A sharp drop in the stock market and international backlash to U.S. tariff policies have reminded consumers that financial turbulence does not stop at national borders. Whether it’s higher prices on imported goods or a sudden change in lending behavior, global decisions can shape your personal finances more than you might expect.

Understanding how international developments translate to your credit score can help you respond calmly and confidently when the headlines get overwhelming. Here is what to watch for—and how to protect your financial footing.

How global chaos trickles down to your finances

Big-picture events like new tariffs or plummeting stock markets may feel distant, but they can affect your household finances faster than expected. When global economies react to policy shifts, such as the newly announced U.S. tariffs and retaliatory threats, businesses often face higher costs and reduced confidence.

That economic pressure can lead to job insecurity, cost-cutting measures, and higher prices for essential goods. This strains household budgets, potentially pushing people to rely more heavily on credit to manage everyday expenses.

According to the U.S. Bureau of Labor Statistics, inflation has remained a concern in recent months, driving up the cost of living and affecting how Americans spend and save.

Tariffs and inflation: Why your credit card might take the hit

Tariffs often lead to higher consumer prices, which can ripple across spending habits. As food, gas, and other essentials become more expensive, people may rely more on credit cards to bridge the gap.

A sudden increase in card balances can raise your credit utilization ratio—a key factor in your credit score. Even if you’re paying your bills, using a higher percentage of your available credit could put downward pressure on your score.

Keeping an eye on your utilization is especially important during economic stress. Credit Sesame members can track their credit usage and monitor score changes with free credit monitoring tools.

Late payments and stress: The credit damage you might not see coming

When money gets tight, some bills fall through the cracks. A missed payment, even if unintentional, can have a lasting impact on your credit.

Credit scores are especially sensitive to payment history. One late payment can stay on your credit report for up to seven years and cause a noticeable drop in your score. During periods of financial stress caused by global instability, this risk grows.

Staying organized with automated payments and regular credit checks can reduce the risk of accidental slip-ups.

Loan rates, approvals, and the credit ripple effect

Economic uncertainty can also affect how lenders evaluate risk. When markets drop or inflation spikes, lenders may pull back on approvals or offer credit with higher interest rates.

That means you might qualify for a smaller loan than expected, face stricter requirements, or pay more in interest, especially if your score is already under pressure.

Monitoring your credit helps you understand your standing before applying for new credit or loans. Credit Sesame offers personalized insights that can help you prepare.

The Consumer Financial Protection Bureau publishes ongoing consumer credit trends, including insights into borrowing behavior and lender activity during economic shifts.

Protecting your score during uncertain times

When markets are volatile and prices are climbing, staying proactive with your credit becomes even more important. Here are a few ways to help protect your score:

• Track your spending. Understanding where your money goes can help you stay ahead of rising costs.
• Reduce unnecessary debt. Pay down high-interest credit cards when possible to improve your utilization ratio.
• Set up payment alerts. Avoid late payments by setting reminders or using automatic payments.
• Monitor your credit. Stay informed with tools like Credit Sesame’s free credit score checks and alerts.

Taking small, consistent steps can help you weather financial uncertainty without damaging your credit health.

Staying focused when global market chaos puts your credit at risk

Global events are out of your control, but their financial impact can reach your doorstep. Rising tariffs, economic tension, and shifting markets all influence how much you spend, borrow, and repay.

Even when headlines are unsettling, you have tools and options that can help you protect your financial progress. Keeping track of your credit score, staying on top of your bills, and minimizing debt are practical steps that may soften the blow of external shocks.

In uncertain times, focusing on what you can control is often the most powerful move you can make.

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The evolving role of credit in 2025

Credit in 2025 is more than just a number—it’s an important factor in financial security, borrowing power, and even job opportunities. As lenders adopt AI-driven underwriting models and credit scoring methods evolve, understanding what impacts your credit score is more crucial than ever.

Whether you’re managing debt, seeking new credit, or preparing for major financial decisions, keeping up with the latest trends in credit scoring and lending policies can help you stay ahead.

How AI and alternative credit scoring are reshaping creditworthiness

Traditional FICO scores are still widely used, but in 2025, AI-powered lending models and alternative credit scoring methods are gaining traction. To assess a borrower’s creditworthiness, more lenders are considering non-traditional data, such as rent and utility payments.

Consumers with thin credit files who demonstrate responsible financial behavior benefit from this. However, it also means that staying financially organized is more important than ever—even small, overlooked bills could play a role in future credit decisions. Free credit monitoring can help you keep track of your financial standing and identify opportunities to improve your credit.

Rising interest rates make good credit essential

As inflation pressures persist, interest rates remain a hot topic. Lenders are tightening approval standards, making a strong credit score critical for securing the best loan terms. A difference of even a few points in your credit score could mean thousands of dollars in savings over the life of a mortgage, auto loan, or credit card balance.

To gauge where you stand, checking your Sesame Grade, which offers the most complete view of your credit score and the factors influencing it, can provide insights into how lenders may view your creditworthiness and what areas you might improve.

Buy Now, Pay Later (BNPL) services and their credit impact

BNPL options have become mainstream, but many consumers still don’t realize their impact on credit. Some BNPL providers now report on-time payments to credit bureaus, helping build credit. However, missed payments or excessive BNPL use could negatively affect credit scores.

If you use BNPL services, ensure payments are factored into your budget and avoid overextending your finances. Not all BNPL lenders report to credit bureaus, so it’s essential to check how your payment history is being recorded. Reviewing your free credit report summary regularly can help you stay informed.

More frequent credit report updates mean fewer surprises

Credit monitoring is evolving, with real-time updates becoming the new standard. The major credit bureaus now offer faster updates, giving consumers more transparency into their credit activity.

