Archive for the ‘Debt Management’ Category

The Truth About Credit Repair

Promotions such as – We Can Repair Your Credit – are everywhere. They imply that all you need to do is hire a service to get negative items wiped off your credit history and your credit score will instantly improve. The reality is that consumers often pay a lot of money and their score does not improve in any significant way.

It is true that a consumer has several options to deal with debt and build a good credit history. These include DIY, debt management plans, debt settlement, and bankruptcy. The best option depends on a person’s specific situation.

Each option comes with different side effects. DIY may have the least side effects, but is only feasible for people who have enough income to cover living expenses & debt repayment. Debt settlement may have tax consequences. Bankruptcy can have longer lasting side effects, but for some people it is the best option to get back on track.

Removing negative credit items will not instantly lead to high credit score. A history of paying debts as agreed is necessary for a high credit score. So after dealing with negative debt, a consumer will need to use credit effectively to build a good history. Unfortunately, many consumers pay for expensive loans with a goal of building credit. Often the fees and interest are so high that they consume a large portion of income.

The truth is many consumers can build or rebuild a credit history. The first step is to analyze your specific situation, understand your options, and make an action plan.

If you need help making a plan consider working with a Florida Master Money Mentor. The mentors provide free 1-1 educational help and guidance. They cannot provide legal or investment advice, nor do they sell or endorse financial products. They can provide guidance in developing a plan to achieve financial goals such as building credit, debt repayment, or developing a savings plan. For more information about how to connect with Florida Master Money Mentor in Hillsborough County contact Lisa Leslie or 813-744-5519 ext.54143.


Upcoming Personal Webinars: Live, Interactive, Online Classes

Hillsborough County Extension invites you to participate in these online personal finance classes. Register using the links below. All are free.

Time for all is 12:00pm – 1:00pm EST.

What: Managing Student Loan Debt
When: Wednesday, Feb 15, 2017
Description: We will discuss and compare payment options, demonstrate tools to estimate payments, and provide information about Public Loan Forgiveness.

What: Saving is a Family Affair Webinar
When: Tuesday, Feb 28, 2017 from 12:00 PM – 1:00 PM EST
Description: Whether you are single, married, married with children, a grandparent, an aunt or an uncle – saving for the future is important. We will discuss how everyone in the family can make and contribute to financial goals such as education, independent living, or other future goals.

This webinar is presented by University of Florida/IFAS Extension in partnership with Hillsborough County Extension and Seminole County Extension. This webinar is a partnership of the Tampa Bay Saves and Florida Saves campaigns.

What: Spring Clean Your Finances
When: Wednesday, March 15, 2017
Description: Discussion will include essential documents, how to long to keep, consolidating accounts, reducing fees and organizing financial papers.

Women & Money: Unique Issues

Join us for a program that will provide the motivation and knowledge to help you achieve your financial goals.

Topics will include:
Evaluating Money Decisions
Goal Setting
Cash Flow Management
Saving and Investing

When: April 25 & 27, 2016, 6:15 p.m. – 7:45 p.m.

Children’s Board of Hillsborough County, 1002 East Palm Avenue, Tampa, FL 33605. Registration is required.

Registration: $10 covers both days. No shows and late cancellations will not receive a registration refund. Refreshments will be provided.

Register at:

Registration Deadline: April 18, 2016. Seating is limited.

This is a non-commercial, educational program. No products or services will be sold.

Layaway Logic

Layaway has become popular again, especially during the holiday season. The idea is that consumers will get the retail items they want and avoid going into credit card debt. Stores are promoting it, likely seeing it as a way to entice customers to purchase more items. In that regard it does work on similar emotions as credit cards.

Ideally a consumer includes saving for holiday retail spending as part of their yearly budget. Save money all year conveniently through payroll deduction and then avoid paying a penny more than retail. But we all know that ideally and really are not the same. Consumers often face unexpected expenses and emergencies that put a dent in savings goals.

