Category: Credit Cards

What Percentage of Young People (Age 18–24) Have Never Checked Their Credit Score? The Stats May Surprise You!

Posted on June 9, 2025 by - CREDIT BLOG, Credit Cards, Credit Report

What Percentage of Young People (Age 18–24) Have Never Checked Their Credit Score? The Stats May Surprise You!

A credit score can impact where you live, how much you pay for a car, and whether you get approved for a credit card, but nearly 4 in 10 young adults have never checked theirs. That’s not a small oversight. It’s a blind spot that can cost real money. If you’re in that 18–24 age range, this is your chance to get ahead. The sooner you understand your credit, the easier it is to shape it, and protect your future from expensive surprises. In this guide, we’re breaking down what percentage of young people (age 18–24) have never checked their credit score, why that matters, and what to do if you’re one of them.

Percentage of Young People (age 18–24) Have Never Checked their Credit Score

What Percentage of Young People (Age 18–24) Have Never Checked Their Credit Score?

According to a recent study by LendingTree, a whopping 40% of Gen Z adults (ages 18–24) have never checked their credit score. That’s a staggering number, especially when you consider how much your credit score affects your everyday life. From renting an apartment to qualifying for a credit card, buying a car, or even landing a job, your credit score plays a big role in the direction of your life. Yet millions of young adults are in the dark when it comes to this crucial three-digit number.

Why Young People Avoid Checking Their Credit Score

There are a few common reasons young people (ages 18-24) avoid checking their credit:

  • Lack of education. Credit isn’t always taught in school, and many people don’t understand how it works until there’s a problem.
  • Fear. Some worry they’ll discover bad news—like a low score or a forgotten bill in collections.
  • Assumption. Many assume they’re too young to have a credit history worth checking.
  • Access. Some simply don’t know where to go to check it for free.

But here’s the truth: you can’t fix what you don’t understand. And the earlier you start building credit awareness, the more power you have to shape your financial future.

Learn the Rules of Credit

Why Your Credit Score Matters, Even in Your 20s

Even if a mortgage is years away, your credit score still affects your life right now … and the banks would rather you not figure that out. Why? Because the worse your credit, the more money they make off you through high interest rates, fees, and deposits.

Here’s how your credit score shows up in real life:

    • The chance to get ahead:With excellent credit, you can qualify for rewards cards that earn you miles, points, and perks. Use them on your everyday spending (e.g., groceries, gas, takeout), and the perks will pile up.
    • Rental applications:Landlords check credit to decide if you’re a reliable tenant.
    • Vacations:Want to book a flight, rent a car, or grab a last-minute Airbnb without draining your savings? A solid score gives you access to credit cards that can help finance travel.
    • Job opportunities:Some employers review credit reports, especially for roles in finance, security, or leadership.
    • Auto loans:A strong score can save you thousands in interest over the life of a loan.
    • Cell phone plans and utilities:Companies may require a credit check or a hefty deposit.
    • Emergencies:A healthy score gives you access to credit when life hits unexpectedly.
The bottom line?
The less you know, the more they profit.
But when you understand how credit works, you flip the power dynamic and unlock a lot more freedom.

What Happens If You’ve Never Had Credit?

Another surprising stat: around 15% of young adults are “credit invisible,” meaning they have no credit history at all. That might sound better than having a low score, but in reality, no credit is just as damaging as poor credit.

This is because lenders need evidence that you can manage debt, and if you have no credit, lenders can’t assess your risk. They will think: Better safe than sorry, and they will deny your application outright.

That’s why it’s essential to start building a healthy credit file early.

But first …

How Can You Check Your Credit Score (for Free):

Curious where you stand? Here are a few ways to check your score without spending a dime:

  • Credit card company: Many credit cards offer free access to your FICO or VantageScore as a perk. Just keep in mind that there’s no single “official” score. You actually have dozens, based on different formulas (though most lenders use FICO).
  • Bank account dashboard: Some banks and credit unions show your credit score right on their website or mobile app.
  • com: You can get a free copy of your credit report (not your score) from each of the three bureaus every week.
  • Credit monitoring tools: Free apps like Credit Karma or Experian Boost give you regular score updates, tips, and insights to help you stay on track.

What percentage of young people (Age 18–24) have never checked their credit score? A whopping 40 percent!

