Credit Management

  • April 20, 2021
  • By: P.T. Phan

CREDIT MANAGEMENT

Everyone who calls GreenPath receives a free financial counseling session. GreenPath’s professional counselors will listen respectfully and support you in reviewing your situation. The counselors will give you advice on budgeting and planning.

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financial tools Financial Tools for Success

April is Financial Literacy Month –  a good time to consider the importance of financial literacy education, especially with the economic uncertainties caused by the ongoing pandemic.

Continuing our series of blogs sharing information as part of Financial Literacy Month, the focus today is on finding the right financial tools for success – whether the resources help us with budgeting, setting financial goals, or managing credit card debt, loans, or other debt.

Check out these financial tools to begin understanding options to figure out your finances.

Financial calculators: A healthy financial future begins with an understanding of a person’s current situation. Online financial calculators help people run the numbers and answer questions related to financing their home or comparing how a debt management plan can help manage credit card debt.

Financial wellness resources: Being able to make healthy financial choices is about having good information at your fingertips. Much of that education is available online, but it’s important to tap into trusted resources. As an example, as a national nonprofit, GreenPath makes available a library of resources including worksheets, guides, educational on-demand webinars about managing finances, online learning experiences to help set a simple spending plan or prioritize expenses, and other educational tools.

YOUR JOURNEY TO FINANCIAL WELLNESS BEGINS HERE.

Whatever your financial situation, take our 3-minute assessment and we’ll work with you to create personalized steps for moving forward.

TAKE THE ASSESSMENT

Financial counseling and debt management: Teaming with a trusted financial counseling agency gets the right information to help people make the best decisions about their future.

As a national nonprofit, GreenPath Financial Wellness provides free one on one financial advising with certified counselors. You’ll improve your financial literacy education with credit card debt counseling, debt management plans, student loan counseling, housing counseling, foreclosure mitigation, and debt management counseling

Based on a person’s full financial picture, people will understand how to pay down debt, steps to rebuild credit history, tips to create a savings strategy or other specific information to move forward.

Let’s Connect

Financial Literacy Month is a good time to connect with a caring financial counselor to conduct a free financial counseling session.

Which financial tools are right for you? If you are ready to manage, and eventually eliminate, your debt, let’s connect!

Talk with an Expert

questions to ask about credit card debt Know the Signs: 5 Questions to Ask About Your Credit Card Debt

As the new year begins, it can be a good time to consider questions about your credit card debt.

Many people take stock, review achievements and challenges, and make a plan for a positive new year.

If you are dealing with additional or unexpected debt, you’re not alone.

You may have needed to use credit cards to manage your bills, and now may be wondering how it has affected your financial picture. Most of us have experienced challenges with managing debt at some point. However, if you create a plan, you can pay down debt, save money on fees and interest, and make progress toward your financial goals.

As outlined in the video above, there are five signs that signal your debt may become a challenge.  These cautionary signs can help reveal opportunities to improve your financial health and wellness.

Can you answer “Yes” to any of these questions?

1. Are you unsure of the amount of debt you owe to lenders?

Some people find managing $1,000 dollars of debt a struggle, while people with higher incomes can easily manage quite a bit more. If you do not know your total debt, and your debt-to-income ratio, that can be very telling.

As we look to manage debt in a time of COVID, getting a clear picture of how much debt you have is the first step in creating a healthy plan to financial wellness.

2. Do you pay only the minimum monthly payment?

Most credit card statements include a chart outlining how long it is going to take to pay off the debt. Seeing in print that it will take 10 to 15 years to pay off debt can be very stressful. It is also a clear warning sign that you may need to develop a positive plan to pay more than the minimum.

Many people find it helpful to understand how to use credit cards wisely. Paying only the minimum each month extends how long it takes to wipe out your debt and adds considerably to the amount of interest you pay. Minimum monthly payments can be a short-term approach to dealing with financial troubles — because you are keeping up on bills — however making more than the minimum payment each month helps avoid digging yourself into a financial hole.