Layaway can be a reasonable option but it is important to be realistic about whether you can afford to meet the designated payment schedule and final pick up dates. Find out store policies:

  • If you have something on layaway and it goes on sale- can you pay the sales price instead of the price when the item went to layaway?
  • How much time do you have to pay for the item?
  • Does the online layaway policy differ from in-store layaway?
  • Is there a penalty or fee for missed payments?
  • If you change your mind and decide not to purchase, can you get a refund?
  • Are any fees non-refundable?
  • After you have paid the full cost, how long will it be before you receive the item?

As  with any purchase– comparison shop, calculate the total cost, and save your records.

New FICO Credit Scoring Model May Lead to an Increase in Scores for Some Consumers

The company behind the FICO scoring model used by many lenders has announced changes to its scoring formula. FICO reports that past due medical bills which have been sent to collections will have less of an impact than in their previous models. They state “the median FICO Score for consumers whose only major negative references are medical collections will increase by 25 points.” In addition the new FICO scoring model will bypass paid collection accounts.

FICO also states that the new model is an attempt to refine the scoring process to better evaluate consumers with limited credit histories. Folks in these credit categories are often referred to as having “thin-files.”

This new scoring model will be available this fall. FICO scoring models are frequently used by mortgage and other types of lenders. However, not all lenders use FICO and how many will replace their older FICO model with the newer version is unknown.

Consumers should keep in mind that a credit history of accounts paid as agreed and low debt-to-credit ratios are the factors that lead to higher scores. If a consumer has a relatively low score, they can avoid paying big dollars in interest by improving their score before taking on long-term debt such as a mortgage or large automobile loan.

There is additional information about this the at the FICO web site:

PowerPay Debt Away

Live for the experience of today and don’t worry about tomorrow is sometimes good advice. But financing that philosophy with credit cards can be expensive. Consumers who carry month-to-month credit card debt can pay quite a bit for interest and have less money to spend on more enjoyable experiences.

PowerPay is an online debt analysis tool to develop a strategy to pay off debt. The analysis will show you the total cost to pay off debts and the month & date they will be paid. Once this is calculated you can analyze which debts to focus on first, the effect of extra lump sum or monthly payments, and the new pay off dates. The program allows you to calculate over 30 accounts at one time. PowerPay was developed by Utah State University Extension, so you are in a commercial free zone and will receive no spam or sales solicitations.

The challenge is that in order to eliminate or reduce debt, you need to stop accumulating debt. This is especially hard when you have unexpected hardships such as job loss or income reduction. But if do you have income left after expenses, paying off debt can save you money.

Visit .  The site is encrypted, but even so you won’t  need to provide any identifying personal information. You will set-up an account with a user name and password. This will allow you to go back to your  information. You will need to enter information about your credit accounts such as interest rate, balance, minimum payment, etc. However, you will not need to enter account numbers. This is truly a non-commercial tool designed to help you privately work out a debt reduction plan.

Take Control of Student Loan Debt

According to the Federal Reserve, student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008. The latest Fed reports states, “Balances of student loans have eclipsed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages.” The Fed keeps an eye on these numbers to determine their impact on the nation’s overall economic growth.

On an individual level, most student loan holders are well aware of the direct impact on their lifestyle. A significant portion of their income has to be allocated toward student loan debt payments. That means less money for other expenses like mortgages, automobiles and daily living. Since lenders consider debt/income ratios, borrowers with high student loan debt may be denied loans or face higher interest rates.

Student loan debt does not magically go away. So, the best strategy is to take action. Find out exactly how much you owe and the type of loan – federal or private. You can retrieve information about federal student loans at . In the case of federal student loans there are many types of repayment options. A repayment and comparison calculator to help you analyze those options is available at www.  .  If you are employed in the public sector investigate the Public Student Loan Forgiveness program. Try to avoid delinquencies and default. These options can be costly and can  lead to wage or other types of garnishments.