Improve Your Credit Score By 100 Points With This Simple Tip

Most of you know that I became a financial educator after I was able to improve my credit score by 120 point in 18 months. People always want to know how I did and guess what? A webinar teaching you the steps I followed and the documents I used is coming your way next month! You don’t want to miss it, so make sure you sign up via the -email sign up form to the right.

But in the meantime check out the credit boosting tip in the video below from my sis-STAR, budgeting rockstar, Tiffany “The Budgetnista” Aliche.

And remember: Sometimes your credit score is your first impression.

4 Ways Student Loans Impact Your Credit Score

I officially have student loans.

Let me rephrase that. I am officially repaying my student loans.

storyville_i_make_it_rain_art_di1For a good part of my financial journey my student loans were in deferment because I was in graduate school. Considering when I started graduate school my salary was around $32,000 I gladly accepted deferment and took the opportunity to focus on the rest of my financial life.

Despite my personal circumstances, student loan questions are and remain one of the top categories I receive questions about and for good reason. Almost everyone I know who went to college has some type of student loan debt. I mean sadly, I know people who could buy a home with their student loan amounts. According to the Federal Reserve, in 2012 there was roughly between $902 billion and $1 trillion in total outstanding student loan debt in the United State. Approximately 60% of students had student loan debt.

While I plan to write more posts on student loans, to get us started here are four ways that student loans impact your credit.

1. For people who don’t have credit, student loans are a way to establish credit history.

Because virtually every US citizen is eligible for student loans, the loan administrators don’t have the liberty of turning folks down that have thin or less than stellar credit files (Federal loans are different from private loans). If you don’t believe in credit cards, student loans can be your opportunity to demonstrate your ability to reliably repay debt.

2. Student loans are considered installment loans and can boost your credit rating.

Before I understood credit the terms installment and revolving credit confused the mess out of me. So let me simplify it.

Revolving credit is credit that doesn’t have a specific number of payments attached to it and is usually used on a regular, as-needed basis. I call it flexible. Credit cards are the most well-known type of revolving credit. You spend, you pay off, you have the ability to spend again with a varying monthly payment based on your spending. Payments can go on for as long as the line of credit is open.

Installment credit is credit that is set. It has a specific, finite number of payments (referred to as terms) and usually comes in the form of loan that is taken out and paid back in even increments based on a number of months. Student loans, car loans, personal loans, and mortgages are examples of installment credit; payments on these loans don’t vary from month to month and are supposed to have an end date.

Because student loans are considered installment loans, they can add to your credit mix, which accounts for 10% of your credit score. While 10% may sound negligible, it can make a difference. So if you are like me and live in NYC and can’t afford a mortgage, student loans provide that opportunity to mix your credit up a bit.

3. Potential creditors consider student loans to be good credit

This doesn’t meant that regardless of your payment history, it’s viewed as good, so lets not get out of hand. This means that creditors look at it as a necessary evil that is an investment in your future. Having $35,000 in student loan debt vs. $35,000 in credit card debt is viewed differently by potential creditors and will be treated differently during the review process when lenders decide whether to grant a mortgage, auto loan, or small business loan.

4. You generally have about 60 days before federal loan lenders  report your account past due to the credit bureaus at the end of the month.

For some reason I didn’t receive paperwork after my loan came out of deferment post graduate school and I was 6 days late on the payment when I caught the error. I went into a panic, almost had a breakdown and thought my MyFabFinance badge was going to be snatched from me. I was relieved to find out that there is generally a grace period before your report is dinged. I do not recommend factoring this into your repayment strategy because a lenders repayment policy is up to them, but if you find yourself a few days late, you are generally okay. But get a payment in as soon as you are able. If you are finding it difficult to keep your payments organized I highly recommend the My Fab Finance Financial Organizer to get you in order.

 

As stated in the opening, I plan to cover student loan debt more as my experience with it goes on. Please feel free to send me your questions as well as comment below.

 

 

Financial Freedom Sale

Today is not just a day to attend BBQ’s and watch the fireworks, today is a day to relax and celebrate how amazing you are. For that reason we are having a sale in recognition of financial freedom.

FinancialFreedomSale

My NYC and surrounding area folks, today and today only tickets to Fashion & Finance are $5!!!!!!!! That’s right. $5!!!

For $5 you get:

* Bottomless Drinks
* Hors d’oeuvres
* Invaluable financial advice with MY financial mentors and the opportunity to ask us questions

* Exclusive access to the ginormous Housing Work Buy the Bag Warehouse (Think Goodwill on steroids)

PLUS $5 off your first two bags of clothing!