Regularly checking your free credit score can help catch errors, detect fraud, and understand how your financial behavior impacts your score. Inaccuracies on your credit report could cost you money in higher interest rates or loan denials, so reviewing your credit regularly is essential.

Credit fraud and identity theft are on the rise

With data breaches becoming more common, protecting your credit has never been more important. Synthetic identity fraud—where scammers combine real and fake information to create new identities—is one of the fastest-growing forms of financial crime. According to the Federal Trade Commission (FTC), millions of Americans fall victim to identity theft every year, with financial fraud among the most common threats.

To safeguard your credit, consider:

• Freezing your credit with the major bureaus if you’re not applying for new accounts.
• Using credit monitoring services to get real-time alerts on suspicious activity.
• Setting up fraud alerts to notify lenders that additional verification is needed before opening new accounts.

How to stay ahead in the 2025 credit landscape

Navigating credit in 2025 requires proactive management and financial awareness. To keep your credit in top shape:

• Check your credit reports regularly and dispute errors immediately.
• Stay informed about changing credit score models and how they affect you.
• Use credit responsibly—avoid overextending yourself, and pay bills on time.
• Leverage tools like credit monitoring and fraud alerts to protect your financial future.

A Consumer Financial Protection Bureau (CFPB) guide emphasizes the importance of regularly reviewing credit reports to detect errors, prevent fraud, and improve financial health. Monitoring your credit can help you stay informed about changes to your score and take proactive steps to maintain or improve it.

Why understanding credit in 2025 matters

Credit remains a fundamental financial tool in 2025, influencing everything from loan approvals to job opportunities. As technology transforms how credit scores are calculated and used, staying informed and actively managing your credit can make all the difference in achieving your financial goals.

By keeping up with emerging trends, monitoring your credit health, and making smart financial decisions, you can position yourself for financial success in the evolving credit landscape of 2025.

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Life gets busy, and managing finances often takes a back seat until a late fee or missed payment reminds you to pay attention. But simplifying your financial life doesn’t have to be complicated. With the right strategies, you can reduce stress and stay on top of your money.

1. Automate your savings and bill payments

One of the simplest ways to reduce financial stress is automation. Set up automatic transfers to your savings account and schedule bill payments through your Sesame Cash pre-paid debit card, bank, or other service provider. This ensures your savings grow consistently and your bills are paid on time without the hassle of remembering due dates. The Consumer Financial Protection Bureau recommends automation as a key step in building better financial habits.

2. Avoid late fees with reminder tools

Missing payment deadlines can lead to costly late fees and a negative impact on your credit score. Use reminder tools like calendar apps or financial dashboards to get notifications about upcoming payments. Many tools, like the Credit Sesame all-in-one dashboard, also allow you to track due dates and set alerts, helping you stay organized and stress-free.

3. Consolidate your financial accounts

Managing multiple accounts at different banks or platforms can be overwhelming. Consolidating them under one provider or platform reduces complexity and makes it easier to track your finances. Look for tools that allow you to view your accounts, track spending, and monitor your credit score all in one place. This streamlining not only saves time but also improves financial clarity.

4. Use a budgeting tool

Budgeting apps and dashboards are invaluable for gaining control over your money. Many tools categorize spending automatically, helping you identify where your money goes and where you can cut back. According to a study from the National Foundation for Credit Counseling, budgeting is one of the most effective ways to improve financial health.

5. Keep track of your credit score

Understanding and monitoring your credit score is vital for simplifying your financial life. A good score can save you money on interest rates for loans and credit cards. Tools like free credit monitoring services inform you of any changes so that you can address issues proactively. Experts from the Federal Trade Commission recommend checking your credit report regularly for accuracy and signs of identity theft.

6. Declutter your financial paperwork

Physical and digital clutter can lead to missed payments or lost information. Set up a filing system for important documents, and switch to e-statements to reduce paper. Online dashboards can help you store and organize your financial information securely, giving you easy access whenever needed.

7. Set clear financial goals

Knowing what you’re working toward helps you prioritize your spending and savings. Whether buying a home, paying off debt, or building an emergency fund, breaking your goals into smaller, actionable steps makes them more achievable. Tools like financial dashboards can help you track your progress and stay motivated.

8. Consolidate insurance policies

If you have multiple insurance policies, consider bundling them under one provider. Many insurers offer discounts for combining home, auto, and life insurance policies. Using comparison tools like home insurance finders can simplify the process and help you find the best rates.

9. Embrace a minimalist financial mindset

Simplifying your financial life isn’t just about tools but also your mindset. Prioritize what matters most and cut out unnecessary expenses or services. A minimalist approach reduces stress and frees up money for the things that truly add value to your life.

Take the first step to simplify your financial life today

Simplifying your financial life can feel overwhelming, but starting small makes it manageable. Whether automating your savings or using a dashboard to consolidate your finances, every step brings you closer to financial clarity and peace of mind.

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It’s easy to lose track of spending between gift shopping, travel, and festive activities, but the holiday season can be the perfect time to give your finances extra attention. As the New Year approaches, promise yourself that you will stay in control of your credit during this busy time of year. Our 24 tips can help you prepare for a New Year’s resolution to improve your credit and improve your personal finances in 2024.

