General Personal Finance

I’m going to briefly discuss Betterment, a new option in the investment market. More detailed analysis of all the great things Betterment has to offer is available over at Modest Money. For now we’ll cover the basics of Betterments “set it and forget it” approach or, in the words of their CEO, “what you should be doing”.

Betterment has been around since 2008, but has made a lot of headway in the investment marketplace in this time. In short, Betterment is an “online financial advisor that provides optimized investment returns for individual, IRA, Roth IRA & rollover 401(k) accounts”. Recommended for investors with $10,000 to $10,000,000 to put in, Betterment has put together packages of diversified ETFs to provide maximum maximum returns and minimal risk for its customers. There is no tinkering required on your part.

Because Betterment can manage your money with little or no input on your part, their model has been described as fully automated. This is a great option for busy people or those without decades of experience in the investment world. They make an emphasis on design and usability, so that with a free Betterment account, you’ll be able to interact with your financial information with intuitive and accurate graphical representations. Because of the simplicity of use and the high returns they offer, Betterment is a great option for newer or first time investors, particularly those without huge amounts of riches to invest.

Once you’ve signed up and your money is in their hands, your funds will be invested into 6 varied stock EFTs: 25% Vanguard Total Stock Market, 25% iShares S&P 500 Value Index, 25% Vanguard Europe Pacific, 10% Vanguard Emerging Markets, 8% iShares Russell Midcap Value Index, and 7% iShares Russell 2000 Value Index. With bonds, your funds will be split evenly between iShares Barclays TIPS Bond Fund and iShares Barclays 1-3 Year Treasury Bond FUN. Betterment gives you the benefit of a intelligently diversified investment portfolio automatically. If you lack the expertise to organize and optimal portfolio on your own, or if you fear your own tendency to overly involve yourself, Betterment gives you exactly what you need.

Since you aren’t intimately involved in the gory details of your investments, what involvement do you have? This is where Betterment’s design prowess really shines, more so than much of the competition. With your free account you get your own Dashboard, a visual representation of exactly how your money is doing. You’ll be able to set up specific financial goals. Betterment will automatically show you exactly what you will have to do to meet those goals within certain time limits. Betterment costs slightly more than similar market options, but the level of investment security they provide is worth it. You’ll see your initial investment grow predictably and reliably over time. Betterment is built to provide this service without all the guesswork that other options leave you with.

Betterment is one of the best options on the market for new investors, particularly those with new or modest investment capital. Learn more about how Betterment can change your financial life for the better with security and reliability. For a detailed review and an exclusive interview with Betterment’s CEO Jon Stein, check out the Betterment review on Modest Money.

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Cosign

Protecting your credit is of the upmost importance. A question that comes up often is, “How does cosigning on a loan or even an apartment affect my credit?” The straight answer is that cosigning affects your credit the same as if you were acquiring the loan or the apartment lease yourself. As a cosigner, you are legally and financially responsible for that debt. If the debt is paid as agreed, the account could boost your credit score. If the account is not paid on time, it will certainly negatively affect your credit score. I give the following explanation to those who do not know the significance of a cosigner: When one party does not have sufficient credit, has bad credit or a low credit score, or lacks the income to cover the loan, the lender may require someone else to guarantee or back the loan.

There is another consideration when cosigning for a debt. How will this affect my debt to income ratio? Debt to income ratio can be calculated by totaling your monthly debts and dividing them by your monthly gross income. Typically, 43% or lower is considered an acceptable ratio. Cosigning for an auto or home loan can significantly affect your debt to income ratio. Basically, the monthly payment is deducted from your monthly income. When you apply for your own home or auto loan, this factor may prevent you from being approved for a loan. You will not have the benefit, without a cosigner yourself, of additional income to lower the ratio. Not only do you need to consider the potential risk of a negative account, but also the additional debt. There is a such thing as “too much credit.”

