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3 of the Best Financial Decisions You Can Make Right Now

Financial health is every bit as much of a state of mind as it is a course of action. When you set ahead of time what you are going to do and stick to it, you can escape some of the perils of debt and the nasty cycle that it can place you in permanently. Here are three steps that you can take to build your financial health and get your situation in order.

Pay Down Your Debt

Getting out of debt has a number of benefits for you. First, it improves your credit rating and your ability to get a loan when you need it. Second, reducing your debt will also increase your monthly income.

Many people fail to account for the impact that debt financing costs has on their monthly bottom line. Finance Solutions knows that interest costs can be corrosive when it comes to your monthly budget because they keep you from paying back the principal that you owe. Many people will struggle to keep up with the interest payments and cannot even get to the point where they reduce the amount that they owe. When you are able to pay back even a little of your principal, you will cut the interest costs, helping your bottom line and your ability to pay back even more of your debt. In other words, paying back principal has a positive snowballing effect.

Start an Emergency Fund

One of the things that will absolutely bury people struggling financially is an emergency expense that can cause them to go into even more debt. Things such as an unexpected car repair or medical bill can put many households into bankruptcy since they have no money put aside to pay for them. If you build up your emergency fund little by little, you have money to draw on when bad things happen. While an inconvenient expense may not help your bottom line, at least you can rest assured that it will not break you.

Set a Budget

Even if you have plans to pay down your debt, you will never be able to get there if you do not begin each month with a budget. You will simply not know where you are able to cut back on your spending without having limits established for yourself ahead of time. Finance Solutions has answers for you in this vital area.

Setting a budget means that you have inventoried your spending and figured out limits for certain categories. Your budget must be realistic. There are certain areas where you cannot just cut back on your spending such as housing and health care. However, there are other areas where you can and should reduce expenses. Budgeting means that you cut back on some luxuries that are not necessities and reduce spending when you can replace some items with cheaper alternatives. It also means that you track your spending as it occurs to see if you are meeting your budget.

As you can see, being methodical with your finances can build your health if you start with the right measures and resolve to stick to them

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White Mountain Partners Shares Why More Than Half of Millennials Have Credit Card Debt

Millennial life isn’t all it’s cracked up to be, despite some beliefs to the contrary. These days, millennials are having plenty of trouble with credit card debt. Of those, one in ten of them says that they have carried this debt for more than five years. So why is it that this generation seems to be saddled with so much credit card debt? The answer to this may surprise you.

A Look at the Numbers

Of the millennials that struggle with credit card debt, about 54% of them owe less than $5,000. However, 24% of those polled say that they owe between $5,000 and $10,000 in credit card debt. The remaining portion of the group has an even more significant amount of credit card debt; nearly 5% of them say that their credit card debt has reached $30,000 or more, according to Business Insider.

However, millennials do take their credit card debt seriously, despite how the numbers look. Almost 70% of those who carry credit card debt say that it causes them some stress and for a few of them, it is significant stress, even if the amount of debt that they carry is relatively small. For example, of those who carry about $5,000 in credit card debt, about 55% – more than half – of those say that they feel stressed out about it. Anecdotally, when representatives from White Mountain Partners speak to our clients in this demographic, we receive similar reports.

How Did They Get Here?

One thing is certain about millennials that we at White Mountain Partners have seen. Millennials aren’t spending their money on the items that they have been stereotypically associated with, like avocado toast. For most of them, this debt didn’t result from bad spending habits.

Unfortunately, the reason why so many millennials have so much credit card debt is that they cannot afford the cost of living. In other words, they are using their credit cards to buy things like groceries, to put gas in their cars, and to take care of other everyday expenses, like utilities.

A recent CNBC article breaks down the numbers like this: Four in 10 of them attribute their debt ratios to their day-to-day living expenses, while another one in five, or 20% of them, say that their credit card debt has arisen from emergencies, like having to unexpectedly go to the emergency room or to make a major repair on an appliance or their vehicles.