It’s an incredible value that allows you to invest in your wallet, your closet, and yourself!

Get your ticket while they last and remember, financial freedom is one of the best gifts you could ever give yourself and those who depend on you.

 Click HERE to purchase your ticket!

Things to Consider Before Closing Your Credit Card

This article originally appeared June 2013.

I recall when my mother first found out I owned a credit card.

I was in college and the bill arrived at my parent’s house.  Why didn’t I have the foresight to have my bill sent to school? Call it fate. As she scrolled through the charges and saw my lavish Red Lobster dinners and my Journey’s shopping sprees I’m sure anger bubbled inside of her. After all I had no job and pretty much no plan to re-pay my accumulating debt.  There was no “your card is declined” surprise at the register though. She closed my card down immediately and made sure I was on the phone to hear it.

And this is what several people move to do when they find themselves a bit over their heads or in hot water with a credit card company.

However it might not be to your benefit to close out the account. While closing out your account may prevent you from continuing to rack up charges on a card and possibly sabotaging your repayment plan, closing a credit card account can hurt your credit score.

Cancel card ImageAccording to MSN money there are five situations where it might be okay to close a credit card account:

Post Break-Up. If you are separating or getting divorced from someone with whom you share a joint account, go ahead and close it. Otherwise, as long as the account is open, you are fully responsible for any bills your soon-to-be-ex runs up. (That’s true even if your divorce decree says he or she will be responsible for that bill. Your issuer can still look to both account holders for payment as long as there is a balance.)

The Friggin fees. If your credit card company is charging an annual fee that you don’t want to pay, ask to have it waived. The same thing is true if you are accidentally late with a payment and get hit with a late fee. (As long as you’re late only once in a blue moon, you should be able to get the fee removed.) But if your issuer won’t budge, especially on a hefty annual fee, it may be time to take your business elsewhere.

The card no longer makes sense. For instance if you own an airlines rewards card for Us Airways because their hub is located in your city, but youmove to another city where another airline is the primary hub and you find yourself flying US Airways significantly less. Most airline reward cards carry hefty annual fees after the first year, so you may find it necessary to close one of these accounts and switch to a card with a more useful rewards program.

You’re done with debt. Some people prefer to live debt free lives. And that is completely fine and I applaud you. I once worked with a woman and she and her husband only financed major purchases like homes and vehicles. Everything else was paid for in cash.While it may be best for your credit score to keep a credit card or two open and simply pay in full each month, that approach may not work for you. You know yourself. If the temptation that piece of plastic offers is too great, then get rid of it.

The card has been used fraudulently. If your credit card has been lost or stolen, in most cases the card issuer will automatically close the account and issue you a new card. But that’s not always the case. Suppose, for example, you bought one of those diet products off the Internet, and despite your best efforts to cancel, you keep getting hit with a monthly charge for more. Or you gave a debt collector your credit card number to make a monthly payment on a debt and then discovered the collector was taking larger payments than agreed upon. In situations like that, you may want to close your account rather than risk having to fight to get charges reversed in the future.

If you are trying to rebuild your credit here’s where you should be wary.

If a credit card is in good standing and there is a lot of positive credit history that goes with that account it will stay on your credit report longer if you keep it open. A closed account doesn’t disappear from your credit reports. A common misconception is that once you close it, that account will no longer contribute to your credit score.

The actual impact to your score is that you loose that amount of credit factoring into your utilization. Unless you have low balances on your other cards, closing an account can throw your debt ratio (how much credit you are using vs. what’s available) out of wack.  It is recommended that you keep as many of your accounts open as possible. If you already have several old accounts, for example, and you close one, that won’t affect your score the way it would if you had only a couple.

You should also keep your oldest accounts open if you can. Scoring models take into account the age of your accounts, including the age of your oldest account, your newest account and the average age of all accounts. A seasoned credit history is best when it comes to this factor as having several new accounts will make creditors wary to lend to you and can bog down your score.

Closed accounts will eventually fall off your report and if you closed the account in good standing you will lose all of that positive history you built.

After being educated on the pros and cons of closing a credit card and you are comfortable with it potentially having a negative affect on your score I urge you to do what is best for YOUR situation.

If you are not good with credit, shut it down.

Could You Live Off One Paycheck a Month? One of our Readers is!