If you decide to cosign a loan, here are some tips to aid you in protecting yourself:

1) Have the other party pay you directly and you make the payments. This arrangement will give you peace of mind that the bill is paid in time, on time, all the time.

2) Aquire access to the account either online or by telephone. Call or go online monthly to monitor the account and make sure it is paid on time. If it is not paid on time, then you need to contact the other party to determine when the payment will be made.

3) Have the monthly bill sent directly to you. Obviously, this option will enable you to monitor the activity on the account.

4) Insist on automatic bill pay. Although this is a great option, I would still suggest utilizing option 2 above.

5) Create a plan for refinancing in the future to have your name removed from the account. An account that is paid perfectly has an excellent chance of refinancing at a later date as long as the parties circumstances have not negatively changed.

I cannot stress enough that if you decide to cosign on a loan, it is important to monitor the activity on that account. It is also equally important to keep open lines of communication with the other party on the account as well. If you are the person in need of a cosigner, it would be a good practice to inform the other party when the payments are made. In this digital age, texting or emailing a screen shot of the payment confirmation is simple and time efficient.

Becoming financially tied to someone, even a relative, can place stress and strain on a relationship so I caution those entering into that kind of partnership. If you watch any judge show on television for any amount of time, eventually there will be a case where someone has not lived up to their obligation regarding a cosigned debt. I am not advocating for or against cosigning; however, it is important to consider all of the pros and cons of such a financial obligation. Questions or comments? Please enter them below and stay tuned…come back for more great reads from THE 800 Credit Score Man.

Image Credit

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Personal Finance is about managing the money you have well. To excel at personal finance, you don’t need to become a world-class investor. You don’t need to get extraordinarily wealthy. But you do need to make the right choices regarding the money you make, as well as make good plans for your financial future. In your future financial life, you will have to decide over and over whether to risk money or to save it.

Risk is the heart of investment, and it’s how you grow your wealth. Investment and its associated risk doesn’t have to be in the form of stocks and bonds. For you, maybe it’s the risk you take in going down a new career path, or moving to a city with better jobs, or ending a toxic relationship. For other people it might be deciding whether or not to cash in a structured settlement for a lump sum. Whatever it is for you, risk is the necessary step before growth, financial or otherwise. Here are 5 financial risks that can benefit all who make them, even though they may be a little scary.

  • Getting Educated. Education is the basis of your future earning potential. Higher education has earned a bad name in recent years. But this doesn’t mean that the right degree, well chosen, won’t result in better employment for you. Education is a big investment. Some people take out loans, sell a structured settlement, or borrow money from family in order to afford it. This can be uncomfortable for some, but with hard work and the right attitude it can work out. Here are some settlement loan tips to help you prepare yourself.
  • Starting a Business. Like further education, starting a business is a risk that many people are too afraid to take. But on the other side of your business could lie success, confidence, and a new standard of living. There are many tools and resources for new entrepreneurs that can prepare you for a successful career running your own business.
  • Get Married. Marriage isn’t for everybody, but from a financial standpoint, it’s a big step in the right direction. With so many tax breaks and financial decisions offered to married couples, it can make a huge difference in your financial life. Of course, this is no reason to take such a big personal step without being ready. But if marriage is on the table for you, if a little scary, this could be a motivating factor.
  • Buy a House. This is another biggie that a lot of people are worried about. In many markets, houses are not affordable to the average person. Others lack the credit history to be awarded a loan. It’s a goal worth working toward, especially if you want to build wealth in a very steady and practical way.
  • Retirement Investment. Investment in the stock market is scary for most people, but it has a long history of growth that can make your retirement secure and comfortable. Learn about basic investment and watch your future become much more steady.

Future financial payoff requires risk. Don’t let fear of failure keep you from selling your structured settlement, buying that house, or getting that new job. These risks are the foundation of your future wealth and security.