LEARN MORE ABOUT DEALING WITH DEBT

Watch the full webinar, “Dealing with Debt” for more information.

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3. Do you take credit card cash advances to help pay bills?

If you are facing uncertainty about how to cover costs for monthly living expenses, one tempting  “quick fix” is a credit card cash advance, especially in the face of unexpected income loss or other emergency situations.

But keep in mind, cash advances will have a higher Annual Percentage Rate (APR) than standard purchases. Also, credit card companies often charge a transaction fee on the borrowed amount. This can add a lot to the cost of borrowing, making it even more difficult to pay off in the long run.

4. Are you maxed out or over the limit on credit card balances?

As you reach limits on your credit card, minimum payments increase, and often your creditor will raise your limits, which adds to the potential for even greater debt.

If you’ve hit the maximum amount on credit cards, it is time to take a hard look at where your money is going and make a plan to change any habits that are not beneficial to your financial health.

Maybe you spend too much of your income on housing, car payments and living costs. It may be time to reevaluate. Or the solution may be as simple as reducing overspending on entertainment and discretionary items like new clothes or travel, until you have your budget under control.

Replacing your old habits with new, healthy ones can help you pay that debt down.

5. Are you getting collection calls?

Ignoring calls from debt collectors won’t make them go away, and can impact your credit report.  However, it is a strong indicator that it’s time to make a solid plan on what to do next. Engaging a debt counselor can help you develop an agreement between you and your creditors that can consolidate the full amount of your loans at a lower interest rate or for a longer repayment period. It can get you back on track much quicker and relieve the stress that you may have been experiencing.

Additional Resources

Asking yourself these five simple, but sometimes challenging, questions can help you recognize you may need help and identify the areas you need to address first.

To explore other options, consider a free consultation from someone who has your interests at heart. We can help you learn about various debt repayment strategies, educate yourself on how much debt is too much, and how to avoid debt problems in the future.

Our NFCC-certified counselors help you start the conversation about where you are today, and what you need to accomplish your goals.

We guide you through a process to assess your financial situation, understand where you are headed, and create an action plan to work toward a more positive financial future.

We listen with respect, offer advice and information that could help you meet your needs.

Request a Call with a Financial Expert

Get smart about credit day 7 Tips to Get Smart About Credit

You have a great opportunity to assess your financial situation and make a plan to move forward.

If you are dealing with credit and debt, you aren’t alone.

The average American household has an average balance of about $6,600 in credit card debt, and that’s not taking into account home, auto, and student loans. Paying off your debt is successful with a little planning. In fact, a plan can go a long way toward achieving your financial goals.

Even in a time of financial uncertainty, there are ways to address and manage credit so it works for you.

7 Tips to Get Smart About Debt

Shared here are seven suggestions to consider so you can save more, plan for the future, and live life financially well.

1. Get an idea of what you are currently spending.

To know where you’re going, you have to know where you’re coming from. Are you spending more than you make? Do you have excess money each month that you could be putting toward your debts? Use GreenPath’s budgeting worksheet to get an idea of how much money you have coming in vs. going out each month.

2. Take a look at your spending habits.

Once you have a full financial picture of your monthly surplus (or deficit), figure out what your spending habits are and how you might change them to get out of debt. Maybe you’re spending too much on subscription services – or realize you’re spending more than you allotted for groceries each month.

This online course on Redesigning Your Financial Habits is a great place to start. In about half an hour, you will learn some of the science behind habits, identify your spending habits, and make a plan to retool them to work for you.

3. Prioritize expenses and identify areas where you may be able to save.

Once you have an idea of where you are spending and why, see if there are areas where you can cut back. If you need some extra help deciding where to make cuts, this Aligning Priorities workbook offers information to prioritize your expenses.

Hold yourself accountable, and check back in on your spending habits.

Great, you’ve made a plan! But are you sticking with it?