How to Start Building Your Credit Score

If you’ve never checked your credit score, or don’t have one yet, don’t panic. Everyone starts somewhere. These three steps will help you build credit the right way and set yourself up for long-term success:

  1. Get a Secured Card or Become an Authorized User
    A secured credit card works just like a regular credit card, but it requires a small deposit (usually a few hundred dollars) that acts as your credit limit. Because that deposit protects the lender, these cards are much easier to qualify for, even if you have no credit history.

Just remember: the deposit doesn’t pay your bill. You still have to make payments on time. If you’re late and the deposit gets used to cover what you owe, it will hurt your credit. So use it for small, regular purchases (like gas or groceries) and pay it off in full each month.

Another simple option? Become an authorized user on someone else’s credit card. This is one of the easiest and risk free ways of building your credit score. If a parent, sibling, or trusted friend adds you to an account in good standing, their history of on-time payments and low balances can give your score a boost, even if you never use the card.

Pro tip: If someone’s nervous about adding you, let them know they don’t have to give you a card at all. You’re just riding along for the credit-building benefit. And if their account ever goes delinquent, you can cancel the arrangement and your score will revert. Easy, low-risk, and super effective.
  1. Get the Credit Rebuilder Program
    If you want a shortcut to building positive credit, the Credit Rebuilder Program is designed to give you structure, guidance, and results. It’s especially helpful if you’re starting from scratch.

Here’s how it works: You make a small monthly payment ($39), and that payment gets reported to all three credit bureaus as an installment account. That means you’re building credit history just by enrolling. The program is built for people recovering from financial hardship, but it is also a great tool for young people. 100 percent of people are approved, and it has the same positive impact on your credit score as an auto loan..

You’ll also get access to:

  • The 7 Steps to a 720 Credit Score (keep reading for the details!)
  • Legal tools to help fix errors or unfair marks on your credit report
  • Ongoing support, even if you’re starting from zero.

This is one of the only programs out there that doesn’t require a credit check and still helps you move forward. Whether you’re rebuilding or just starting out, it’s a smart move that delivers real results.

3. Follow the 7 Steps to a 720 Credit Score

The 7 Steps to a 720 Credit Score is a credit-education program that’s included with the Credit Rebuilder Program. It’s not about disputing everything on your credit report or looking for loopholes. Instead, it teaches you the exact patterns of behavior that banks and credit bureaus reward so you can build a credit score that opens doors.

Because here’s the deal: the banks profit when you don’t know how the system works. They make money off people with low credit scores through high interest rates, fees, and penalties. The less you know, the more they earn.

You’ll learn things like:

  •  How to manage your “credit utilization”
  • What you should do if you are married
  • Which types of credit to open (and when)
  • How to avoid common mistakes that quietly drag down your score
  • How to build a score that makes you look creditworthy—even if you’ve had financial setbacks

These are the same rules lenders use to judge your worthiness, but they’re not exactly shouting them from the rooftops. We are. And the best part? Once you know how the system works, it’s not that hard to win at it.

Final Thoughts

So, what percentage of young people (age 18–24) have never checked their credit score? Close to 40%, but that doesn’t have to include you.

Checking your score is free, safe, and one of the smartest financial decisions you can make in your 20s. It’s the first step toward building a solid foundation and avoiding costly surprises down the road.

And if you’re not sure where to start, the Credit Rebuilder Program can help you take the guesswork out of growing your credit with confidence.

Enroll in the Credit Rebuilder Program

How Do Loan Terms Affect the Cost of Credit?

Posted on June 3, 2025 by - CREDIT BLOG, Credit Cards, Credit Report, Credit Score

How Do Loan Terms Affect the Cost of Credit

When you take out a loan, it can be easy to focus on one number: the monthly payment. But there’s a much bigger question to ask: How do loan terms affect the cost of credit? 

A loan term is the amount of time you agree to repay the debt. It can range from a few months (like a payday loan or personal loan) to 30 years (like a mortgage). And while longer terms often mean smaller monthly payments, they can also cost you far more in the long run.

So in this article, we’re going to walk through how loan terms affect the cost of credit—and how you can make smart choices to protect your wallet and your credit score.

The Basics: What Is a Loan Term?

A loan term is simply the agreed-upon time period you have to repay a loan. Common loan terms include:

  • Auto loans: 36 to 84 months
  • Personal loans: 12 to 60 months
  • Mortgages: 15 to 30 years
  • Student loans: 10 to 30 years

The longer the loan term, the lower your monthly payment tends to be. But that doesn’t mean it’s cheaper. In fact, that extended timeline can cause the total cost of credit to balloon.

Let’s look at why.