Image Credit: Paul Cross

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Insurance News

One of the primary reasons to purchase term life insurance is if you have a mortgage on your home. Whether it’s just you and your spouse, you and your family, or just you, if you own a home you should think about purchasing life insurance to protect the ones you leave behind if you died prematurely. Having a mortgage isn’t just like having a couple hundred dollars charged on the credit card; a mortgage typically is hundreds of thousands of dollars. Imagine if you passed away unexpectedly, you would be leaving your loved ones alone to somehow manage those payments on one income. Term life insurance can help alleviate the financial stress your death would bring.

Just the Two of Us

If it’s just you and your spouse or significant other, the idea of purchasing a term life insurance policy that would cover the mortgage payment should be considered. Unless your spouse relies on your income or you have other pressing financial concerns, purchasing term life insurance with coverage totaling your mortgage loan amount plus enough to cover final expenses (personal debt, burial and funeral) is a good start. Your term length, the amount of time you have coverage for, should be however long you think it would take to pay off your mortgage.

Example: Let’s say you are 35 years old. You have $200,000 left to pay on your mortgage. You estimate that with your current monthly payments you will have the loan paid off in 30 years. You apply for $250,000 of life insurance coverage with a 30-year term length. This would cover the house payments and enable your spouse to not have to worry about funeral costs. The average price of this term insurance policy is about $24 per month. Peace of mind at a small cost.

Family Affair

If you own a home and have a family, purchasing a term life insurance policy that would include covering the cost of the mortgage along with making sure your loved ones’ standards of living go unchanged would be best. Your spouse/significant other would be left to cover the mortgage and pay for your children’s care on one income. With life insurance, your family would not have to face financial struggle along with the devastation of losing you.

The ages of your children and whether you want the life insurance death benefit to cover their college schooling would determine how much life insurance to apply for. At Quotacy, you can run as many instant term quotes as you like and use the Needs Analysis Tool to help calculate the recommended amount for your situation.

Some life insurance is better than no life insurance. Term life insurance can be easily adjusted to fit your income and needs.

Riding Solo

Maybe you own a home and live by yourself. If anyone helped you by co-signing for your mortgage loan, they would end up footing the bill if you died prematurely. They helped you when you needed it, help them by covering yourself with life insurance. Because you do not have any dependents relying on your income, getting a term policy that mainly covers just the mortgage may be adequate. If anyone co-signed on any other loans for you though, be sure to add the loan amounts for those (e.g. student loans) into the equation.

The younger and healthier you are, the more inexpensive life insurance is. Waiting too long may bring high premium costs and there is always a chance something may cause you to be uninsurable. Whatever situation you’re in, whether you’re single or have a family looking up to you, we’ll help you protect your loved ones. Running term life insurance quotes on Quotacy is easy and instant, and we don’t require you to give up any personal contact information just to see the estimated cost. Buying a home is one of the biggest steps in building your future; protect the future of your loved ones with life insurance.

4392568340_a665195a70_bMost people are going to need assistance at some point in their lives, and those odds increase once they pass retirement age. This will usually be the result of some sort of chronic condition, such as Parkinson’s or Alzheimer’s. You might think that Medicare will take care of these expenses, but the truth is it will only cover so much. And if you’re relying on Medicare, this will most likely leave gaps in coverage that you may not expect.

For example, Medicare will only cover up to 100 days in a nursing home, and they will only pay until after you’ve spent three days in the hospital. But what if you need to be there for longer – perhaps the rest of your life? Should you hope that you have enough savings to cover the expense and be left with the worry of whether or not your kids will be able to pay for it?

To make matters worse, Medicare won’t always cover skilled nursing or home health services, and only certain companies are qualified by Medicare. Not to mention, they have strict eligibility requirements, which can be a stumbling block in getting the care you need.

It’s no secret the amount of coverage available through Medicare is declining, which is why we there are private policies that help to fill in those gaps that Medicare are not able to cover. You might have heard of Medicare supplement insurance, which is designed to operate that way, but you can use an individual long term care policy in exactly the same way. It will cover things that aren’t normally covered under Medicare, and it will also help you preserve your assets. That way, you don’t have to bankrupt yourself in order to get the care you need.