Millennials’ Budget Breakdown

So what does that look like for them? A report in ApartmentTherapy.com suggests that on average millennials spend about $208 a day on housing (compared to other Americans who spend around $164 a day), nearly $11 a day on groceries and almost $10 a day on eating out in restaurants. They also spend $1.24 a day on their pets and $2.36 a day on their car insurance.

Here is the frightening thing about that $208 a day. If that’s true, then that means that their expenditures are over $6,000 a month: In order to live, they must have access to at least $75,000 a year in order to keep a roof over their heads.

A Forbes article also suggests that millennials stand out compared to other people in the other age demographics, because, in fact, for the most part, they prefer to live more frugally. These are the people that will look for more frugal options in, say, travel. For example, they will take trips that allow them to stay closer to home, or in some cases, they will stay home and just have a staycation.

Additionally, many millennials face the very real challenge of student loan debt. This debt has saddled them with additional expenses that people in other age demographics don’t deal with as much. Less of their income is available to pay for the day-to-day necessities that they need.

Final Thoughts on Millennial Credit Card Debt

It may be to say that millennials aren’t spending their money wisely. However, recent reports suggest that that just isn’t the case. Most millennials are actually debt-averse. The reason that they do have so much credit card debt is that they cannot afford to live. Normal expenses like housing, food, and other necessities take up a good portion of their income

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finance

Golden State Partners Shares Why Your Credit Card Rate Could Be Going Up

It seems very counter-intuitive, and it will likely raise your hackles, but the interest rate on your credit card will likely go up soon. The first question you are likely to ask is, “Why would my credit card’s already high-interest rate go up when the Federal Reserve just lowered interest rates?”

Here at Golden State Partners, we field quite a number of questions from people who are fed up with their credit card issuers’ rates as well as other problems they are having, such as when the issuer apparently arbitrarily restricts your use of your card’s credit limits.

The following is some guidance about what to expect in the coming two months regarding credit card interest rates, as well as how you can protect yourself financially from high-interest credit cards.

What is Going On Now

According to the Wall Street Journal, as of October 2019, the average credit card rate for consumer credit cards is 17 percent. That represents a high point for the past two decades in credit card interest rates. Meanwhile, the Federal Reserve Bank has lowered the interest rate that they are charging banks to borrow from them almost to zero.

The reason the banks are increasing interest rates on their credit cards, according to WSJ, is that they did not receive the profit they thought they would from the huge incentive programs they were offering to wealthy cardholders in the past few years. Premium cards were touted with sign-up bonuses, airfare miles, and hotel stays.

Since the banks did not receive much return on investment from these incentives, they are retaining some of the incentives, to keep wealthy clients using their cards, but they are also raising interest rates to pay for their losses on the incentive programs. This increase in interest rates will not bother the wealthy at all because they have the funds to pay off their balances in full each month. Instead, the costs will be born by credit card issuers’ clients who carry a balance each month in the form of higher interest rates.

The banks also know that a recession is on its way, and the higher interest rates that are paid now will cover their losses in the future when more people will likely be unable to pay their credit card bills. According to the WSJ, the average credit card debt carried by people in the United States is $8,602 in 2019.

Other Reasons Your Credit Card Interest Rate Can Increase

According to Nerdwallet, there also are other legally-acceptable reasons that credit card issuers can raise your interest rate.

Promotional Rate Ending

When your promotional rate ends, the bank has no legal obligation to inform you that your interest rate is about to go up.

Late Payments

If you are behind by more than 60 days, the card issuer can raise your interest rate substantially. This new rate will apply to all existing balances and new charges. The new interest rate can stay in place for six months.

Lower Credit Score

If your credit score decreases substantially, the issuer must provide you 45 days’ notice but can then increase your interest rates. This increase will only hit your new purchases and will not apply to your existing balance. They are required by law to review your credit score in six months but are not required to lower your interest rate, even if your score goes up.

Prime Rate Increase

When the Federal Reserve increases the prime lending rate, the banks can increase the interest rate for all cards that have a variable interest rate. Most cards do have a variable interest rate. You will get no notification of the change.