1. Check your credit report before the holidays. Before diving into holiday shopping, take a moment to ensure your credit report is error-free. Catching any mistakes now can help prevent surprises later.
2. Set a holiday budget for gifts, travel, and fun. Create a detailed budget for all your holiday spending, including gifts, meals, travel, and holiday activities. Stick to this budget to avoid overspending.
3. Pay down debt before you start shopping. If you’ve been carrying balances on your credit cards, aim to pay them down before the holiday season begins. This will reduce the impact of any new charges during this time.
4. Use credit cards carefully for holiday purchases. Credit cards can be handy, but make sure you can pay off the balance in full each month. Avoid letting holiday purchases linger on your statement.
5. Keep credit card balances low. To protect your credit score, aim to use less than 30% of your credit limit during the holidays. Going over 30% can result in a drop in credit score.
6. Ask for a temporary credit limit increase. If you expect to make larger holiday purchases, ask your credit card issuer for a temporary limit increase to reduce your credit utilization ratio.
7. Consider a holiday balance transfer. If you’re already carrying high-interest credit card debt, consider transferring your balance to a card with 0% APR for a few months to save on interest as you shop for the holidays.
8. Avoid opening new credit cards just for discounts. It can be tempting to open new cards for holiday discounts, but doing so can lower your credit score. Stick to using the credit you already have.
9. Make extra payments on your credit cards. Instead of waiting until the due date, make small payments throughout the month. This will keep your credit balances low and help you stay on top of your spending.
10. Set up automatic bill payments. The holidays can get busy, so set up automatic payments for your bills to ensure nothing slips through the cracks and you avoid late fees.
11. Use cash or debit for gifts. Consider using cash or a debit card for your holiday shopping. This prevents adding more debt to your credit card balances.
12. Say no to payday loans. Avoid payday loans during the holiday season. They often come with high interest rates and can worsen your financial situation.
13. Track your holiday spending. Use an app or spreadsheet to track your spending as you go. This will help you stick to your budget and avoid overextending yourself.
14. Don’t get carried away with holiday sales. They’re everywhere, but don’t let yourself feel pressured into buying things you don’t need. Stick to your shopping list.
15. Use rewards to reduce debt. If you have a rewards credit card, use the accumulated points or cash back to pay off your holiday purchases. This strategic move can help reduce your overall debt and alleviate financial stress.
16. Pay off holiday purchases early. The sooner you pay off your holiday shopping, the less interest you’ll pay. Try to clear your balances before the end of the month.
17. Review your subscriptions and cancel unused ones. The holidays are a great time to cancel subscriptions you no longer use. This can free up funds to pay down holiday debt.
18. Don’t max out your credit cards. Aim to leave some breathing room on your credit cards so you can continue to use them without negatively impacting your credit score.
19. Make a holiday shopping list. Planning your purchases ahead of time will help you avoid impulse buys and keep your spending under control.
20. Take advantage of discounts on essentials. Many companies offer discounts around the holidays. Use these discounts for regular expenses to free up cash to pay off holiday purchases.
21. Start saving for next year’s holiday season. Set up a holiday savings account now so that you won’t have to rely on credit cards next year to fund your celebrations.
22. Be mindful of travel expenses. Travel is a common holiday expense. Create a budget for flights, accommodations, and transportation to avoid unnecessary charges on your credit cards.
23. Don’t use credit for last-minute holiday purchases. If you find yourself scrambling for last-minute gifts, resist the urge to charge it all to your credit cards. Stick to your budget or use funds you’ve already set aside.
24. Plan to tackle holiday debt immediately. After the holidays, plan to pay off any remaining holiday-related debt as quickly as possible to avoid accruing interest in the new year.

Stay on top of your spending, avoid unnecessary debt, and you can be ready to embrace 2025 with a strong financial foundation. You can enjoy a stress-free Christmas and start the new year in control of your credit.

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It’s never a good thing to be late on a debt payment. These days, though, the consequences of late payments are becoming increasingly severe for individual borrowers and all consumers. Late payments on consumer credit are rising. At a time when interest rates are elevated and consumer debt is at an all-time high, those late payments add to the direct cost of that debt. Increasingly, indirect costs are also coming into play. The best defense in this situation is for consumers to limit new borrowing and work on keeping their credit scores in good shape.

Consumers struggle to keep up

The numbers on consumer borrowing are scary. According to the Federal Reserve Bank of New York, in the third quarter of 2024, total consumer debt rose to $17.943 trillion. That was the 17th straight quarter in which total consumer debt reached a record high.

This debt burden is even heavier because credit card debt has been the fastest-growing type of consumer debt. Since the beginning of 2021, credit card debt has grown by 42.4%. This is a problem because credit card debt is typically much more expensive than other major types of consumer debt.

Some economists argue that those debt totals don’t matter much because consumer incomes and net worth have also risen. However, what does matter is that delinquency rates have been rising. Delinquency rates measure the percentage of credit accounts that have overdue payments.

According to the credit bureau TransUnion, the percentage of credit card accounts that are seriously delinquent has risen over the past month and the past year. “Seriously delinquent” means an account is at least 90 days overdue.

Delinquent payments are especially common with subprime customers. Roughly 1 of every 5 subprime credit card customers is currently seriously delinquent with their payments.

Lenders have responded by getting tougher

When customers pay their bills late, it costs credit card companies money. The more later payers there are, the more those companies act to protect themselves.

According to the New York Fed’s latest credit access survey, the rejection rate on credit card applications has risen from 16.6% in February 2024 to 22.2% now. The rejection rate on credit limit increases has risen to 44.5%, the highest level on record.

This means the rising tide of late payments affects more than just the overdue customers. Anybody seeking credit might find it increasingly hard to get.

What happens if the U.S. enters a recession?

As bad as credit conditions are, they could be worse. Right now, the unemployment rate is just 4.1%. In the aftermath of the Great Recession, it was a high as 10%. When unemployment rises, more people will likely have a harder time paying their bills.

This issue has two key aspects. First, if the economy slows, more consumers will likely face difficulties keeping up with their debt payments. This can lead to costly late fees, penalty interest rates, and significant damage to their credit scores, making it harder for them to regain financial stability.

The second aspect is the broader impact on lending practices. As late payments increase, lenders are likely to tighten their credit standards. This means loans and credit cards will become accessible only to consumers with excellent credit histories, leaving others with fewer borrowing options and potentially higher costs.

