A credit expert weighs in: How these 5 life milestones affect your credit score - CNBC

A credit expert weighs in: How these 5 life milestones affect your credit score - CNBC


A credit expert weighs in: How these 5 life milestones affect your credit score - CNBC

Posted: 30 Sep 2020 03:37 PM PDT

Learning to manage your finances is crucial in achieving major life milestones down the road.

Buying a car or taking out a mortgage on your first home requires having a good amount of savings stored away and a healthy credit score.

But just as important as understanding what you need to reach these milestones is knowing how certain events do or don't affect your credit once you get there.

According to Rod Griffin, senior director of public education and advocacy for Experian (one of the three main credit bureaus), there are five common life milestones that people often misunderstand just how they can either impact or not impact their credit:

  1. Graduating from college
  2. Sharing your first apartment with a roommate
  3. Starting a business
  4. Married, and getting divorced
  5. Retiring

Wherever you are on your financial journey, take a moment to recognize how the current situation you are in (or may be in soon) plays a role in your credit. Below, CNBC Select breaks down these five life milestones.

1. Graduating from college (or not)

Where you went to school and what degree you did or didn't receive won't be a factor in whether you can access credit.

Since only debt-related information is tracked in credit reports (your loans, credit cards, payment history, any bankruptcies), your education level is not part of your credit report and it has no bearing on your credit score.

The student loans you took out to fund your way through college, however, do have an impact. And as long as your name is on the account, they can actually help you begin to establish credit, Griffin says. In addition to increasing the average age of your credit accounts, student loans act as an installment loan that can boost your credit mix.

As with all credit products, whether these student loans will hurt or help your credit score depends on how you manage them. Making your loan payments on time and in full every month will build a history of on-time payments and show future lenders that you can pay back what you borrow.

2. Sharing your first apartment with a roommate

Having a roommate certainly comes in handy, especially financially. A roommate can substantially cut your living expenses in half, making your monthly bills more manageable. But sharing an apartment can also come with some financial red flags.

"While having a roommate doesn't affect your credit scores directly, there could be indirect damage if they don't uphold their share," Griffin tells CNBC Select.

If your name is on the lease or a utility bill along with your roommate's, any overdue bill can potentially wreck your credit score very quickly. So, if your roommate is late on making their payment to you in order for you to pay the bills on time, it becomes your problem.

"While most utility companies don't report to the major credit bureaus, if you fall seriously behind and the account goes to collections, your credit may be impacted," Griffin says.

Make it an essential step when you first move in with a roommate to talk about how you manage the bills together. Create a spreadsheet to stay organized and set internal deadlines to enable both of you to track your timely payments. And if they aren't already, ask to have your on-time rent, utility and telecom payments reported to the credit bureaus so they help strengthen your payment history on your credit report. (Experian Boost is a free service that makes this easy.)

You'll be happy you were so diligent once you move out on your own. A good credit score can help you get a lower security deposit on a new place and qualify for the best credit cards one day.

3. Starting a business

While it's ideal to have good credit, entrepreneurs can still start a business, or get a small business loan, with a bad credit score.

"Opportunities can appear at that most unexpected time in your life and becoming a unicorn startup can be a once-in-a-lifetime chance — bad credit shouldn't stop you from pursuing such an opportunity," Griffin says.

If you have less-than-stellar credit, finding a co-signer can help you get approved for a personal loan so that you can finance your small business. But before doing so, there is an immediate way you can improve your chances of getting a loan (and with better terms) through bettering your credit score.

Experian Boost is a free service that can bump your credit score fast. Users who sign up can get credit for their on-time utility (water, electricity), telecom (cell phone) and streaming bills by adding them to their Experian credit file.

Learn more: Here's how Experian Boost can help raise your credit score for free

"Establishing a track record of on-time payments and paying off your debt can seriously improve your credit score," Griffin says.

Once your small business is up and running, keep in mind that establishing a business credit history is just as important as your personal credit history. By doing so, "you can separate your personal credit from the business operations," Griffin says.

Consider applying for a small business credit card to cover all your company expenses and make sure you keep an eye on your business credit score along the way.

4. Married, and getting divorced

Getting married is a monumental milestone for many. And while it's important to keep tabs on your credit while you share finances with your spouse, you should continue to do so if you ever part ways.

"Going through a divorce is stressful, emotional and chaotic, and many tend to overlook their credit during the process, which is a big mistake for long-term financial health," Griffin says.

Divorce proceedings don't directly affect credit reports or credit scores. However, the financial issues that are part of the divorce process usually involve joint credit accounts where both parties are involved. These joint accounts largely do have an impact on the two individuals' credit history and credit scores.

"Prior to the divorce, make sure that if you are the primary owner of the joint account, you either remove your spouse from the account or close the account to avoid unaccounted transactions," Griffin says.

Learn more: Divorce can cause your credit score to plummet—experts say take these 4 credit steps beforehand

Griffin notes that where things can get confusing for separating couples is with the divorce decree. That's the document presented by a court that formally ends a marriage. While the decree may specify who is responsible for which accounts opened during the marriage, it doesn't break the credit card issuers' or lenders' contracts.

"If the spouse responsible under the divorce decree is unable or unwilling to pay, and the lender has not changed the contract, the late payments will still appear on both credit reports and will harm credit scores for both individuals," Griffin says.