One of the beauties of starting this blog and movement is that I’m continuously inspired by other women. Not too long ago one of my readers, Tyesha, mentioned in my comments section that she was living off of one of her paychecks. I’ve heard of people doing this but never spoke to someone who is doing this that wasn’t a granola eating minimalist. So I had to hear how she was doing it and asked her to share her experience with MFF readers. 

TyeshaandI

Tyesha and I at the In Her Shoes Anniversary Event

Here is Tyesha’s story:

In January of this year, I took a look back on my 2013 spending and saving, and let’s just say I was very disappointed in myself. About 1/2 of my salary was being used for shopping or paying off credit card bills. I was literally sick to my stomach after looking at the numbers, and I knew something had to change.

About three weeks later, I started a new job and decided I have to see how I can live on one pay check per month.

Before that could happen I had to pay off the credit card bills I accumulated last year. My goal was to pay all cards off by the end of April. As of the end of March 2014, all those bills were been paid off. Woooohooo! I can’t say how great feeling it is.

During this time of paying off my credit cards, I gave myself a tight budget and was able to save significantly!

So why am I living off one paycheck?

I have a goal on the amount of money I want to save by the end of the year. I also have a vacation/wedding trip in South Africa this summer for which I am saving for. (I have opened a separate saving account for this trip.)

So how am I doing this you might ask?

childishgambinogif

Here are the steps I have implemented:

Step 1: I have a budget, and I am sticking to it!!! I have always had a budget but never stuck to it. Shopping being my weakness, I always see something I want to have, and I get it. NO MORE!!!

Step 2: I set my expenses up as fixed and variable. Fixed expenses are items that are the same every month such as tithes, rent, and cable. Variable expenses change monthly and include my food allowance and entertainment.  I budget everything–even the allowance I gave to my niece and nephew (which they have to work for). Lol… I know; I am a bad Auntie.

If, for some reason, I go over in one area, I try to find a way to cut back in another or not to spend the money I  allotted for a certain line item such as movies or the shirt I wanted to get this month.

Step 3: I reduced my overhead. My rent is currently half of what it was about two years ago, but even if it was not, I could still live on one check per month. As stated above, I have no credit card bills. When I do purchase something on credit I will pay the bill right then. I polish my own nails every Sunday instead of going to the nail salon. I go to the nail salon about once every two months.

Step 4: I said no to shopping – MOST TIMES!! I don’t shop at much as I used to…as I stated earlier, I still have clothes in my closet from about 2 years ago that I have not worn. (Now can they fit?!? Thats another conversation)  I smile when I am able to walk into and out of my favorite store and not buy anything.

Step 5: I stopped eating out as often as this was another large expense in 2013.

Step 6: I significantly reduced what i was spending on others. My birthday gifts allowance has been decreased drastically.

These are some of the things I am doing to live on one check per month! Wish me luck! I am totally looking forward to the challenges and accomplishments ahead.

-Tyesha (Taj)

Tyesha2

So. Thoughts? Could you live on one paycheck a month? I’d like to try it myself as I have major purchases and life changes coming up.

A Gift for You! Happy Financial Literacy Month

Happy April and Happy Financial Literacy Month!

I want to take the time out to say thank you! You all are absolutely amazing and you continue to inspire me with your successes each and every month.

April is Financial Literacy Month so I wanted to give my readers a special gift. I worked diligently with my graphic designer to create this financial organizer for you. It is complete with a monthly financial calendar so you can track your bill due dates, a debt repayment plan sheet, an account information page, and more!

When I decided to get my finances together, getting organized was the first thing I did.

As you begin to spring clean, use this to organize your finances so that we can make this your best financial year yet! Print it out, put it in a 3-ring binder and whip your finances into shape. This template will only be free during the month of April, and after that I will sell it for a nominal fee.

So share it to everyone you know and let’s make the rest of this year fiscally awesome for you!

MFF Financial Organizer

 

And don’t forget that we have our Frugal Fab 5 Spring Clean & Grow your finances event coming up April 12th!

Attendees will:

– Create a debt reduction plan
– A clear understanding of how your credit score is calculated
– A credit plan to help you raise your credit score as much as 100 points in 1-year.
– A complimentary e-guide: 9 Ways to Successfully Handle Debt Collectors.
– Frugal, fabulous FUN!
– Lunch
– A complimentary copy of Tiffany “The Budgetnista” Aliche’s bestselling book, The One Week Budget!

Click here to invest in your financial future and secure your seat today.