Interest Over Time: The Longer You Borrow, the More You Pay

When you borrow money, you pay interest—which is the cost of using someone else’s money. Even if you have a low interest rate, the longer the loan term, the more months you’re paying that interest.

For example, imagine you borrow $10,000 at a 6% interest rate:

  • On a 3-year loan, your total interest might be around $950.
  • On a 5-year loan, your total interest might jump to $1,600.

Same loan amount. Same rate. But a longer term means you pay significantly more over time.

So when asking, How do loan terms affect the cost of credit?, one of the biggest answers is this: loan term determine how much interest accrues.

The Psychological Trap of Smaller Payments

Lenders often advertise lower monthly payments to make loans feel more affordable. And yes, those smaller payments might fit better into your monthly budget. But they also keep you in debt longer.

These long loan terms are like stretching out the pain instead of dealing with it upfront.

Let’s say you’re offered two options for a $20,000 car loan:

  • A 36-month term at $608/month
  • A 72-month term at $340/month

That $268/month difference sure makes the 72-month option tempting, doesn’t it! But you’ll end up paying thousands more in interest over the life of the longer loan. Plus, you’ll spend six years paying for a car that might not even last that long.

So how do loan terms affect the cost of credit? Loan terms can tempt you into longer, more expensive obligations with seemingly “affordable” payments.

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Real-Life Example: The Mortgage Trade-Off

Mortgages are the most common example of long-term loans, and they illustrate this concept perfectly.

  • A 30-year mortgage comes with lower monthly payments, but you might pay over $100,000 more in interest compared to a 15-year mortgage.
  • A 15-year mortgage has higher payments but builds equity faster and saves a huge amount in interest.

Again, this is why understanding how loan terms affect the cost of credit is so important. You don’t just want a payment you can afford today—you want a financial future you can grow into.

Loan Terms and Your Credit Score

Now let’s talk about how loan terms affect your credit score—because that’s part of the cost of credit too, and it’s what our credit-education course and the Credit Rebuilder Program focus on.

Your credit score is based on several factors, including:

  • Payment history
  • Credit mix
  • Length of credit history
  • New credit inquiries
  • Amounts owed (aka utilization)

A longer loan term might seem like a good idea for keeping your credit score stable, especially if it helps you avoid missing payments. And that’s true to a point: on-time payments over time do help your score.

But a long-term loan can also make it harder to reduce your overall debt load. Because the repayment period is extended, you end up paying more in interest over time, which means you’re spending more money without significantly lowering the principal. That can trap you in a cycle of slow progress. And if you fall behind later, the impact on your credit will be even greater—because larger balances carry more weight.

Here’s why that matters: credit utilization (how much of your available credit you’re using) is one of the most important factors in your credit score. High balances can push your utilization rate above the recommended 30% threshold, signaling to lenders that you may be financially overextended. So if a long-term loan keeps your balances high, even with on-time payments, your score may still suffer. And if you start missing payments on top of that, the damage can compound quickly.

Prepayment: Can You Pay Off a Loan Early?

One way to offset the cost of longer loan terms is to pay the loan off early. But here’s the catch: not all lenders allow it without penalty.

Some loans come with prepayment penalties that charge you for paying ahead of schedule. Why? Because early payoff means less interest income for the lender.

Never forget this: banks and lenders aren’t in the business of helping you reach your dreams—they’re in the business of making money off of you. Every interest charge, every late fee, every penalty is designed to take money out of your pocket and put it into theirs. That’s their business model.

So before you accept a longer loan term thinking you’ll just pay it off sooner, ask the lender: is there a penalty for early payment? If so, you might end up paying more than you planned—even if you do everything right.

Flexibility vs. Friction: Choosing the Right Term for You

There isn’t one right answer when it comes to loan terms. Sometimes a longer term is necessary to make a payment fit your budget. And in those cases, it might be a helpful tool.

But the more important question is: Do you know what it’s costing you?

When you understand how loan terms affect the cost of credit, you’re in a better position to:

  • Compare total interest costs
  • Decide if a shorter term (with higher payments) is worth it
  • Consider refinancing or early payoff
  • Avoid hidden fees or prepayment penalties

How to Choose the Right Loan Term

Here are a few guidelines to help you make a smart decision:

  1. Use a loan calculator. Plug in different terms and see how much interest you’ll pay overall.
  2. Choose the shortest term you can comfortably afford. This helps minimize total interest.
  3. Look for prepayment flexibility. Even if you choose a longer term, the ability to pay more when you can gives you control.
  4. Don’t forget to factor in your financial goals. If you’re planning to buy a house or start a business soon, minimizing long-term debt matters.