What can you do to help improve your credit score?

A healthy credit score increases your chances of getting credit approval even as lenders raise standards. Improving your credit may also mean you qualify for pre-approval and a better interest rate.

• Stay ahead with a payment calendar. Keep track of when your loan payments and credit card bills are due. Loans follow a fixed schedule and credit cards operate on regular billing cycles. Anticipating due dates ensures you never miss a payment.
• Pay more than the minimum. Minimum payments barely chip away at credit card balances and can lead to growing debt if you continue using the card. Paying more reduces interest charges and keeps balances low.
• Build a budget free of credit reliance. Treat credit cards as a convenience, not a crutch. Aim to pay off balances in full each month. If you’re borrowing more than you can repay, it’s time to reevaluate your spending and adjust to a sustainable budget.
• Monitor your credit. Regularly checking your credit report can help you catch errors, detect fraud, and understand how your financial habits affect your score. Use free credit monitoring tools to track changes and get alerts about significant activity. Staying informed allows you to address issues that affect your credit health quickly.

Navigating today’s challenging credit environment requires proactive measures and a commitment to financial discipline. Rising debt levels, increasing delinquency rates, and tighter lending standards highlight the importance of maintaining a strong credit profile. By managing your payments diligently, reducing reliance on credit, and prioritizing healthy financial habits, you can protect your credit score and stay prepared for whatever economic challenges lie ahead.

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Does your spouse-to-be have a good credit score? This may not be at the top of your must-know list before marriage, but understanding what marriage does to your credit report is crucial. While it won’t necessarily have you rethinking your walk down the aisle, it will make you wonder what happens after you’re both wearing rings. Wonder no more! This helpful guide on how marriage affects credit ratings separates fact from fiction.

What doesn’t happen to your credit score after marriage

1. There is no joint credit report: When you and your partner get married, your credit reports do not merge. Joint credit reports are not a thing. Each of you maintains separate credit files at each of the three major credit reporting bureaus: Experian, Equifax, and TransUnion.
2. A name change does not result in a new credit report: If one of you chooses to change your last name, you do not receive an all-new credit report. The married name is typically included in your existing credit report as an alias “also known by.” This keeps the credit history intact, simply adding the new name to the credit information.
3. Credit scores do not merge: Your credit score is unaffected by the marriage itself, as there is no such thing as a joint credit score. Your spouse’s credit score remains separate from yours.

How does marriage affect your credit score?

Marriage can affect your credit indirectly when you apply for lines of credit together. For example, if you apply for a home loan in both names, both credit histories are checked by the lender. This means that if one spouse has a poor credit history, it could lead to a loan rejection or a higher interest rate for a joint loan than if the person with a better credit score applied alone.

Additionally, joint applications for credit accounts make both spouses liable for the loan and its repayment, impacting both credit scores. If a joint account becomes delinquent or enters collection, the lender will attempt to collect the debt from both of you, regardless of who actually used the credit line.

Can spouse names appear on your credit report?

If you are married, your credit report (and your spouse’s) may include the following for both partners:

• Accounts where one is the cosigner for the other’s line of credit.
• Jointly opened accounts.
• Existing accounts that one partner has been added to after marriage (e.g. adding a spouse as an authorized user to a credit card).

Factors that do not affect your credit score

Your credit score is influenced by payment history, debt utilization ratio, age of accounts, inquiries, and credit mix. However, many factors have no effect at all, including:

• Marital status
• Spouse’s credit score
• Race
• National origin
• Religion
• Political beliefs
• Sexual orientation
• Place of residence
• Occupation
• Employment status or length of employment
• Salary
• Assets
• Age
• Family and child support obligations
• Inquiries not initiated by you
• Employer inquiries
• Interest rates on current or past credit products in your file
• Participation in credit counseling

What if your spouse has bad credit?

Determining what to do when one spouse has bad credit can be tricky. Your partner’s bad credit might make getting credit more expensive or difficult when both your incomes and credit are needed, such as when buying a house. However, joint applications can help build the credit of the spouse with poor credit if managed responsibly.

Authorized users versus account holders

• Authorized users: An authorized user can use an account but isn’t responsible for the debt. Authorized users are easier to remove from an account.
• Account Holders: A joint account holder has equal responsibility for the debt. Adding a spouse with bad credit as an account holder on a healthy account can help their credit score if the account is managed well.

Broken engagement

If you obtain credit together and then call off the wedding, you are both legally obligated to honor the financial contract. Your relationship status has no bearing on your responsibility to honor a debt, and failing to do so can negatively impact your credit.

Helping your spouse build credit

If you’ve got great credit, you can help your spouse improve their credit by setting a good example and communicating openly about finances. Talk about bills, spending, budgeting, and debt regularly. Credit counseling as a couple can also be beneficial. You may wish to avoid cosigning for your spouse as this poses a significant risk with no benefit to you. Instead, consider adding them as an authorized user on one of your existing accounts to help build their credit.

Get married and be happy

When planning for marriage, it’s natural to focus on the excitement and joy of the upcoming wedding, but it’s also important to be mindful of practical considerations, such as credit scores. Credit management might not be the most romantic aspect of wedding preparations, but it is good to be aware as part of financial planning for the future. Understanding each other’s credit history and discussing financial goals can help build a strong foundation for your future together. By addressing credit scores early on, you can work together to improve your financial health, secure better loan terms, and avoid potential stress down the road. Ultimately, being proactive about your finances can contribute to a more stable and harmonious married life.

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Growing numbers of Americans are seeking help managing credit. The reasons are obvious—debt problems have become a national epidemic. What may be less obvious are the rewards of better credit management.

Getting credit help can do more than get you out of your current debt trouble. It can ultimately leave you better off, with lower expenses and greater peace of mind.