How to get your credit report totally FREE on AnnualCreditReport.com

 

You’ve pressed the reset button on the year and by now you’ve hopefully determined what your financial goals will be for this year..

If improving your credit score is one of those goals, knowing and understanding your credit report details are crucial to improving your credit score. My reason for starting My Fab Finance and embarking on my financial journey was to improve my credit. Think of the credit report as your roadmap for making that happen.

While I won’t discuss the various sections of a credit report in  this post, I will provide a tutorial so that you can access yours for free. There are several companies, including FreeCreditReport.com, who swindle consumers into paying for their report when your report is available absolutely FREE.

If you would like help understanding your credit report refer to the Credit Report Post. It’s long, but hella informative.

The following instructions are for accessing your Equifax report.

Lets get started!

1.Make sure you go to annualcreditreport.com. If the page doesn’t look like this (with the exception of the slider image) you are probably in the wrong place.

Step 1

Click on the red box at the bottom that says “Request your free credit reports”

2. On this next page all you have to do is click “Request your free credit reports” again
Step 2
3. This page is officially step one. Here, you will enter your personal information. Be sure to double check for accuracy. If you have not lived at your current location for more than a year, be prepared to enter your previous addresses as well. Once you’ve entered your information, proceed to the next page.

Step 3

 

4. On this page you can decide which credit bureau you’d like to retrieve your report from. As you know, there are three credit bureaus: Experian, Transunion, and Equifax. I recommend pulling one from each site every few months. For example pull Equifax in January, Experian in June, and Transunion in November. While information can differ from one report to the other, for the most part they are the same. Pulling every few months will allow you to monitor new items, disputes, possible mistakes, and items that might have fallen off.

Make sure you keep a record of the date in which you accessed each credit report bureau’s website.

5. The next page will prompt you to verify the last 4 digits of your Social Security number. If all info is correct, you can proceed to the next page.

6. I call this the trick questions page. On this page you will be asked questions to verify your identity. Please be aware they do throw false information into the mix. Some or all answers could be “None Of The Above”. It is important to answer correctly. If you answer any of these questions incorrectly, you will not gain access to your online credit report. You will also have to go through the time consuming process of requesting it by mail.

Step 6

After you have provided your answers proceed to the next page.

7. This is the page with your credit file number. Be sure to notate your transaction code – which will be provided in the first sentence. From this page, you will click on the box that says view and print your report (the box next to the pink arrow).

 

Step 7

 

8. You will finally receive your credit report! Before you do anything, print and/or save your report as a PDF. (the box next to the pink arrow)

Step 8

Again as stated, if you need additional help navigating your report, please refer to our Understanding your Credit Report Post.

Ready to Begin? First Steps to improving your Finances

 

You’re ready to get your finances in order, but where do you start?

I am asked this question on a weekly basis and I completely understand.

In a previous Twitter chat I stated, “Looking at your credit report for the first time is like walking into a room and all of your bad financial decisions are hanging out.” It can be absolutely overwhelming. It’s especially overwhelming if you are essentially starting from scratch.

There are many different plans of action one can take, which I think are relative to your situation. While retirement is extremely important; establishing good financial habits and a budget are even more important.

Step 1: The first step I recommend is securing employment or establishing a regular form of income. To accomplish your financial goals you will need…finances. Being underemployed is different from unemployed and can be an issue on its own but the important thing is to become employed so that you can take care of your necessities (rent, food, transportation, childcare, etc.).

oneweekbudget

Step 2: Establish a budget. I highly recommend my friendtor’s (Friend + Mentor) Tiffany “The Budgetnista” Aliche’ book, The One Week Budget which can be purchased on Kindle for less than $1 here . I highly recommend this book and often refer to it myself.

Familiarize yourself with your credit report. Identify any debts owed and the amounts. This will be key in determining a “get out of debt plan”. Be patient. Remind yourself that getting out of debt often takes longer than it did to get into debt. It is possible. Try a site like Quizzle or my credit report tutorial to gain access to your credit report.

Step 3: Designate an amount you can afford, to build your emergency fund.  When I say what  you can afford, that doesn’t mean only putting aside $25 a month because you have $100 on the side for your fun fund.

Establishing an emergency fund is essential. I recall after graduating from college I was laid off from 2 jobs. One went bankrupt and the other one reorganized after coming out of bankruptcy. Job security is not what it was for our parents and grandparents. It is important for you to prepare for whatever may happen. The amount you put aside each month should take into account how much of your current income you will need to pay off your debts. For example, currently I put aside roughly $300 per month and hope to boost that to $500 per month by next year.