After a Year

In the first year, unless you are behind on payments, the issuer can’t increase your interest rate, but they can increase the rate as soon as you have had the card for one year. You must receive 45 days’ notice of the increase.

It may seem like the deck is stacked against you with high-interest credit cards. At Golden State Partners, we have solutions for consumers who are struggling under high-interest credit card debts, such as lower-interest debt consolidation loans. Call us today for help

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Derby Advisors Discuss Ways to Avoid a Lifetime of Credit Card Debt

According to CNBC, out of the 81 percent of millennials who owe some form of debt, 20 percent believe they will die still indebted. The average millennial carries $36,000 in personal, non-mortgage debt. Many others in this country are also deeply in debt and feel they will never be free.

Derby Advisors, a firm that specializes in helping consumers who are deeply in debt, has some solutions to help people pay off their debts.

Create a Budget

The place to begin is to know what debts you have at what interest rates as well as to write down all of your expenses, both monthly and those that come up less frequently.

Pare Down Unnecessary Expenses

If you have heavy debt and are paying for Starbucks every day as well as expensive cable television and streaming services, it is time to prioritize what is really important. See how much money you can save each month that can go towards your debt. The sooner you get your debt paid off, the sooner you can stop paying all of that interest.

Get Help With Your Student Loan Debt

If you owe student loans to a private provider, you will have to look into other options to get any help with your payments and interest. Most people, though, have federal student loans.

Motley Fool suggests you go on the website of your servicer to find out what types of options you might have to help you with your federal student loan debt. Some people are able to apply for income-based repayment plans. Others are able to stop paying on their student loans for a time when they are going through a financial crisis. Others are able to have their student loans totally forgiven.

Pay Down the Highest Interest Debt First

Called the “avalanche method,” the idea is to pay off the debt with the highest interest first while making the minimum payment on all of the other debt. This will allow you to free yourself of more and more of the interest charges. Each debt paid off frees up more money to pay off the rest.

Consider a Balance Transfer Card

If you can pay off all of your debt, or at least your higher-interest debt within 12 to 18 months, Motley Fool suggests you consider applying for a zero-interest, balance transfer credit card. During the zero-interest period, you will be able to make greater payments, since you are not struggling under the high interest that most credit cards carry.

Consider a Debt Consolidation Loan

If you can’t pay off the debt in 12 to 18 months, consider a personal, debt consolidation loan. They carry lower interest and have a fixed pay-off date. Because your interest rate will not be as high, you will have more money available to do other things that are needful, like creating a rainy-day fund and saving for retirement. Best of all, you will not be saddled with debt for the rest of your life!

Whether you use a balance transfer credit card or a debt consolidation loan, put the other credit cards aside. If you use them and begin to accumulate a balance, you will dig your hole deeper with high-interest credit card debt, rather than dig out.

Derby Advisors wants you to know that, although it takes some planning and discipline to get out of debt, you do not have to die in debt and keep paying high interest to creditors. Call us for solutions. We are here to help

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Wink Capital Explains Why You Need to Make a Plan to Deal With Holiday Credit Card Debt Now

Credit card debt is one of those things that can slowly creep up over time. This is especially true when you have the habit of paying off the minimum monthly amount. The outstanding debt eventually builds up due to the interest rates of your credit card balance. Here are some staggering facts about credit card debt:

  • 56% of people who have credit card debt have been carrying the balance for over a year.
  • One out of three card holders have debt in more than one card.
  • Millennials are more likely to have credit card debt.
  • Lower-income individuals have higher debt, while high-income individuals have long-term debt.

It seems like credit card debt is slowly turning into a fact of life. However, this should not be the status quo. According to Wink Capital, a well-known financial planning and debt assistance company, holiday credit card debt is considered one of the most overlooked types of liabilities.

Since many people frequently go on holidays, debt always seem to appear and go unpaid. In this post, we will further understand why holiday credit card debt should be dealt with immediately.

Wink Capital Explains Why You Need to Make a Plan to Deal With Holiday Credit Card Debt Now

Credit cards change interest rates over time.