Long term care insurance will cover a variety of services, which can include:

  • Home health care
  • Nursing home care
  • Assisted living
  • Skilled nursing
  • Hospice care

In spite of all the benefits of long term care insurance, this product is not for everyone. So, it’s important to know when and if you need it. If you’re younger than fifty, it’s most likely not a good idea to get a long term care policy, as you could be paying premiums for many years until you need it. You also shouldn’t get this type of policy if your income is low or if you have limited assets.

As you approach retirement age, the last thing you want is to get stuck behind the proverbial eight ball when you find out that Medicare will not adequately cover any type of long term care services you may need. You want to make sure you’re planning for the future, and time moves faster than we think. You can reasonably hope that nothing will ever happen to you, but it’s always best to be prepared. After all, you never know when you could come down with a serious illness for which there is no cure.

Image Credit: frankieleon

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5300558006_138133050dTreasury risk management is an evolving task. Financial experts worldwide are noting transformations in treasury operations. These changes were confirmed by a recent survey of 200 professionals in the finance industry across the globe about the future of treasury management. A majority of the participants verified that their firms are experiencing a transformation. When presented with the phrase “Treasury is changing,” 85 percent of the finance professionals responded in agreement. Sixty percent of them are investing in technology to address treasury risks and prepare for the future of treasury management.

The methods you use to mitigate risk for your enterprise may not be as effective as treasury operations continue to transform. Investing in technology improves operational efficiency and business performance, and it offers better ways to address risk. To find out more about the future of treasury management and what finance professionals say about it, take a look at the infographic below.

 

Infographic

 

Photo Credit: photosteve101

Credit

CreditTime is your friend and ally when it comes to credit scores. If you are young and just establishing credit, it actually works against you because a large part of your credit score depends on your history of payments. Short history…lower score. The FICO or VantageScore 3.0 system does not start at 850 and decrease depending on your payments to creditors. You start low and increase as time passes. This is why it is helpful to establish credit at a young age, especially if you are a good steward over your credit. Early establishment helps you demonstrate your creditworthiness and is a definite positive. This doesn’t mean at 24 years old that you cannot achieve a excellent score in the 750-850 range. I recently read about a young man who has a credit score of 807. Unfortunately, he did not expound on how he reached such a high score at a young age, but his story gives us an example that it is possible.

I’m reminded of the Rolling Stones song featured in the movie, Fallen, with Denzel Washington, “Time is on my side.” Another way time is on our side is in regard to derogatory or negative items on our credit reports. If, for whatever reason, you have had some credit issues in the past, you are not labeled with them for life. Thank goodness! Collections, judgments, and liens are removed from your credit report all together in seven years. It’s as if it never happened. The typical credit account details the last twenty-four months of activity on your account. As you can see, one late payment will not follow you for years to come. Bankruptcies generally stay on your credit report for up to 10 years. I must say, having derogatory accounts does not necessarily mean that you cannot establish new credit. It just may cost you more in terms of higher interest rates. The closer you come to that 7 year mark, the more likely creditors will be willing to extend you credit. However, you must show a good payment history since your last negative issue. Time is truly on your side.

Unlike credit card accounts, auto and student loans, mortgages, and installment loans, hard inquiries are removed from your credit report within 2 years. I was recently asked a question about inquiries and how long they affect your score. Individual inquiries typically lower your score by just a few points. What creditors are looking for when evaluating inquiries is if you are applying for a lot of credit at one time. If you are, this may indicate that you are having a hard time covering your expenses and may be desperate for credit. In addition, the credit scoring systems are sophistcated enough to recognize if you are applying for a mortgage or an auto loan. The assumption is that you are searching for the best rate and not buying two homes or cars at the same time. When applying, there is approximately a two week period where you can have your credit report checked by several different entities and these inquiries will be counted as 1, not the 4-5 times you actually applied for credit.