What If You’re Already Stuck in a Long-Term Loan?

If you’ve already taken out a long-term loan and regret the terms, don’t panic. You have options:

  • Refinance: Look into shorter terms or lower interest rates.
  • Make extra payments: Even $50/month toward the principal can save you thousands.
  • Call your lender: Ask if there are any programs to reduce your interest rate or term.

And if the debt has become unmanageable, it might be time to speak with a debt professional. We help people understand all their options, including whether they should explore reset strategies and debt-reduction options.

The Bottom Line

So, how do loan terms affect the cost of credit?

They impact how much interest you pay, how long you stay in debt, and how much financial flexibility you have going forward. Shorter terms usually cost less in the long run—but you have to balance that with what you can afford today.

The goal isn’t just to get approved. It’s to make decisions that support your future, not sabotage it.

What You Should Know Before Closing Credit Card Accounts

Posted on March 3, 2016 by - CREDIT BLOG, Credit Cards, Credit Score, Personal Finance

After learning the difference between traditional, secured, subprime, retail and major credit cards, you may want to close one or more of your credit cards, especially if you have more than five. If that’s your only solution to increasing your credit score, learn more about the credit process before closing an account.
Most credit scoring systems award a higher credit score to those who have no more than five credit cards. Before rushing to close an account, know the impact it will have on your credit score.
Here are a few basics about owning credit cards.
Fifteen percent of your credit score comes from the age of your credit accounts. The older your credit accounts are, the better it is for your credit score. Credit scoring systems consider the average age of your accounts. If possible, never close older accounts. If you do, you will drive down the average age of your accounts which will decrease your credit score.
Closing a credit card account may also affect your utilization rate. “Utilization rate” is the ratio of your credit card balance against your credit limit, expressed as a percentage. For example, if you charge $800 on a credit card with a credit limit of $2,000, your utilization rate is 40 percent. Credit-scoring bureaus reward people who have utilization rates below 30 percent. If you want to be rewarded by the credit scoring bureaus, always keep your utilization rate under 30 percent.
How does closing credit card accounts impact your utilization rate? If you transfer the balance on the account you want to close to another account, consider this first. If you decide to cancel a credit card and transfer the remaining debt to another card, you may cause the utilization rate on the second card to rise sharply.  This may cause your credit score to drop.
Leaving a balance on your card after canceling the account is worse than transferring a balance because you won’t have a credit limit to offset the balance owed. For example:  If you leave a $700 balance on the canceled card, your utilization rate will suffer dramatically since the limit on the card will be $0.
Develop a strategy to increase your credit score when you have more than five credit cards. Your best bet is to keep all of them active but pay them off every month. This is achieved with a budget. Plan which expenses you will pay with credit cards.
A steady history of payments will demonstrate to credit-scoring bureaus your ability to manage your accounts and will eventually improve your credit score. Pay special attention to the cards with the highest limits, oldest ages, and best interest rates. Be sure to keep these cards active, maintaining a utilization rate below 30 percent.
Retail credit cards, cards which can only be used at the designated company on the card, are an exception to the “keep-them-open” rule. There is no reason to purchase monthly from these stores. Letting a retail account go inactive may not be the ideal choice, but it should not be a cause for alarm unless it causes your credit score to drop. If that happens, call the retail store and to see if you can reactivate the card.