Credit card companies do not have an interest rate that stays stagnant for the long-term. In fact, credit card interest rates can soar as high as 18% under their Annual Percentage. If you want to pay off your holiday credit card debt quickly, you need to chance upon lower interest rates and complete your payment before percentages soar.

Paying off credit card debt slowly does not improve credit scores.

If you’re thinking that paying off holiday credit card debt long-term will help financing companies consider your future plans to loan, think again. According to Wink Capital, this strategy may even harm your chances of getting a good credit score.

The only factors that matter when it comes to paying off credit card debt would be the following:

  • Paying off your debt on time: Every month, it is essential to pay your debt before the due date. Missing your payment time frequently hurts your credit score.
  • Percentage of use: Another factor would be how much of your credit limit you are using. Ideally, you would want to use 30% or below of your credit limit to ensure a good credit score.

Paying the minimum balance becomes a bad habit.

Lastly, one of the main reasons why it is recommended to pay off credit card debt right away is because of the habit it builds. Some people are stuck in debt because they refuse to pay the full balance, but would rather stretch it using the minimum amount.

Not only is this building up more debt through interest rates, it also becomes a habit that forms over time. Soon, you may find yourself using multiple credit cards to pay off debt until it becomes unmanageable.

Some of the tips to help you pay credit card debt more efficiently are:

  • Setting up reminders to pay on or before the due date
  • Putting aside a portion of your paycheck for paying off debt even before spending on other things
  • Seeking help from debt management companies to help you build a plan on paying holiday credit card debt

With these strategies, you can successfully stay on top of your credit card debt which will lead you to a more financially secure life

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finance

Tuck Associates Shares The States With the Highest Amount of Credit Card Debt

Many people in this country hold a shocking amount of credit card debt. Sadly, according to The Balance, as of December of 2018, the average credit card interest rates are around 17 percent. If you have bad credit, your average interest rate will be just under 25 percent. At interest rates that high, people are more likely treading water making minimum payments that barely put a dent in the principal each month.

When people are spending so much money servicing the interest on their credit cards, they are unable to save money for rainy days, college for their children or their retirements. Their standard of living is lowered, and they may be unable to continue to pay their debts over time. This is especially relevant in now when a recession is looming. According to the Wharton School, during the last recession, about 20 percent of the workforce lost their jobs. People who are out of work or who are underemployed risk defaulting on their credit card loans and then risk lawsuits and wage garnishments.

Tuck Associates, a firm that specializes in helping consumers and small business owners struggling with heavy debt, finds some interesting trends in where credit card debt is the highest.

Alaska

According to The Balance, Alaskans carry the most credit card debt, on average, when compared to consumers in other states. The average credit card balance in Alaska is $ 13,048. In order to pay off this debt in three years, assuming the 17-percent average U.S. credit card interest rate, Alaskan consumers would need to make a payment of $254 monthly and would end up paying $3,748 in interest charges. That averages around $1,200 a year, or $120 a month in interest alone.

The Other Highest Credit Card-Indebted States

Rounding out the top five states with high credit card indebtedness are Wyoming, Utah, California, and Montana. Montanans average just under $10,000 in credit card debt.

Other Troubling State Figures

Motley Fool’s study of credit card debt per state from 2017 unearthed some other very troubling figures. They found that Texas, Georgia and a few other states that ranked high on their list of states with excessive credit card debt also were states where the residents had low credit card scores. Not too surprisingly, since lower credit card scores coincide with higher interest rates, the state of Texas, in particular, has the highest average late-payment rate in the country.

Imagine if you are trying to pay off the average Texan’s $7,692 in credit card debt at around 25 percent interest. It would take a $400 a month payment and would entail paying $4,174 in interest to pay off the debt in three years. Such a large payment would likely be in lieu of the family being able to make a car payment or some other larger necessity.

High Interest is a Huge Culprit

As you can see, the ridiculously high-interest rates that these credit cards carry are a huge impediment towards the payoff.