4. Check the plan.

Plan your paychecks and check back to see how your actual spending compares with your plan. Use the Highlighter Test to see if your spending habits are in line with your goal, or if you might need to change things up a bit. Make adjustments as you need to.

5. Automate everything.

Set up direct deposits and automated payments so that you don’t miss due dates and get hit with a late fee. Use alerts and overdraft protection to help you avoid mistakes.

6. Choose a debt payoff strategy that works for your situation.

Many people consider paying the minimum on all debts and focus extra payments on one debt at a time. When you pay one account off, they redirect the monthly payment to the next one in line, adding it to the minimum they were paying already. This way, each time you pay off one debt, your payment on the next one gets bigger. This could be a good approach for you to consider.

7. Look into a debt management plan.

Depending on your situation, there may be options for you to get out of debt more quickly. If you have high-interest credit cards or other unsecured debts, a debt management plan could be just what you need to get out of debt for good.

A debt management plan works with your creditors to bring your accounts current, lower interest rates, and eliminate fees. This means that more of your payment goes toward reducing your account balances. It can help you pay off debts faster and save money on interest.  An added benefit is that once the debt management plan is established, diminishing collection calls and creditor balances help reduce worry and stress about your debt situation.

GreenPath is Here for You

At GreenPath Financial Wellness, we are working to make it easier for everyone to achieve financial health. We can help you gain a better understanding of your spending habits, and we can help you create a plan to pay off your credit card debt. Our financial coaches are kind and caring. We can help you understand your finances and make a plan to meet your goals. It’s free, confidential and no pressure!

Call today for a free financial counseling session.

How Is Credit Score Calculated How is Your Credit Score Calculated?

Ever wonder how your credit score is calculated? It is a common question and can be helpful to explore.

Your credit score is a number based on a formula using the information in your credit report. The result is an accurate forecast of how likely you are to pay your bills.

 

Your Credit Score Considers Five Areas of your Credit History

As the video explains, your credit score is calculated using five major components, with varying levels of importance. These credit score factors, with their relative weights, are:

  • Payment history (35%)
  • Amount owed (30%)
  • Length of credit history (15%)
  • Credit mix (10%)
  • New credit (10%)

All of these categories are taken into account in your overall score. No one factor or incident determines it completely.

Why Credit Scores are Important

Credit scores are especially important if you are considering applying for any type of loan. If you’ve gotten a loan, a credit card, or even auto insurance, the rate you paid was directly related to your credit score.

The higher the score, the better you look to lenders.

People with the highest scores get the lowest interest rates.

Credit Score or FICO Score?

You might hear the term “credit score” often referred to as a “FICO Score” but the terms mean the same thing.

A FICO Score is a proprietary tool created by the data analytics company FICO.

FICO’s is not the only type of credit score available, but it is one of the most common measurements most used by lenders to determine the risk involved in doing business with a borrower.

How Do Lenders Use Credit Scores?

Your credit score communicates the idea of “risk.” That’s because credit scores are used by lenders to determine the risk involved in doing business with a borrower.

Credit scores look at the information that can predict your future behavior.

If you’ve been paying your bills on time for the past 25 years, you’re likely a low-risk person to lend to. In contrast, imagine you got your first credit card two years ago and have had four late payments during that time. Your balance on the card is at the credit limit. You have applied for new credit four times in the last six months. Based on these facts, you will have a lower score and are considered a higher risk.

Credit scores can and do change. Often, a negative item on a credit report can result in a quick and sudden decrease in the score. However, improving a credit score usually takes time and patience. There is no “quick fix” for damaged credit.

Free Credit Report Review

Now that you know how your credit score is calculated, GreenPath’s NFCC-certified credit counselors can walk you through a free review of your credit report. We’ll explain how to read the report and how credit scoring works, and answer your questions.

Together we’ll make a plan for managing your credit score to support your goals.

Request a Call with a Financial Expert