Don’t make this mistake on Friday, by 720 Credit Score

Posted on November 22, 2013 by - Credit Cards, Credit Score, Personal Finance

Every year on Black Friday, a ton of consumers make a huge mistake that ends up hurting their credit scores and their bank accounts…
They sign up for retail store credit cards.
Excited to get that one-time discount that is usually offered with a brand new retail store credit card, shoppers ignore all of the ramifications. My advice? Don’t ever agree to a retail store credit card. You won’t save money in the long run, and you might hurt your credit score.
Let me explain…
Imagine that you doing some Christmas shopping, and you approach the cashier with a few sweaters for your sisters, clothes for your kids, and a belt for your husband. The total is about $157. The cashier immediately makes you an offer:
“Do you want to apply for a retail store credit card? You’ll save 15 percent on today’s purchases.”
No matter how tempting it is to save that $24, don’t say yes.
Think about it: The banks and the retail stores that promote these store-specific credit cards offer these promotional savings because they know they are going to recoup the discount … and then some.
Consider all the ways the banks and the retail stores can make money off you:
1) First, you will pay interest on whatever you buy on the day you open the card. Most retail store credit cards have a high interest rate—usually in the range of 20 to 30 percent. So unless you pay your balance in full right away, you are going to pay more than you saved.
2) Have you ever bought something just to take advantage of a coupon? A lot of people have. By signing up for that retail store credit card, you will be put on the store’s mailing list, and you will receive coupons that are just for cardholders. They are intended to entice you to the store.
3) In the future, you will be more likely to engage in a little “retail therapy” if you have store-specific credit cards in your wallet. Using credit cards is always easier than using cash; it’s also an easy way to get into debt.
4) If you are given a one-time offer to save on today’s purchase, you just might pile a few more items into your shopping card.
Suddenly, that $24 savings doesn’t seem worth it, does it?
Keep in mind, your credit score could also suffer if you use retail store credit cards. Here are three reasons…
1) Keeping these cards active can be tough. Credit-scoring bureaus want to know that you can responsibly manage your credit cards. If you let your credit cards go inactive, the bureaus have no idea whether you are able to manage balances and debt. In other words, inactive credit cards do nothing for your credit score.
But keeping a retail store credit card active can be tough. Are you going to buy a dishwasher from Sears each and every month just to keep your Sears card active? Are you sure you need a new pair of jeans from the Gap twelve times a year? Most likely, you will either keep the card active by making unnecessary purchases (which costs you money), or the card will go inactive. Either way, it’s bad news.
2) Let’s talk about the second reason I’m opposed to retail store credit cards: You might end up with too many credit cards. The credit-scoring bureaus are the happiest if you have the right number of credit cards (between three and five). If you do not have at least three credit cards, they don’t have the information they need to make a judgment about whether you are responsible. If you have more than five credit cards, they know that you are in danger of getting in over your head.
Three to five is the sweet spot. So if you are limited to just three to five credit cards, why waste one on a card that will only be accepted by one merchant? You cannot reserve a car using your Banana Republic card, but you can purchase a suit from Banana Republic using a Visa.
Too often, people apply for retail cards each time they are offered a discount. These people must also carry American Express, MasterCard, and Visas for everyday expenses, traveling, and business needs. And they quickly find themselves carrying a lot more than five cards.
3) Finally, let’s talk about the third reason a retail card could hurt your credit score: You will definitely add a credit inquiry to your score. Ten percent of your credit score is based on the number of credit inquiries you have on your credit report in the past year. If you apply for a retail store credit card, your score could drop a few points, and this could cost you a lot of money in interest on future loans and credit cards.
So come Black Friday when the holiday-shopping-season officially starts, be a savvy shopper and just say no to retail store credit cards.
I want to know how many times you were offered a store-specific credit card on Black Friday, so please let me know below!