Credit counseling is in demand

Money Management International (MMI) is a nonprofit credit counseling organization. They recently reported a 72% year-over-year increase in people seeking credit counseling. That’s a huge increase and an indication of how quickly consumer debt is getting out of control.

What is credit counseling? It can entail any or all aspects of learning to manage credit more effectively:

• Information about personal finance products
• Help with budgeting to live within your means
• Explanations of credit reports and credit scores
• Education about debt reduction strategies
• Creation of a debt management plan

People often need this kind of help because they struggle to understand financial products and basic money management skills. This is why even people who earn a decent income can find themselves with debt problems. The MMI reported a 73% year-over-year increase in people seeking help among people with above-average incomes.

The need for help with credit is real

People seeking help are being realistic about their financial troubles. Financial statistics indicate that an increasing number of consumers are finding themselves with serious debt problems.

Here are some examples of data in the recent Household Debt and Credit Report from the Federal Reserve Bank of New York:

• Total household debt has reached a record high of $17.69 trillion.
• Credit card debt has been the fastest-growing type of debt over the past year, and it is also typically the most expensive.
• The rate at which credit accounts are becoming seriously overdue has increased for nine straight calendar quarters.
• Young adults, in particular, are having a hard time handling debt, with 18 to 29-year-olds having the highest delinquency rate of any age group.

These statistics show that the growing number of people seeking help means they are being realistic about their difficulties. Being realistic can be the first step towards fixing the problem.

Credit goals and the benefits of reaching them

Here are some of the basic personal finance skills you can get by seeking credit education and how those skills can benefit you:

Keeping up with payments

The monthly flood of bills can get overwhelming at times. One of the first steps is to organize bill payment to make it as efficient as possible. Creating a monthly routine to process your bills can help. Tools like automated bill payment can reduce the paperwork involved and help keep you on schedule.

Living within your means

Budgeting skills help you anticipate expenses so you don’t suddenly fall short. Managing your cash flow is essential to ensuring you have more money coming in than going out. While borrowing can play a constructive role, you should not depend on borrowing to meet routine expenses. Before you borrow, you should budget to see how you will be able to afford the payments.

Getting out of debt

There are various strategies for getting out of debt. Making more than the minimum payments can help you get out of debt more quickly and less expensively. Refinancing and debt consolidation may also be options for making your payments more affordable. Having a clearly defined debt reduction plan can give you a sense of progress instead of feeling stuck in an endless cycle of debt.

Improving your credit score

Improving your credit score can be one way of measuring your progress in handling debt. Increasing your score may also reduce your borrowing costs, making debt reduction easier. Credit monitoring with personalized suggestions can give you the tools and information you need to manage your credit better and hopefully improve your credit score.

Protecting your finances

Getting out of debt trouble is a big step, but it’s not the end of the journey. Another important personal finance skill is learning how to protect yourself and your credit record. It is a good idea to regularly monitor your credit report and know how to address any unexplained changes. It would be best if you also became an educated consumer to choose the most cost-effective financial products. Finally, stay informed so you can be aware of scams that might threaten your accounts.

More people are seeking personal finance help these days, a sign of the serious consumer debt problem in the US. However, those seeking help are making the first move toward solving that problem.

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What is considered a bad credit score and how much will a bad credit score will cost you over your lifetime? This question is hard to answer without knowing personal details, but the fact is a poor credit score will make your life more expensive in various ways. Higher interest rates, larger deposits, more expensive premiums, and the lack of access to quality financial services are all ways a poor credit score can cost you more. But, how much more?

No two people have the same desire or appetite for credit so it is impossible to say that poor credit costs a specific dollar amount. Someone who leans heavily on credit and is going to pay more overall than someone who chooses to pay cash for everything. However, if we compare apples to apples across similar loan products, it doesn’t take long to see just how expensive bad credit can become.

Mortgage Loans

If you have poor FICO or VantageScore credit scores, you are going to pay a higher interest rate than someone with a great credit score. If your scores are too low, you could be denied outright.

According to FICO, the average interest rate on a 30-year fixed-rate mortgage for a consumer with a FICO score of 760 or above is 6.478%. If you were to take out a $300,000 mortgage loan at 6.478% your monthly payment would be $1,892. If, you had a FICO score of 650, the same 30-year mortgage loan would cost you 7.521%. The difference does not appear huge.

However, at 7.521% percent, your monthly payment on that same $300,000 mortgage is $2,102.  That’s $210 more each month. Each year, you’ll pay $2,520 more in interest. If you live in the house for five years, that means $12,600 more in interest.

Credit Cards

The average interest rates on credit cards is around 20 percent, depending on the card type and credit score. The cost of a poor credit score relative to credit card debt is much more pronounced than any other financial service.

Using the Experian Creadit Card Payoff Calculator, at 20 percent, someone carrying $5,000 in credit card debt and making the minimum payment will end up paying almost $8,000 to clear the debt and it will take five years.

Someone who has poor credit is going to pay a considerably higher interest rate on their credit cards. At 30 percent someone carrying $5,000 in credit card debt and making the minimum payment will end up paying nearly $9,000 over four years.

It doesn’t end with mortgages and credit cards. Auto loans, insurance premiums, and utility companies all use credit scoring in the calculation of your rates, premiums and deposit requirements. Poor credit scores make life more expensive.

Having a bad credit score makes it difficult to even obtain a credit card. Credit cards for bad credit scores are often secured credit cards.

5 credit situations and how to handle them

1. Carrying a high balance

In addition to costing you money in interest, credit card balances raise your debt utilization ratio (the amount of money you owe compared to your available balance), which can lower your credit score and increase your risk of bankruptcy. Avoid using your credit card when the balance is high and make payments more than once a month if you can to keep the balance as low as possible.