Youngsters, establish credit early in your life. The absence of credit is typically treated like having bad credit and is associated with a low credit score. It may not seem fair, but with thirty-five percent of your score based on history alone, creditors have no way to determine if you will pay as agreed upon. Seasoned individuals, not all is lost. Keep making payments on time…every time. Negotiate those “bad debts” to a manageable amount and pay them off over time. Stay tuned…come back for more great reads on how to increase your Credit Swagger.

peer to peer lending cna

In part one of this article series we talked a bit about the history and development of peer-to-peer lending platforms in the U.S., especially Prosper and Lending Club. In this part two, we’ll talk a bit about the logistics of peer-to-peer lending investments and shed light on a few practical tips you can use starting today.

Who Is Allowed To Invest In Peer-to-Peer Lending?

Only an unfortunate few are not allowed to invest in peer-to-peer lending in the U.S.

As of the time of this writing, five out of fifty states don’t allow their citizens the freedom to invest with Lending Club. Specifically speaking, Iowa, Idaho, Maine, North Dakota, & Nebraska are the states that won’t allow it right now.

Investors that would like to work to build their investment portfolio through Prosper Marketplace are even more
restricted.

Only 31 U.S. states are open for investing through Prosper. You’re in luck if you live in: Alaska,
California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois,
Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New York, Oregon,
Rhode Island, South Carolina, South Dakota, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin or
Wyoming.

But even though you’re allowed to lend through Lending Club in more states than Prosper doesn’t mean that the company itself
will allow you to lend if you don’t meet their requirements. Lending Club has rather strict requirements for their lenders/investors.

In order to be approved to lend through Lending Club you must have a net worth of at least $250,000. If not that, you may qualify
to invest with an annual gross income of at least $70K combined with a net worth of at least $70K. Also, if you live in Kentucky or California you will have to abide by different requirements because of state law.

Thankfully, Prosper Marketplace is less of a hassle to begin investing in loans with, but they are not without
standards by any means.

How To Get Started With Investing In P2P Loans

So we’re going to assume that you are qualified to begin investing in loans on these growing and innovative p2p lending platforms.

Getting started with peer-to-peer lending can be quite a challenge for anyone, it truly is new ground for many
American investors. Prosper and Lending Club offer a wide variety of loans to invest in and many different ways for
you to invest your money. Without a doubt, there can be a frustrating learning curve in the beginning. But the same can be said about riding a bike when you were a kid. And regardless of the learning curve, it’s something you can truly benefit from.

The high returns and stability of platform makes p2p lending well worth a couple of weeks worth of effort learning the system.

Here are 7 proven tips to consider when you get started making p2p loans.

1. Diversify: Mama always said “Don’t put all of your eggs in one basket”, well nothing could be truer in regards to p2p lending. When I first began investing in p2p loans I had no idea what I was doing. I found a couple of loans that I thought were great opportunities and put the majority of my funds into these loans. That was a mistake that I’ll never duplicate and I don’t want you to walk that same path.

Both Prosper and Lending Club let you loan as little as $25 per loan note. I urge you to take full advantage of this, if you begin by loaning $1K then split that up into 40 different loans. The only way I’d recommend that you go over the normally recommended $25 is if you start lending with $2,500 or more. Even then, diversification is a must, but you can afford to put more money into each diversified note.

2. Automate Your Loans: Back in 2010 when I started investing with Lending Club you could sit at your computer and cherry pick the loans that you wanted. Things have changed. The big banks have entered the fray, they have technology and they aren’t afraid to use it. In fact, they ALWAYS use it and you probably should do the same if you don’t like getting left with scraps for investment opportunities. One of the up-and-coming platforms that levels the playing field for retail investors is Lending Robot. They have created an automated option for retail investors and it has been widely accepted in the p2p lending sector as a great investment tool for everyday investors that refuse to get pushed around by the banks.