Marry Your Spouse, Not Their Credit Score

Posted on October 2, 2013 by - Credit Cards, Credit Score

If you are getting married, you might be a little worried about how the marriage will affect your credit score, especially if your spouse’s score is lousy. But right off the bat, let me dispel this rumor: Your credit score and your spouse’s credit score will never be merged together. What your spouse does in his or her own name (past, present, or future) will not hurt your credit score…
As long as you do not join accounts.
When you get married, your behavior still counts toward your credit score, and your spouse’s behavior still counts toward your spouse’s credit score. If you pay your Visa bill late, the late payment will not hurt your spouse, so long as the credit card is in your name only. If your spouse has a mortgage payment and defaults, the default will be on your spouse’s credit report only—so long as the mortgage is in your spouse’s name only.
Most people approach marriage and credit with a one-for-all, all-for-one attitude. They apply for car loans as a couple, open joint credit card accounts, and stop building separate credit histories. After all, they have joined their lives together; why not marry their credit histories?
This might sound like a great idea, but the truth is that you should never vow to join all of your credit accounts. Keeping some credit accounts separate has big advantages. In fact, holding credit jointly puts a couple at even greater risk during times of financial crisis. Here are two common credit pitfalls of marriage.
Marriage and Credit Pitfall #1: Keeping All Credit in One Spouse’s Name
Opening all credit cards and loans in one spouse’s name is not wise, but unfortunately, it happens all the time. This usually happens when one spouse works a nine-to-five job and the other stays home with the kids. The spouse with the paycheck opens all credit in his or her name. Here’s the problem, though…
What happens if something happens to the working spouse? A bankruptcy, death, loss of income, or divorce would make the other spouse vulnerable. Because no credit is the same as bad credit, the stay-at-home spouse would have no ability to secure a loan.
There’s another problem with this strategy. Let’s switch this scenario up a bit and imagine that both spouses work. The wife has a part-time job with a small salary, so all of the credit is in the husband’s name. The couple decides to buy a home. To qualify for a loan, they need both spouses’ income. The couple now has a big problem: The wife has no credit history, so her score is low. Putting her name on the home loan would endanger the loan. And the husband cannot qualify for the loan on his own—he needs his wife’s income for that extra boost. Most likely, the couple would not qualify for the loan. At a minimum, the couple would pay a higher interest rate.
This pitfall can be avoided if both spouses build their own credit scores.
Pitfall #2: Joint Credit Cards and Automobile Loans
Imagine that Jack and Diane are married and have joint credit cards and joint automobile loans. When Jack loses his job, the couple struggles to make ends meet. After a couple of months, they start realizing that they cannot afford all of their bills. So they stop making payments on several credit cards and on one of the two car loans. The credit card bills are sent to collections and the car is repossessed. And both Jack and Diane’s credit scores are trashed in the process.
Now let’s see how the same situation would play out with Peter and Paula, a married couple with separate credit cards and automobile loans.
When Peter loses his job, the couple creates a strategic plan about their forthcoming financial problems. Peter and Paula know they can only afford to pay all their bills for three months; the money will run out after that. Peter searches high and low for a job, but is unsuccessful. After three months have passed, the couple decides to stop paying credit cards and car loans in Peter’s name. They stay current only on bills in Paula’s name. Of course, Peter’s credit score suffers. But Paula’s remains pristine. This means that Paula is able to apply for loans in her name, while Peter learns how to rebuild credit.
One last thing: This isn’t to say you should never hold a single joint account. Sometimes, putting your spouse as an authorized user (at least temporarily) is a great way to help your spouse build a credit score. But be strategic. Make sure that you each of you build your own credit score.

What Are the Credit Cards You Recommend for People With Good Credit?

Posted on October 2, 2013 by - Credit Cards

We went out there and researched the best credit cards on the market, consider things like interest rates, rewards points, fees, and the like. You can see our recommended list of credit cards for people with strong credit here.
And keep the following in mind:
1. In our program, we recommend that you have three to five credit cards. If you are going to apply for more than one credit card to reach this goal, apply for them all at once. Part of your credit score is based on the age of your accounts. If you open one now, and then wait six months to open another, you will lower the average age of your accounts.
2. If you are married, do not apply for credit jointly with your spouse. You and your spouse should each apply for three cards.
3. If you have more than five cards, do not close them. This will hurt your score, and it will never help your score.
4. Don’t put this off! The longer you wait to start building your credit score, the longer your credit score will suffer.

Did You Hear How Tony Raised His Credit Score in Three Months?

Posted on October 2, 2013 by - Credit Cards, Credit Score

Every other week, I hold a question-and-answer session for the students in my credit-education program. Usually, I help people with their specific credit situations, give advice, and answer questions about the program.
The other week, though, I was fortunate to have Anthony join the call.
When Anthony started my program three months ago, his credit report was peppered with collection accounts and a judgment, so his score was about 580. To give you an idea of how that fares, anything below 620 is considered bad credit. So Anthony was considered the highest-risk borrower.
But today, just three months later, his score has jumped 60 points.
I tell my students that they should usually expect to wait about six months before they start seeing a significant jump in their credit score. But Anthony has followed all of my advice to the letter. And his score is on its way up, and fast.
Here’s how he did it:
First, he got a secured installment loan from a credit union. He was denied a few times, but Anthony was persistent. Finally, he found a credit union (Cal Coast) to give him a $600 secured installment loan. He put this $600 into an account at Cal Coast, deposited another $6 to cover the fees on the loan, and he uses the account to pay off the loan–$101 a month for six months.
This is a great tactic because it means the credit unions have no risk—after all, he’s keeping the money in the bank. And it helps you, the borrower, increase your credit score by paying the installment loan on time.
Anthony has made just three payments, and his score is already on its way up.
He also opened three new secured credit cards. He keeps a balance on these cards, but only so that they remain active, and he pays his bills on time.
“It’s amazing how simple it is once you know the rules,” I said to Anthony. “If you don’t know the rules, though, it’s just unfair.”
And that’s when Anthony said something that was my favorite part of the call. He said, “If you take the emotion out of it and you take it for what it is—a numbers game—then you see that there are tactics to it. I appreciate that. We can attack our credit scores more strategically rather than getting tied up in the negative emotions of it.”
Anthony said this perfectly. We get so scared about finances. We get this awful, pit-of-the-stomach, all-consuming feeling.
But if we are strategic and rational, rather than panicked and reactive, we get results.
Sixty points in the first three months! I can’t wait to see what happens to Anthony’s score in the next few months.
If you are feeling scared about your credit score, leave a comment below. Get your fears out of your mind. When you put the fear aside, you can start working on the solution.

