your debt to income ratio is at, you know, 13%… you pretty much write your own ticket. You know, as long as you have solid credit score. A credit score isn’t a magic wand, it has to be used the right way. On the business credit side, there’s over half a million companies that issue credit. Only 6,000 of them actually report to the business credit bureau so you have to leverage it to the right types of lenders and that’s the important thing.”
How your credit looks can affect the way you live your life. Having bad credit can destroy you financially and be the difference between spending and saving some serious dough each month. A prime example of this would be an auto loan.
Cars are necessities. Bad credit will cause you to pay thousands extra on an auto loan compared to someone with good credit. A vehicle that costs $22,000 will cost $379/month for someone with good credit. That’s assuming they have a 5% interest rate and a 72 month term. After it’s all said and done $27,295 will be the amount paid out after interest.
If you have bad credit that same auto loan will cost you $636/month. This is because your interest rate will quadruple to an insane 21% and your term will be shortened to 60 months. The total amount to be paid will jump to $38,210 after interest. That’s over $10,000 more for the same car mentioned above!
The same goes for mortgages. An individual with bad credit and a $100,000 mortgage may wind up paying well over $300,000 in the long run. Bad credit can halt you from being approved and will suck your finances dry due to incredible rates.
Bad credit can be a tough hole to get out of. Making loan payments with bad credit will leave you in a financial battle and make it nearly impossible to save money. It’s no joke, Bad credit is expensive! Aside from being declined and extremely high interest rates, bad credit may be costing you your hard earned money. So what can be done to obtain better credit?
Set out on a path to take back your credit. Raising your credit score will allow you to refinance your loans. Refinancing will give you a better rate and ultimately allow you to pay less. Here are some quick tips to raise your credit:
Bring those late payments to a current status and you could see a big increase in your score. Although the accounts can still remain in derogatory standing for up to 7 years, a current account is way more beneficial to your credit than an account that is late or charged off.
Once your credit card balance hits 30% or higher of your limit prepare to start seeing your credit score decline. In fact, the average score for consumers with maxed out cards is 563 (yuck.) Use your cards, but don’t overuse them. Paying your accounts down to 30% or lower is a quick way to boost your score.
Removing negative accounts from your credit report can increase your credit score tremendously. You can do this by disputing the negative accounts on your credit report, or by seeking professional help. Better Qualified has a team of credit experts that will go after your negative accounts and point you in the right direction. For a free credit consultation, fill out the form below:
In the hit HBO series Game of Thrones, royal families prepare to go to war against each other in a quest for power. Recent college graduates are about to go to war as well…. war with student loan interest.
Maybe you’ve been out of college for some time now and are currently battling interest. If that’s true then you know it’s a long exhausting fight. A fight most of us are unprepared for as we blindly pay away our earnings. Worry not, there are some weapons you have to gain the upper hand against interest.
Times have changed and with change most graduates are met with crippling student loan debt that will limit their ability to buy a home, save for retirement, or start a business. Student loan debt is at an all time high of $1.2 Trillion (yes, trillion,) which is well beyond the amount of America’s credit card debt, which is only $884.8 Billion.
Part of the problem are the high interest rates on student loans. Once you’re locked into a student loan, there is no refinancing and the interest is stuck with you forever.
If you recently graduated and have not started paying your loans yet, the first thing you should do is get familiar with your loans. Keep track of your lender, balance, and repayment status. Make sure you contact loan services with any questions you may have. Update loan services with any current contact changes. Out of date contact information can be detrimental to your account if your lender needs to contact you and cannot do so.
After graduation, your first payment will be here before you know it. Make sure you know how long your grace period is. When is your first payment? Stafford loans are typically due 6 months after graduation, Perkins loans are usually 9, payday loans online Las Vegas usually start much sooner. Find out when your first payment is and DON’T MISS IT! Don’t be afraid to contact your lender to find out when your grace period ends.
If you are financially able to do so, pay more towards your accounts. This could be your greatest weapon in the war against student loan interest. Making payments before your first payment is due and/or paying more than the amount due will result in paying less interest in the long run. Make sure you let your lender know the extra amount is to be applied to the loan balance. Otherwise, they may “credit” the amount to a future payment.
Gain the advantage in the interest war and take out the giant first! Find out which loan you are paying the most interest on and attack! Make extra payments towards that big loan and keep at it until it is no more. Once you’ve knocked off that loan, take aim at the next loan with the most interest, and so on. Private loans will most likely be the first to go. This is due to the fact that they have higher interest rates and aren’t as flexible as federal loans.