2. Cosigning on a loan

If you cosign for an apartment lease or car loan for a friend or relative who is having trouble getting approved and he or she defaults, then your credit could suffer, too. Do not cosign a loan unless YOU can afford to make the payments in the event the friend cannot pay. It goes without saying that you should only agree to this if you trust the person 110%.

3. Missing a payment

If you have a good credit score, then one or two missed payments may not seem like a big deal. But making payment 30 or more days late can reduce your score by up to 100 points. Automate payments where you can and set up reminders so you don’t forget to pay.

4. Having your identity stolen

If someone else applies for credit cards or loans in your name, that’s identity theft. Unfortunately, those accounts can show up on your credit report summary and lower your score. Checking your credit report regularly can alert you to a problem.

5. Getting fraudulent charges

You could fall victim to small, unauthorized charges for things like apps and online subscriptions that you didn’t even know about. Review each credit card statement carefully and dispute suspicious charges.

Your credit score made simple with Sesame Grade

You can see your credit picture at a glance with Sesame Ring. The unique user interface enables easy and intuitive review of TransUnion data. Credit report information from all three bureaus is available if you choose to upgrade to Premium. In addition to data and information, the app provides a measure of overall credit health with your Sesame Grade, and provides alerts, personalized action plans and AI-driven customer support. As you embark on your journey of credit and financial health improvement, knowledge is your most potent asset. Insights from all three bureaus can help you make sound financial choices, negotiate from a position of strength, and nurture your credit health. Regular reviews enable you to maintain accuracy, detect discrepancies and shape your financial future with confidence. Remember that credit is a tool that, when used wisely, can open doors to financial opportunities.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post The high cost of having a bad credit score appeared first on Credit Sesame.

Myths, fairy tales, and legends… some are harmless. They are stories to make us feel better, like Camelot and the Round Table, or as a way to reward children, like Easter bunnies and the tooth fairy. But some can be pretty scary (Hansel and Gretel, anyone?) and costly, especially in the real world. To live happily ever after when it comes to your credit, it pays to know the truth.

Myth #1: You only have one credit score.

Fact: You actually have three credit reports, one from each major bureau (Equifax, Experian, and TransUnion), and with each report comes a corresponding credit score. There are two scoring models used by credit bureaus, FICO and VantageScore. Each uses your credit history to generate a three-digit score ranging from 300 to 850. Slight differences in reported information and scoring models can create variations between your FICO, VantageScore, and even among your FICO scores from different bureaus. Don’t fret over minor variations, but significant discrepancies (50+ points) warrant investigation.

Regularly checking your reports and scores from all sources is helpful in identifying errors, potential fraud, and changes in your financial health. Take advantage of free annual credit reports and dispute any inaccuracies. By understanding your unique credit landscape, you can make informed financial decisions and navigate your credit journey with confidence.

Myth #2: Checking your credit report isn’t as important as keeping tabs on your credit score.

Fact: Just checking your credit score may not be enough. Think of it like using a broken scale – the number might be comforting, but it’s inaccurate. While credit scores are important, they reflect your credit report, which is the detailed history of your borrowing habits.

Imagine driving with a faulty dashboard light – sure, things seem okay, but a hidden issue could cause bigger problems later. Similarly, ignoring errors in your credit report can negatively impact your score and future financial opportunities. Checking your report annually, fixing errors, and then monitoring your score empowers you to take control of your credit health. Remember, healthy credit starts with a clean report.

Myth #3: You must carry a balance on your credit cards to have a good credit score.

Fact: No, you don’t. Carrying a balance on your credit card is a myth. Contrary to popular belief, good credit comes from using your card and paying in full each month. Carrying a balance actually hurts your score by increasing your credit utilization ratio, which factors heavily (30%) into your score.

Aim to keep your credit utilization ratio below 30% and ideally below 10%. This means using your card responsibly and paying it off completely to demonstrate you manage credit wisely. Good credit scores come from smart habits and not carrying debt.

Myth #4: Bad news can affect your score for seven years

Fact: It’s true that negative information like bankruptcy can linger on your credit report for 7-10 years. Chapter 13 bankruptcy disappears after seven years, while Chapter 7 takes ten years to fade. But don’t despair. The impact of these blemishes weakens over time, and your recent financial behavior plays a more significant role in determining your score.

Even a missed payment, while staying on your report for seven years, carries less weight further down the line. The magic is in focusing on positive actions:

• Make all payments on time and in full, consistently. Recent on-time payments have a greater impact than past mistakes.
• Bring down your credit utilization ratio. Aim for below 30% of your credit limit to show responsible credit management.
• Consider disputing any errors in your report. Inaccurate information can unfairly lower your score.

By consistently demonstrating responsible credit habits, you can mitigate the effects of past missteps and watch your score gradually improve. Remember, the key is to focus on the present and build a positive credit history for a brighter financial future!

Myth #5: Shopping around for a loan hurts your score.

Fact: Applying for multiple loans might raise a red flag, but don’t let comparison shopping scare you. Inquiries for the same type of loan, like mortgages or auto loans, within a 14-day window count as one on your credit report. This “grace period” helps you compare rates without major score damage.

However, beware of credit card applications! Multiple credit card inquiries within a short time can individually impact your score. Space out your card applications or stick to pre-qualified offers to minimize inquiries and protect your score.

Remember, responsible comparison shopping helps you find the best loan terms while minimizing score impact. Just be mindful of credit card inquiries and utilize the 14-day grace period for other loan types.

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Your credit score made simple with Sesame Grade

You can see your credit picture at a glance with Sesame Ring. The unique user interface enables easy and intuitive review of TransUnion data. Credit report information from all three bureaus is available if you choose to upgrade to Premium. In addition to data and information, the app provides a measure of overall credit health with your Sesame Grade, and provides alerts, personalized action plans and AI-driven customer support. As you embark on your journey of credit and financial health improvement, knowledge is your most potent asset. Insights from all three bureaus can help you make sound financial choices, negotiate from a position of strength, and nurture your credit health. Regular reviews enable you to maintain accuracy, detect discrepancies and shape your financial future with confidence. Remember that credit is a tool that, when used wisely, can open doors to financial opportunities.