5. Retiring

Working or not working, your credit score still impacts how you live.

"Good credit scores may have less importance as you age, but can still play a crucial role in living your retirement dream," Griffin says.

Whatever your retirement plans are — a new mortgage on a vacation home or a long-awaited road trip in a new RV — having a low credit score will cost you more and put a dent in your plans.

With a high credit score, you could get a lower down payment on a new home (for a vacation or to downsize) and you would be able to score the best auto insurance rates on that new RV.

"There are also more opportunities and time to travel during retirement, and having good credit can be an important resource when on the road or jetting off to a bucket list locale," Griffin says.

A healthy credit score can help you qualify for the best rewards credit cards, which come with all sorts of perks, such as airline miles and hotel points when you spend, plus fraud protection and 24/7 travel assistance.

Check out: CNBC Select's picks for the best travel credit cards of 2020

While you are enjoying your post-career years, automate your bill payments so that you never miss a due date and maintain your good track record. Have your free Experian Boost account stay open so that any past on-time payments remain on your credit file and sign up for a free credit monitoring service, like CreditWise® from Capital One, to keep tabs on your credit score along the way.

CreditWise® from Capital One

CreditWise® from Capital One

Information about CreditWise has been collected independently by CNBC and has not been reviewed or provided by the company prior to publication.

  • Cost

  • Credit bureaus monitored

    TransUnion and Experian

  • Credit scoring model used

    VantageScore

  • Dark web scan

  • Identity insurance

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff's alone, and have not been reviewed, approved or otherwise endorsed by any third party.

5 Best Bad Credit Business Loans of 2020 - Fortunly News

Posted: 21 Sep 2020 12:00 AM PDT

Overview

Launched in 2014, Currency is a Los Angeles-based fintech company that helps prospective borrowers find the right third-party equipment loans and leases. Currency's platform is organized as a marketplace of funding providers, each one with different lending specializations and eligibility requirements. Thanks to its long list of lending affiliates, Currency is able to offer loan options for prospective borrowers of all credit profiles, even business loans for people with bad credit.

Funding Types Offered

Currency specializes in equipment financing, a financial product encompassing loans and leases used to either purchase or rent equipment.

Here's how to get bad credit equipment financing via Currency. The application process is quick and easy, and you won't need to wait for more than a few minutes to a business day for an offer. First of all, you'll need to submit some basic information such as the type of your business, your desired borrowing amount, time in business, annual sales, and your company's latest three bank statements. To qualify for Currency's online loans for bad credit, you'll need a personal score of 585, a minimum of six months of business activity, and annual revenue of at least $75,000.

As a part of the underwriting process, Currency will perform a soft credit inquiry to evaluate your personal creditworthiness. The company will then compare your profile with a set of its own criteria and the external lenders' requirements, which will narrow down the list of funding providers willing to offer bad credit business loans to you. From there, Currency will choose one lender offering the product with the best rates and terms and present it to you.

Depending on your creditworthiness and the funding provider's policies, you'll be able to get a loan amount ranging between $5,000 and $500,000, with a repayment term of 24, 36, 48, 60, or 72 months and an estimated APR of 6% to 24%.

Should you decide to accept the offer on a loan for bad credit, note that you'll be allowed to use the funds to purchase equipment anywhere in the United States and from a few select dealerships in Canada.

Reasons to Choose Currency

Two-thirds of all funding requests sent to Currency get approval within minutes, while the rest is processed in one business day. The lending platform works fast and even if you don't qualify for funding, you won't be left waiting for an answer for too long. The whole process from the application to funding typically takes up to 72 hours.

When you apply for a business loan with bad credit, you expect the lender to charge you an extremely high APR. However, that's not the case with Currency. With an average APR of 8% and a median APR of 15%, this lending platform's annual percentage rates are quite competitive.

Another great thing about Currency is that the company helps you verify that the equipment you're purchasing is as advertised. The due diligence process typically takes about 24 hours. If everything checks out, the lender works on payment terms with the vendor and ultimately transfers the money.

Reasons to Explore Other Options

Currency encompasses the criteria of various lending partners; however, the platform itself also has minimum requirements and offers very few options for poor credit loans. Note that you'll have to prove that you've rebuilt your credit score if you've been in business or personal bankruptcy before.

Prepayment penalties and possible additional fees represent another drawback of working with this lending marketplace. Each one of Currency's partners has different prepayment policies, and while most don't charge their clients for repaying the loan early, some have prepayment penalties. The same thing applies to origination fees – about 5% of loans provided by Currency's lenders come with this additional charge. In some cases, there may also be a document fee that depends on the type of the borrower's collateral and ranges between $75 and $575.

Currency's business loans for low credit score require collateral. The company files a lien that covers the equipment that you're financing and the rest of your business assets. Some of the platform's partners may also require a personal guarantee.

Final Thoughts

Currency stands from the competition by introducing a refreshing, tech-first approach to an otherwise very traditional industry. For the most part, this lending marketplace succeeds in streamlining some daunting parts of the process, but the applicants still have to provide bank statements, let the funding provider do a soft pull of their credit report, and read through many pages of fine print. On the plus side, rates are pretty decent, and the long list of possible lenders increases your chances of getting a small business loan with bad credit.

Highlights

High borrowing amounts

Convenient application procedure

Long-term funding options available

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