3. Don’t Throw Caution To The Wind: Many of the higher risk loans have a tantalizingly high interest rate attached to them. But remember, that’s for good reason. Higher risk borrowers historically have a higher loan default rate. So a portfolio of p2p loans that are earning over 20% interest could easily end up returning less than 10% once all is said and done and all defaults have come to fruition. That being said, not all high risk loans are bad. Which is why you need to learn to filter and evaluate with both hard data and common sense.

4. Filter Through The Good & Bad Loans With Efficiency: You could be browsing loans all day long on Prosper and Lending Club and still have nothing narrowed down or targeted to invest your money in. This is why filtering loans is critically important. Both Lending Club and Prosper allow you to filter loan choices on their platforms. Lending Club’s filtering leaves much to be desired in comparison to Prosper’s easier and more advanced system. To make things easier with Lending Club you can download a CSV file of the loans available to you and filter them in Excel.

You could literally spend days tinkering with p2p filtering peer-to-peer lending stat websites. The most popular website for experienced investors is Nickel Steamroller, they give you an amazing amount of information and lending data to make calculated decisions when you choose loans.

5. Avoid Taxes If Possible: Unfortunately, interest earned on peer-to-peer loan investments don’t get the tax breaks that stock dividends get. Loans through Prosper and Lending Club are taxed at the standard income tax rate. This can put quite a dent into your investment returns but you can get around this cash grab by placing your investment in an IRA. Both Prosper and Lending Club offer investors a no-fee IRA if you invest at least 5K. In this way all of your interest can be accrued without tax penalties.

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In parallel announcements, Hotspot, the foreign exchange market owned by BATS Global Markets, and FXall, owned by Thomson Reuters, revealed that they will limit the FX process known as Last Look, which allows FX liquidity providers a certain amount of time to reject a trade, even after it has been hit.

A key way that both platforms are limiting the practice is by reducing the amount of time liquidity providers have to reject a trade. Hotspot is shortening the time market makers have to act on a trade from 200 milliseconds to 100 milliseconds. FXall has not publicly announced the amount of time by which Last Look has been shortened, although a spokeswoman said the company has already informed clients of the planned time reduction.

In addition, the venues are implementing other methods for reducing the likelihood that trades will be rejected. For example, Hotspot market makers are expected to have a minimum 85 percent acceptance rate on the non-firm liquidity orders. FXall is also implementing a “minimum passive transaction ration per stream” though it did not provide specifics.

“As we drive to bring more transparency to the global foreign exchange market, we feel it is important to introduce new standards to further strengthen the requirements around our liquidity,” said Bill Goodbody, Jr., senior vice president of foreign exchange at BATS.

The move by the two venues may help speed a trend that is already underway, according to Jake Loveless, CEO of Lucera, which runs a software defined network (SDN) that connects to hundreds of FX venues and also offers a FX smart order router.

“It will be interesting to see what the effect is. Certainly in the long run, we were already continuing down the path of higher and higher fill rates and less and less time,” Loveless said. “It’s marketing economics and execution quality. Resetting those high water markets is going to accelerate that.”

Yet Loveless notes that 100 milliseconds would still be an upper bound for response time. On the Lucera SDN fiber network, for example, 100 milliseconds is almost enough time to transmit twice from New York to London and back.

Lucera’s LumeFX smart order router aims to drive FX market efficiency by what Loveless calls a pattern of “positive reinforcement” where flow is routed to the venue with the highest probability of fill per unit time.

“If a liquidity provider has a response time of one millisecond, it might be routed to even if it has a lower fill rate than someone who said 100 milliseconds,” he said. Clients, if they chose, can adjust the model to favor time over fill rate or vice versa.

FXall’s proposed changes similarly appear to be handing some control to clients over preferences in execution. In addition to new eligibility requirements, FXall’s new Provisory Liquidity protocol will share “transparent and measurable” data to allow clients to make informed trading decisions.