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post 5 credit myths debunked appeared first on Credit Sesame.

While not exhaustive, this A to Z of credit terminology is a solid starting point for understanding key concepts in the world of credit. Whether navigating credit reports, considering loans, or aiming to boost your credit score, familiarizing yourself with the language of credit is a valuable tool on your journey toward financial literacy.

• Amortization: The gradual repayment of a loan through scheduled installments covering principal and accrued interest.
• Annual percentage rate (APR): The total cost of borrowing, expressed as a percentage, encompassing interest and fees.
• Authorized user: An individual granted permission to use another person’s credit account, often to build their own credit history.
• Authorized user credit card: An authorized user credit card is issued to an individual authorized by the primary cardholder to make purchases using the card. The primary cardholder remains responsible for any debts incurred on the card.
• Balance transfer: Shifting outstanding debt from one account to another, typically to secure lower interest rates or consolidate payments.
• Bad credit: A low credit score indicating higher risk, making it challenging to obtain favorable loan terms.
• Bankruptcy: A legal process relieving individuals or entities from overwhelming debt obligations, often involving restructuring or asset liquidation.
• Billing cycle: The timeframe between credit card statement issuance and the payment due date.
• Charge-off: A creditor’s declaration that a debt is unlikely to be collected, typically after prolonged non-payment.
• Collateral: Assets pledged to secure a loan, providing lenders recourse if the borrower defaults.
• Credit bureau: Agencies that collect and maintain credit information, generating reports utilized by lenders to assess creditworthiness. Equifax, Experian and TransUnion are the three major credit bureaus in the United States.
• Credit limit: The maximum amount a borrower can owe on a credit account.
• Credit mix: The variety of credit types in an individual’s profile. Examples include mortgages, credit cards, and installment loans.
• Credit monitoring: A service that tracks changes in credit reports and alerts consumers to potential fraud or inaccuracies.
• Credit report: A detailed record of an individual’s credit history, including payment history, debt levels, and inquiries, used by lenders to assess creditworthiness.
• Credit score: A numerical representation of creditworthiness, typically ranging from 300 to 850, influencing loan approvals and interest rates.
• Credit utilization: The ratio of credit card balances to credit limits, impacting credit scores. Ideally, it should remain below 30%.
• Debt consolidation: Combining multiple debts into a single loan or payment plan to simplify management and potentially reduce interest rates.
• Debt-to-income ratio: The percentage of monthly income dedicated to debt payments, influencing loan eligibility and financial health. Generally, below 36% is considered favorable.
• Default: Failure to meet financial obligations according to loan terms, often resulting in adverse consequences like late fees, foreclosure, or repossession.
• Delinquency: Failure to make timely payments on debts, typically exceeding 30 days past due.
• Dispute: Challenging inaccurate or outdated information on a credit report through a formal process to ensure accuracy.
• Employment history: An individual’s record of work experience sometimes considered in credit decisions, as it reflects income stability.
• Equal Credit Opportunity Act (ECOA): U.S. law prohibiting discrimination based on race, religion, gender, national origin, marital status, age, or disability in credit granting.
• Equifax: One of the three major credit reporting agencies in the U.S., providing credit reports and scores to lenders.
• Experian: Another major credit reporting agency in the U.S., offering similar services to Equifax.
• FICO score: A widely used credit scoring model developed by Fair Isaac Corporation, influencing loan approvals and interest rates.
• Fair Credit Reporting Act (FCRA): U.S. law governing the collection, use, and disclosure of consumer credit information, ensuring consumer rights and accuracy of reporting.
• Fixed interest rate: An interest rate that remains constant throughout the loan term, providing predictable borrowing costs.
• Foreclosure: The legal process in which a lender repossesses a property due to borrower default on mortgage payments.
• Garnishment: A legal order allowing creditors to collect debt directly from a debtor’s wages or bank accounts.
• Good Credit: A high credit score indicating lower risk, facilitating access to favorable loan terms and lower interest rates.
• Grace period: A typically short timeframe, often offered on credit cards, during which no late fees are charged for overdue payments.
• Home equity: The portion of a property’s value owned by the homeowner, calculated as the difference between the market value and outstanding mortgage balance.
• Inquiry: A formal request for a copy of an individual’s credit report, which can temporarily impact credit scores due to potential new credit applications.
• Interest rate: The cost of borrowing money, expressed as a percentage of the loan amount, paid to the lender over the loan term.
• Income verification: The process of confirming a borrower’s income through documented proof, such as pay stubs or tax returns, to assess their ability to repay a loan.
• Joint account: A credit or bank account shared by two or more individuals, with joint responsibility for managing the account and repaying any associated debts.
• Joint credit: Credit extended to two or more individuals, with shared obligation for repayment and potential impact on each individual’s credit score.
• Judgment: A legal decision requiring a debtor to repay a debt, often resulting from a lawsuit filed by the creditor.
• Key derogatory: Significant negative information on a credit report, such as bankruptcies, foreclosures, or charge-offs, which can severely impact credit scores and access to credit.
• Late payment: A payment made after the due date, incurring late fees and potentially damaging credit scores.
• Line of credit: A revolving credit arrangement allowing a borrower to access funds up to a specified limit and repay borrowed amounts with interest over time.
• Loan modification: An alteration of existing loan terms, such as interest rates, repayment schedules, or principal amount, often negotiated between the borrower and lender to improve affordability.
• Loan-to-value ratio (LTV): The percentage of a loan amount compared to the appraised value of the collateral, used by lenders to assess risk and determine eligibility for certain loans.
• Mortgage: A secured loan used to purchase real estate, with the property serving as collateral for the loan.
• Negative information: Adverse details recorded on a credit report, such as late payments, delinquencies, or charge-offs, impacting credit scores.