How to Lower Interest Rates

Of course, if you have a stellar payment record, you can try to get the credit card company to lower your interest rate. In some cases, they might do so.

If you can pay off the entire principal in a year to a year and a half, you could apply for a zero-interest, balance transfer card and just attack the principle until it is paid off.

Also, you can get a personal loan in the form of a debt consolidation loan. That would allow you to have a lower interest rate and a fixed payment schedule that would provide a payoff date.

If you are struggling to make high-interest credit card payments, you are not alone. Call Tuck Associates today. We have solutions for consumers struggling under credit card debt

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finance

Alexis Assadi Review

Alexis Assadi
Alexis Assadi

My Review of Financier Alexis Assadi

I have been following Alexis Assadi’s online career since 2014 after coming across his blog. Back then, he published frequently about investing, building passive income and working towards financial independence. I was interested, but skeptical of a 20-something year old who was writing about money, savings and the like. His young age rendered him a bit too inexperienced for my taste, but I found his content interesting nonetheless and subscribed to his free emails. What drew me in, I think, was that Alexis Assadi seemed relatable. He had a political science degree, not a finance or commerce degree, and was self-taught. I felt that I could do the same, especially with all of the content out there on the internet. You don’t need to be a Wall Street trader to have access to information anymore.

During the next few years Alexis Assadi wrote often about investments like real estate investment trusts, mortgage investment corporations and the like. I had heard of them before – companies that invested in real estate or mortgages and paid regular dividends – but I thought he did a fairly good job of explaining them. One of the concepts that I remember learning from his blog was “funds from operations” (FFO), which is a metric used to help assess the performance of a real estate investment trust. On occasion I would email him and usually received replies back, which I thought was nice considering he got nothing out of it. He didn’t give me advice, but he did help me understand some of the facts.

By 2016 Alexis Assadi began selling online courses. I bought one of them for less than $10 and it was money well spent. I wouldn’t say that it was earth-shattering information, but it taught me about income producing assets, the benefits of owning a company and why some types of small businesses are more advantageous than others. The value of the content was easily worth the price.

I noticed that he began blogging less the following year. Alexis Assadi announced the launch of a business called Pacific Income. This is a lending company. About ten months later, he started a podcast called “Income Investing with Alexis Assadi.” The episodes were about 20 minutes long with a similar format each time: introduce the topic, answer a question from the listener, examine a topic and close with a preview of the following week’s show. The podcast lasted for less than a year, however.

As far as I can tell, Alexis Assadi virtually stopped blogging/podcasting/YouTubing about investing and money altogether by 2018. I read in an interview somewhere that he had lost interest in the subject and wanted to focus on his main business, which was providing financing. To be honest, I was disappointed and surprised that he was no longer interested. But I respect his decision all the same. People are allowed to change and do what they want with their lives.

Since then I’ve noticed that most of Alexis Assadi’s online content has been about politics and the environment. He believes that global warming and environmental degradation are the main human obstacles of the 21st century. His political persuasion is clearly towards the liberal side of the spectrum. For example, he wrote in a blog post on Medium.com that he supported a 2020 US Presidential ticket of Kamala Harris for president and Elizabeth Warren for VP. But I find that he’s quite reasonable. He’s not some leftist anarchist, the type of which so often occupies the internet today. He also started a photo blog, called Alexis Assadi’s Pictures, which I follow on occasion.

So, what’s the final review of Alexis Assadi? Is he a financial wizard who can help any person on earth get rich? No, I don’t think so – and he never claimed to be such. His blog posts were often lengthy analyses, rather than tips and tricks to make money. For example, he cautioned against cryptocurrencies (which have enticed many people seeking to make a quick buck) shortly after they gained media prominence, instead of capitalizing on the frenzy. I think Alexis Assadi is a guy who followed a path as far as he wanted to, and then later changed directions in his late 20s. He was passionate about blogging about finance until he wasn’t anymore. People switch their careers all the time.