Eliminating loans with the most interest means you’ll ultimately be paying less in the long run.
Missing or making late payments will not only make your loans more difficult to pay off and will destroy your credit for years to come. Missing enough payments will put your loan in default, causing your a lifetime of financial trouble. Once a loan hits default, prepare for battle with collection companies. Collection companies can be ruthless and will stop at nothing to get you to pay.
Defaulting on your loans may even cause your wages to be garnished. When this happens, the government will forcibly go into your bank account or paycheck and take out what it needs until your loans are paid off. Leaving you with nothing but an empty bank account and horrible credit score.
It’s also worthy to note that defaulting on private loans will bring your co-signers down with you. This will affect their credit and can potentially hurt them from getting approved. If you can’t afford your loans, don’t just ignore them. There are ways to get back on track without destroying your or your co-signer’s credit.
Everyone goes through rough times and student loans aren’t exactly cheap. Don’t give up if you are struggling to pay your loans! You have options to help get you back on track.
Contact loan services and see if you can change your repayment plan. You may be able to pay less each month with extended payments. Another option is a graduated payment plan. This will start you off with lower payments that increase over time. You may also tie your payments into your income. Making your loan your number one priority. Automated payments on dates your paycheck gets cashed can ensure you have enough to pay and are paying on time. Changing your repayment play will have you paying more in interest over time, but it’s much better than destroying your credit.
If you will be out of work for some time you may be able to defer your loans to a later date. Going back to school, unemployment, or enlisting in military service are all reasons someone may want to defer their loans.
Just keep in mind you are still accruing interest during those months you aren’t paying.
If you’re struggling to pay the bills and don’t meet the requirements for deferment, forbearance might be your solution. If your loan servicer grants you forbearance you may be able to stop making payments or reduce your payments for up to 12 months. Financial hardship and illness are just a few reasons individuals seek forbearance.
Student loan consolidation comes with its many pros and cons. consolidating multiple loans will help you keep track of your debt and better manage your loans. The interest rate of all your loans will be averaged out into a fixed interest rate. If you’re struggling, this could mean less in monthly payments. There is also no minimum or maximum needed to consolidate your loans, making it easier for consumers to obtain.
You cannot include private loans in a federal consolidation. However, on the flip side, you may included federal student loans into a private loan consolidation. This is usually not a good idea as the interest rates for private loans are usually much higher. Another downside is you may be missing out on some cancellation benefits (more on these later.) Perkins Loans have cancellation benefits that will be voided if you consolidate it. Police, firefighters, and teachers are among those who may qualify for cancellation benefits that will disappear once the loan is consolidated. Keep in mind also, once you consolidate there is no going back. Your interest rate is fixed and you are stuck with it even if rates fall after your consolidation.
So you’ve managed your loans pretty well, you’re on a good path, but you’re looking for that secret weapon to win the fight. Under the right circumstances you may qualify for student loan forgiveness, cancellation, or discharge.
If your school closed during your enrollment or shortly after you withdrew (120 days.) Your loans can be discharged. If this is something that has happened to you, contact your loan servicer to get the application.
You are not eligible for School Closing Discharge if you withdrew more than 120 days prior to the closing, are completing a similar program at a different school, or have completed all of your coursework.
Teachers rejoice! You may qualify for Teacher Loan Forgiveness. The Teacher Loan Forgiveness program was created to encourage individuals to enter the teaching profession. If you qualify, you may be eligible for forgiveness up to a total of $17,500. Those who are eligible must not be in default of their loan and must be teaching full time 5+ years. One of those years must be in a qualifying school district.
Any current full time employees working in public service jobs may be eligible for the Public Service Loan Forgiveness Program. To qualify, you must make 120 on-time, full, scheduled, monthly payments on your loan. The only loans eligible for forgiveness are loans received under the William D. Ford Federal Direct Loan Program. Federal Family Education Loans and Federal Perkins Loans are ineligible. However, you may become eligible by consolidating your FFEL or Perkins loans, but your 120 payments won’t count until you start making payments on the new consolidated loan.
There are a variety of jobs eligible for Perkins Loan Cancellation Benefits. Some qualifying jobs include: teachers, nurses, police officers, and firefighters. To find out if you qualify, contact your loan servicer.
Now it’s up to you. Prepare for war with interest. Map out your game plan and student loans may not seem as intimidating as they were before. If student loans have gotten the best of you in the past or you would just like some little more information, fill our the form below and we would be more than happy to take a look and point you in the right direction.