• Net income: An individual’s total income minus expenses, reflecting their available financial resources and debt repayment capacity.
• No credit history: Lack of any credit activity or insufficient information on an individual’s credit report, making it challenging to assess creditworthiness.
• Non-dischargeable debt: Debt obligations that cannot be eliminated through bankruptcy proceedings, such as student loans and some types of taxes.
• Outstanding balance: The total amount currently owed on a credit account, excluding any minimum payments already made.
• Overdraft: A situation where a bank account balance falls below zero, typically resulting in fees and potential limitations on account activity.
• Over-the-Limit fee: A charge levied by a credit card issuer when the cardholder’s balance exceeds their credit limit.
• Personal loan: An unsecured loan not backed by collateral, typically used for personal expenses such as debt consolidation or major purchases.
• Pre-Approval: An evaluation of loan eligibility involving verification of income, employment, and credit. Requires documentation submission and a hard credit inquiry, which may temporarily impact credit score. Offers a conditional loan commitment based on verified information, strengthening your position as a borrower.
• Pre-Qualification: An initial assessment of loan eligibility based on self-reported information. Requires no documentation or credit pull, offering a general idea of potential loan terms but not guaranteeing final approval.
• Principal: The original amount borrowed in a loan agreement, excluding accrued interest.
• Public record: Financial information, such as bankruptcies, judgments, or tax liens, accessible to the public through official records.
• Qualification: Meeting the criteria and requirements established by a lender for loan approval, typically based on factors like credit score, income, and debt-to-income ratio.
• Qualitative analysis: An assessment of creditworthiness beyond solely relying on numerical data, considering factors like employment stability, financial habits, and overall financial situation.
• Revolving account: A credit account with a flexible spending limit, allowing repeated borrowing and repayment of balances with ongoing interest charges.
• Revolving credit: A type of credit characterized by a flexible spending limit and revolving balance, typically associated with credit cards and lines of credit.
• Refinancing: Replacing an existing loan with a new one, often to secure better interest rates, lower monthly payments, or extend the loan term.
• Repossession: The legal process by which a lender reclaims ownership of collateral, such as a car or house, due to borrower default on loan payments.
• Secured credit card: A credit card requiring a security deposit, often used by individuals with limited or poor credit history to build credit.
• Secured debt: Debt backed by collateral, which the lender can seize if the borrower defaults on the loan.
• Soft inquiry: A credit inquiry initiated for non-credit-related purposes, such as employment background checks or pre-qualification offers, typically not impacting credit scores.
• Subprime: Borrowers with credit scores below a certain threshold, typically associated with higher interest rates and stricter lending criteria.
• Terms and conditions: The specific rules and agreements governing a credit or loan agreement, outlining rights and responsibilities of both the borrower and lender.
• Thin file: A limited credit history with insufficient data for accurate credit score calculation, making it challenging for lenders to assess creditworthiness.
• TransUnion: The third major credit reporting agency in the U.S., providing credit reports and scores to lenders.
• Truth in Lending Act (TILA): U.S. law requiring lenders to disclose accurate and comprehensive information about loan terms and costs to borrowers before loan closing.
• Unsecured credit card: A credit card issued without requiring a security deposit, based solely on the borrower’s creditworthiness.
• Unsecured debt: Debt not backed by collateral, posing higher risk for lenders and potentially
• Usury: Charging excessively high interest rates on a loan, exceeding legal limits established to protect borrowers from predatory lending practices.
• Variable interest rate: An interest rate that can fluctuate over the loan term, influenced by market conditions or specific loan terms.
• Verification: Confirmation of information provided by a borrower during the loan application process, such as income or employment, to ensure accuracy and assess creditworthiness.
• Virtual credit card: A temporary credit card number generated for online transactions, enhancing security by limiting exposure of the actual card details.
• Wage garnishment: A legal order authorizing creditors to collect unpaid debts directly from a debtor’s wages or bank account, typically following a court judgment.
• Write-off: A creditor’s accounting practice declaring a debt as unlikely to be collected, removing it from their active accounts but potentially impacting the debtor’s credit score.
• Working capital: A financial metric representing a company’s short-term operational liquidity, reflecting its ability to meet ongoing expenses through current assets.
• Zero-percent APR: Some promotional credit cards or loans offer introductory periods with 0% annual percentage rate (APR), meaning no interest accrues on purchases or borrowed amounts within the specified timeframe.
• Zombie debt: Though not an official term, “zombie debt” refers to old, often expired debts that resurface unexpectedly. Creditors may attempt to collect on these debts through various means, making it crucial for consumers to remain vigilant and verify the legitimacy of such claims.

If you found An A to Z of credit terminology useful you may be interested in,

• You are financially more than your credit score
• Protecting your credit health and identity with credit monitoring

Your credit score made simple with Sesame Grade

You can see your credit picture at a glance with Sesame Ring. The unique user interface enables easy and intuitive review of TransUnion data. Credit report information from all three bureaus is available if you choose to upgrade to Premium. In addition to data and information, the app provides a measure of overall credit health with your Sesame Grade, and provides alerts, personalized action plans and AI-driven customer support. As you embark on your journey of credit and financial health improvement, knowledge is your most potent asset. Insights from all three bureaus can help you make sound financial choices, negotiate from a position of strength, and nurture your credit health. Regular reviews enable you to maintain accuracy, detect discrepancies and shape your financial future with confidence. Remember that credit is a tool that, when used wisely, can open doors to financial opportunities.

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post An A to Z of credit terminology appeared first on Credit Sesame.