Here are the main lessons I learned from him during his years of producing financial content: First, there are many investments in Canada and the USA that pay monthly dividends. Second, it’s important to be thorough and do your research before making an investment. That means learning to read the fine-print. Third, owning a business can be a way to create wealth. Fourth, if you want to be a businessperson or investor, then you should treat it professionally and take it seriously. All of this is logical, but it was useful for me.

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Punch Associates Discuss How to Escape the Debt Dilemma

The Kiplinger Report stated that there is now over $4.05 trillion in American consumer debt. About 25 percent of all Americans admit their debt is larger than the money they have saved for their retirement.

The statistic that really made the mainstream media begin to report the truth about the staggering level of debt in the American economy is the one about auto loans. According to Fortune Magazine, as of February 2019, a record 7 million U.S. citizens have fallen 90 days or more behind in their auto loan payments. This means that many are in danger of repossession. Most people need their cars in the U.S., so this is a sign of dire economic times ahead for many citizens.

At Punch Associates, a firm that has solutions for consumers and small business owners in heavy debt, we are often asked how people can escape the debt dilemma. The answer factors in each type of debt. The following addresses the issues of consumers with heavy debt they are struggling to pay off.

Create a Budget

Not enough people have a monthly budget. You need to take into account all of your debts, how much is owed on each and the interest rates they carry. You also need to take stock of all of your bills and expenses, both monthly and long-term bills, like auto registration and auto maintenance expenses.

The goal is to see how much you can devote to paying down your debt each month. It is best to pay off the credit card with the highest interest rate first before you attack the next debt with the next-highest interest rate.

Reduce Extraneous Expenses

Now is not the time to buy a daily Starbucks, and the television subscriptions are really unnecessary. It is time to pare down and get back on your feet.

How to Handle Specific Debts

Credit cards: According to The Medium, credit cards often carry double-digit interest rates and need to be paid down first. If you can get your issuer to lower the interest rate, it would give you more breathing room and allow you to make greater payments to reduce the principal.

Student loan debt: The solution is different if you have double-digit student loans from private providers, or if you have government-insured loans at around 6 or 7 percent. If you have the former, you will need to consider a personal debt consolidation loan in order to get that interest rate down to a level that allows you to attack the principal.

Those with government-insured student loans may still need to apply for forbearance or income-driven assistance with payments. There are many more options to reduce your government student loan payment today. Many are income-driven options.

Medical debt: Nerdwallet suggests that you need to work with the medical facility’s billing department as soon as you receive your bill. Don’t wait until they have sent the bill to collections. They usually have zero- or low-interest options for you, like extending you a payment plan, reducing your bill or allowing you to use a medical credit card with zero-percent interest for up to two years. Ensure that your insurance covered their fair share and that the medical facility did not over-bill you.

Auto loans: Nerdwallet recommends that if you only are one payment behind with your auto loan and have a good reason, your lender will likely defer the payment until the end of the loan. They might waive the interest charge or penalty as well. If you can no longer afford the payment, you will need to either trade the car in for something less expensive or consolidate your other debts along with your auto loan, if other debts carry high-interest rates.

Loan consolidation: If you just can’t make the payments any more by limiting expenses, it is time to consider if loan consolidation with a personal loan for three to seven years at a lower interest rate will help your situation. That will help you get out from under high-interest rate fees, so you can pay down the principal in a timely manner.

Bankruptcy: Some people may need to consider bankruptcy, but it will affect your credit for seven to ten years, and it costs money to initiate.

At Punch Associates, we have solutions for consumers struggling under heavy debt loads. Call us today

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Ballast Associates Discusses The Benefits and Risks of Debt Consolidation Loans

Millions of Americans are struggling with some form of debt and are looking for a way out. There are a wide variety of scams that take advantage of these vulnerable people and promise different avenues that are not legitimate. But one avenue that is legitimate is debt consolidation. A consolidation loan is a safe and legal way for a disciplined individual to take an important step in paying off their debts.