“Clients value choice in execution when the choices made available to them are consistently and transparently managed to the highest standard,” said Phil Weisberg, Thomson Reuters’ global head of FX.

For more:
– read the WSJ article
– read the MarketWatch article

Related Articles:
Deutsche Borse and two Chinese exchanges form venture for foreign trading of renminbi
Thomson Reuters unveils new post FX-scandal changes to chat

Source: www.fiercefinanceit.com

CNA Finance Logo

CNA Finance LogoIgnoring your creditors is the second worst action you can take regarding your credit. Yes, it is an action. You toss their letters in the garbage. You do not answer the phone when they call. You delete their messages. These are all actions. The worst action you can take is to not pay your creditors on time.

I have been guilty of this mistake in the past myself. I have ignored the letters. I’ve received the first, cordial letter that says something like, “If you have forgotten to pay, please do so immediately, because your account is behind.” “If you have already paid, please disregard this letter.” I have also ignored the letter on blue, pink, or red paper! The red letter is usually the final warning that further action will be taken immediately, which typically means legal action. This is absolutely the wrong move to make. It not only exposes you to further damage of your credit score, but increased late and legal fees. If you cannot pay, call them back. Speak to the nice customer service representative, in a friendly tone, and ask what are your options. Your options may include skipping a payment (deferment), partial payment, refinancing, etc. If you do not receive a satisfactory answer, then ask to speak to a manager or supervisor. Managers typically have more power and options for you beyond the first person that answers the phone. It is very important that once you have come to an agreement that you follow through and make the payment as promised. If you do not, your creditor has little to no reason or obligation to give you a second or third opportunity to bring your account current.

I hesitate to bring this option up; however, if you cannot make your payment by the due date you must make sure to pay BEFORE it is 30 days late. This is not a desired option because not all creditors report to the credit bureaus at the same time. I would never suggest paying a creditor 27-28 days after your payment is due. This practice causes bad habits and will hurt you eventually. I have counseled individuals that believe their credit score is poor because they pay their bills late “every now and then.” I had a client tell me that she never pays her bills on time. After reviewing her credit report, she did not show 1 late payment on any of the three credit reporting bureaus. I learned from her to ask follow up questions. If I had inquired further, I would have realized that she may not pay by the due date every month, but she has never been 30 days late. This is the first bench mark that is reported by creditors to the credit bureaus. Did she hurt herself with those individual creditors by paying late, incurring late fees, and possibly higher interest? Yes. However, as far as outside creditors that may be inclined to judge her creditworthiness, she was a more than acceptable risk.

If you ever find yourself in a situation where you cannot pay a bill by the due date, contact your creditor. I do not advocate paying late; however to preserve your credit history with a mortgage, credit card, auto or installment loan, follow the advice above.

That being said, your credit report shows when you are current or 30 plus days late. You must remember that the reporting system is not perfect. I can envision a scenario where your payment is due on the 20th of the month and somehow if you have not paid by the 30th of that same month, your credit report could reflect over 30 days past due. Although disputing errors on your credit report is easier now than ever, who really wants to go through that process if you don’t have to do so.

Pay on time, every time. Budget gurus who give advice about how to trim the fat in your budget often suggest avoiding late fees, bank fees, and the morning latte at your favorite coffee spot. I have never heard one of them mention increasing your credit score. I will go out on a limb and say that increasing your credit score will save you more money in the long run than carrying a bag lunch. The $20-$30 a month you can save on an auto loan alone can be more beneficial with a better credit score.

Ignoring creditors will never resolve your issue. Your issue could be short term or long term. Whatever the case may be, it is best to keep open lines of communication and follow through by paying your obligations. As usual, stay tune…come back for more great reads from THE 800 Credit Score Man.

Thought Leader Discussions

Gevo, Inc. GEVO Stock News

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Gevo, Inc. (NASDAQ: GEVO) Before we get into this interview, I'd like to extend a special thanks to my friend Joey who both set up the...