While you should be concerned with investing – unless your job has a matching program, which would essentially mean free money – focus on getting your savings together and your debt down.  During this process, I learned emergency funds are used before retirement account funds.

Once you grasp the basics, begin exploring your investment and retirement options.

Also remember, there are more people experiencing financial difficulty than those that do not. I know a lot more financial messes than successes. Find a finance buddy and hold each other accountable. It’s so much easier when you are working with someone else to accomplish your financial goals.

 

Guest Post- 4 Reasons Why You Are Still Broke

Today’s Guest post comes from Kara Stevens of Fabulous and Frugal, 1/5 of the The Frugal Fab 5. Kara mentioned this post while speaking on our panel last week and the title alone blew me away so of course, I had to share it with you all.

how to manage your money, how to properly manage your money, how to manage your money wisely, how to manage your money worksheets, broke

You have worked too hard— getting your (numerous) degrees, navigating Cubicle America, and building your brand to be broke. “Being broke”, though, seems to a recurring theme among black women, who, for all intensive purposes, with the exception of their financial lives, embody intelligence, progressive thinking, resourcefulness, and discipline.
But in order to live a full life, you have to first gain insight into why are still broke. Here are four reasons for why a woman as fabulous as you, is still broke:

1.You are broke because you have yet to establish financial boundaries. How do you feel when someone gets too close—all in your personal body space—when you are in a restaurant, store, or on public transportation? You probably feel like they need to back up because they are making you uncomfortable. Right? Well, the same thing applies to your money. When someone in your family or in your close circle of friends comes into your personal “financial” space, they are crossing financial boundaries.

Establish your financial boundaries by making your opinions and policies around borrowing clothes and money, cosigning loans, and extended visits, clear to your moocher friends and family members. If you want to be direct, say, “ No, I am not wasting my money on that.” If you want a little more finesse, try this: “ I wish I could, but my finances are not allowing me to do that right now.”

2. You are broke because you have not aligned your values to your spending. A lot of us walk through life in a financial fog spending haphazardly because we are not paying attention to what we really care about, what we really love, or what we really need. Instead of customizing our lives and, by default, our budgets to reflect our priorities, we emulate the financial habits of friends or those on the media who are overtop in all things: clothes, entertainment, homes, dining, and travel.

To identify what you should be spending your money on, jot down what you love doing in your free time and the items on your “bucket list” and see how much of your money is currently funding those passions. If you find that you love “fine dining,” but do not care much for movies, clothes, or a fancy apartment, then you should focus most of your discretionary (guilt-free) money to that activity and eliminate spending in the other areas. On the other hand, if you are dying to travel, but are spending a whole heap of money on an apartment that you don’t really care about or paying a hefty car note, it is better to trade-in the costly rent and monthly car payment for a cheap place and sell the car so you will have money to explore the world.

3. You are broke because you equate celebration with big spending. Whether it be landing a new job, a birthday milestone, or a graduation, it is assumed that you have to go out and celebrate; “going out” makes things seem more special and more important when that is not necessarily true. When it is time to celebrate in a big way, consider taking it ol’ school and invite people over to your beautiful home or appointment to revel in your success and happiness. Besides, when you entertain at home, you don’t have to worry about mandatory gratuity, feeling rushed to leave after eating, or sharing public restrooms with strangers.

4. You are broke because you don’t manage your emotions. The concept of retail therapy is usually associated with a woman needing to shop because she needs an emotional pick-me-up or a confidence boost. We just don’t shop, though, when we are depressed. We also shop when we are bored, happy, feeling lonely, or feeling naughty.

Since experiencing emotions is part of the beautiful human experience, we don’t need to feel less; instead we need to identify healthy and cost-effective alternatives to shopping when our emotions start to surge. Try a hot shower, calling a girlfriend, dancing in the mirror in a bikini, doing something nice for someone else, or taking a nap.

As women destined for greatness, we have to manage our finances in a way that empowers our lives, brings us joy, and enriches our souls. The first step on this journey to greatness begins with self-reflection and a decision to no longer be broke.

Now readers, how do you feel about this list? Can you identify with any of the reasons?

ABOUT
Created by nationally recognized millennial money expert Tonya Rapley, My Fab Finance is a leading financial education and lifestyle blog for millennials who want to become financially free and do more of what they love.

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