Benefit: simplicity

Many families suffering from debt are facing the problem from a number of different angles. They may have house payments, car payments, and debts from various credit cards. Having multiple sources of debt increases the chances that one of these sources has a massive interest rate that is contributing significantly to the family’s problem. Individuals may also run late payments because they cannot adequately manage all of the debt sources that they have. Consolidation simplifies this process considerably. An individual only has to worry about having one single payment and one single set of terms.

Benefit: better interest rate

Debt consolidation can often give an individual a better interest rate. This interest rate may be from an institution like a credit union which traditionally gives better interest rates than lenders such as payday loan companies. Many of the debts that individuals have are on the poor interest rate or amortization schedules. They may have rates that fluctuate depending on the whims of the wider world. Consolidation reduces all of those rates by allowing an individual to take a large sum of money and pay off all their debts with the one consolidation loan remaining. The consolidation loan may be at a much lower rate than any of their previous debt obligations. As a result, an individual may have significantly more money to pay down the principal on the loan.

Risks: more debt

The act of debt consolidation involves taking on an extra loan. It also involves individuals potentially holding thousands of dollars at one time. For some individuals, holding those sums of money can be dangerous. A debt consolidation loan could be used to purchase other things if an individual does not have the discipline to use that money to pay off and consolidate their current debts. Individuals have to work on their spending habits and their philosophy towards spending if they ever hope to make use of a debt consolidation loan.

Risks: does not deal with the principal

Debt consolidation is also problematic because it does not deal with the principal. As the experts at Ballast Associates note, consolidation primarily deals with the problem associated with interest rates. But interest rates may not be the most important problem an individual faces if they are swamped with thousands of dollars of debt in principal. People may still have to take on extra jobs or radically alter their spending habits in order to deal with their debt problems.

Conclusion

Debt consolidation only works for some individuals who are swamped by debt. These individuals should seek out a trained adviser like those at Ballast Associates. Advisers will help an individual understand their debt scenario and find the consolidation technique that will work best for them. Having a partner, as well as a consolidation plan, will both ensure that an individual is prepared for the debt relief process

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Second City Advisors Discusses Why Your Credit Score Goes Down After Paying Off a Loan or Credit Card Debt

Many people cannot wait to pay off their loans. They see it as a chance to finally catch up on bills and other personal projects that they have been wanting to put their money towards. However, paying off a loan can end up negatively impacting your credit score. Though this fact may seem bizarre to some people, there is some information that all individuals who pay loans should know about. The key thing to remember here is instability. Fortunately, Second City Advisors has some more information about how this process works and some tips that you should follow to keep your credit score up.

Why Does This Negatively Impact My Credit Score?

As mentioned previously, paying off a loan can end up creating instability. Credit companies like to know that you are a proper candidate before you are allowed to take out a loan or new credit card. Unfortunately, your credit history will cease once you pay off a loan. This means that there will be a limited credit history to take note of whenever credit companies look at your payment history. Having some kind of credit that you are paying towards is a crucial way to build up your credit score and improve your chances of receiving loans in the future.

Leaving The Credit Account Open

One of the most important things that you can do to maintain your credit is to keep your account open. Letting a bit of interest build up over time will keep you in good standing with your credit companies. They utilize complicated algorithms to help understand the consumer who has the loan. This simply looks good on your report and should be done more often. However, there are other things that you should consider when it comes to building credit before paying off the loan.

How to Improve Your Credit Score

Keeping your loan open and letting interest build for some time is a crucial component of improving your credit score. However, there are other things that you can do in order to improve your score in the short and long term. Opening other lines of credit is a great way to show credit card companies that you are financially responsible. Having a credit card and using it only for small expenses will help you build credit responsibly. However, be sure not to open more lines of credit that you can handle. This may end up negatively impacting your credit score and hinder your ability to get a loan or credit when you actually need it.

Understanding How Credit Works

Building credit is a great way to help you accomplish your goals in life. We require money to do just about anything in our modern society. Unfortunately, many Americans do not have the proper financial knowledge in order to maintain good lines of credit. We want you to use this guide to help you improve your credit score and receive some insight on how credit works. Second City Advisors is always here to offer advice whenever you need it the most and is ready to help you improve your financial situation