How Can I Get Credit Cards If My Credit Score Is Terrible?

Posted on October 2, 2013 by - Credit Cards, Credit Score

If you have bad credit, it’s critical that you have and use three to five credit cards. The only way credit bureaus will reward you with a high credit score is if you prove that you can responsibly manage debt. This means: Having at least three credit cards, keeping them active, keeping a low balance (below 30 percent of the limit), and paying your bills on time every single month.
But how can you get credit if you have bad credit?
If you need credit cards, we have researched the best secured and subprime credit cards out there. One of these cards is specifically for people with credit scores that fall below 580. And here are a list of cards for people with scores below 550. That said, I encourage you to keep reading so you can learn about the different types of credit cards we offer on our site.
Secured Credit Cards
There are several ways you can get a credit card, even if your score is low. The first is through secured credit cards. Secured credit cards work like this: Before the card is activated, you will pay a deposit that is usually equal to (but sometimes greater than) your limit. Then, you use the account as you would any other credit card. But here’s the catch: You will also pay the bill, just like you would any other credit card. These aren’t prepaid credit cards. The credit card company will keep your deposit and you will pay your bill.
So imagine that you have a secured credit card with a $1,000 limit. Just to open the account, you will make a $1,000 deposit (at least). Now imagine that you charge $300 to the card. The secured credit card company will not apply the balance to your deposit. You will need to pay the bill, just as you would any other credit card. If you don’t pay the bill in full, you will incur interest, and if you miss payments, your credit card will suffer. If you eventually default, the credit card company will keep your deposit, but only after they have attempted to collect on the debt, and turned you over for collections. If you always pay your bill on time, the deposit will be refunded when you close the account, or when the credit card transitions from a secured to a traditional card.
In short, secured credit cards require you to pay now, buy later, and then pay again, whereas traditional credit cards allow you to buy now, pay later. If you make payments on time and learn how to build credit, you can eventually request that the secured credit card be transferred to a traditional credit card, at which point the bank will refund your deposit. The deposit will also be refunded if you close the credit card account, so long as you have no balance at the time.
Though secured credit cards might not seem like that great of a deal, they are a lifesaver for people who desperately want to increase their credit scores. People with bad credit often cannot qualify for traditional credit cards, so secured credit cards allow them to build their credit scores. Second, many businesses require that their customers have credit cards. For instance, most cell phone companies won’t give you a phone without a credit card—secured or otherwise.
As I mentioned, if you pay the bill on time and keep your utilization rate (the percentage of the balance held against the limit) under 30 percent, then a secured credit card will help your credit score just like any other credit card would. And as your credit card score begins to improve, you can contact the credit card company and ask if it can switch the card to unsecured. While secured credit cards have high interest rates and force you to set aside a sizable amount of money as a deposit, they are an attractive way to rebuild your credit. Use them in the right way—with careful purchases and repaying your debt on time—and you’ll soon be back in the good graces of your credit card company.
This takes us to subprime credit cards.
Subprime Credit Cards
We used to discourage people from getting subprime credit cards. And honestly, we still think that you should try to get a secured credit card before you get a subprime credit card. (We’ll explain why in just a minute.) But we currently recommend a subprime credit card, so we’ve obviously changed our tune. And here’s why …
If you are in financial distress, you might be unable to come up with the requisite deposit to qualify for a secured card. And the truth is: You need credit cards. You need credit cards if you want your credit score to increase, and you probably need credit cards to qualify for some utilities. So by all means, apply for secured credit cards if you have no other options. But keep in mind: Secured credit cards usually come with high fees and high interest rates. Sometimes, the limit is so low on subprime credit cards that you have reached (or exceeded) a 30 percent utilization rate in the first month, just because of the fees.
So if you apply for subprime credit cards, I want you to think of them as tools for reaching a 720 credit score. Keep them active by charging a tiny, tiny bit each month—like a $3 snack at the gas station. The interest rates will be sky high, and I don’t want you to find yourself in a scenario where you are stacking more and more interest on top of a growing pile of debt.
Okay, one more way to get credit cards is by having a family member add you as an authorized user to an existing credit card.
Authorized User Accounts
I encourage you to read our article about authorized user accounts, but I have one additional thing to add. Authorized user accounts are a great way to increase your credit score—and fast. But they should never—never, never, never—be used as a source of credit. Never.
Did we make it clear? Using a family member’s credit card could hurt your relationship with your family. So protect yourself and your family member by getting yourself added in name only. If your family member abuses the account, you can have your name removed, and your score will be no worse off. But if you abuse the account, your family member’s score could drop permanently, and your relationship could be irreparable.

How Many Credit Cards Should I Have?

Posted on October 2, 2013 by - Credit Cards

Question: “How many credit cards should I have if I want to earn the best possible credit score? I receive a lot of credit card offers in the mail. Should I apply for them?”
Answer: Having the right number of credit cards is a big part of your credit score. Ideally, you should not have any retail store credit cards, but you should have between three and five revolving credit card account. This includes Visa, American Express, MasterCard, or Discover.
One of the biggest factors in determining your credit score is the number of credit cards you have. If you do not have enough credit cards, the credit-scoring bureaus will not know enough about your payment history to feel comfortable that you will pay your bills on time and in full. As a result, they will lower your credit score.
In fact, we always say that no credit is just as bad as poor credit. If the credit-scoring bureaus do not have enough information about you, they give you a lower credit score. Better safe than sorry, they figure!
On the other hand, if you have too many credit cards, the bureaus worry that you might be overextended. People with lots of credit cards can more easily dig themselves a big hole of debt. The credit-scoring bureaus respond to this threat by lowering your credit score.
To answer your question—How many credit cards should I have?—the ideal number of three to five gives the bureaus enough information about you to evaluate your credit card payment history, but it also tells them you are conservative about opening new credit cards.
If you do not have three credit cards, you should open some!
Here are credit cards for people whose scores are below 550.
Here are credit card offers for people whose credit scores fall between 550 and 719.
And here are offers for people with credit scores about 719.
If you have more than five, do not close the extra accounts! Doing so will not help your score as it might lower the average age of credit cards. Instead, stop opening new accounts and be sure to keep the proper credit card balances so you can show the credit-scoring bureaus that you are responsible with all your credit cards.

The Credit Card Companies’ Dirty Little Secret

Posted on September 26, 2013 by - Credit Cards, Credit Score

People already know that bankruptcies, foreclosures, repossessions, and collections will hurt their credit scores. And it’s no big secret that late payments are one of the causes of bad credit. But I bet you don’t know about some of the things that hurt credit! Today’s blog is about the the dirty little secret that will hurt your credit score. Here is is …
Credit card companies often omit or inaccurately report credit card limits, and this causes your score to drop. About half of all consumers are missing at least one credit limit on their credit reports. And in other instances, credit card companies intentionally report a lower limit than you have. Why does this hurt your credit score? Well, the credit-scoring system places a lot of  weight on something called a utilization rate. The utilization rate represents your credit card balance as a percentage of your limit. If your limit is $1000 and your balance is $300, you have a 30 percent utilization rate. If your balance increases to $500, your utilization rate would increase to 50 percent. In other words, you would be utilizing 50 percent of your available limit.
The credit-scoring formula responds more favorably to people who have a utilization rate that is no higher than 30 percent.
Now let’s imagine that you have a $300 balance on a credit card with a limit of $1000. Your utilization rate is 30 percent. Good news for your credit score, right? Not so fast. If the credit card company is only reporting a $500 limit, you will appear to be carrying a 60 percent utilization rate because the credit-scoring bureaus will think you are using $300 of a $500 limit. And this hurts your credit score.
There are a lot of theories as to why the credit card companies do this. One is that credit card companies buy lists of borrowers whose limits are, for example, more than $10,000. The companies then send credit card offers with enticing interest rates to the people on these lists. Their goal is to encourage borrowers to switch cards. Your credit card company does not want your name on that list. They want to make sure that you remain a loyal customer. In an effort to keep you as a client, some experts say credit card companies report a lower credit limit than you actually have, or they do not report your limit at all. This makes you less appealing to other credit card companies. This might be good news for their client list, but it is bad news for your credit score.
Are you a victim of this scam? If so, take the following steps:
1.     Pull your credit report from www.my720ficoscore.com.
2.     If the credit card companies are inaccurately reporting any credit limit of yours, immediately begin the process of correcting this mistake. Remember, if you cannot get this mistake fixed, you can and should fight back!