7 Ways to Put Your Good Credit Score to Work

August 17, 2020

If you have been paying your bills on time and have achieved a high credit score, congratulations! A high credit score opens up many options that can help in both your financial and personal lives. Now that you have a good credit score, here are seven ways to put it to work for you.

What is a Good Credit Score?

A credit score is a three-digit number that lenders use to determine how much of a risk it is to lend money to that person. There are two major types of credit scores, a FICO credit score and a VantageScore. Lenders can use either score, although a FICO score is used by 90% of the top lenders. A credit score can range from 300 to 850. A good credit score is considered to be in the range of 670 to 739. According to Experian, one of the credit bureaus that calculates scores, the average FICO score in 2019 was 703.

What Can a Good Credit Score Do for You?

When you have a good credit score, there are many benefits you can take advantage of to help improve your finances and that affect your personal life. Here are some examples of how you can put your good score to work for you:

Help Qualify for Credit Cards and Loans

When you apply for credit cards or loans, like student loans, mortgage or car loan, the lender pulls your credit report and score to determine your creditworthiness. A good credit score will help you qualify for credit cards or loans. With a strong credit score, you can qualify for sought-after credit cards that offer rewards and benefits. With a low credit score, you may not even qualify to obtain credit.

Save You Money in Interest

If your credit score allows you to qualify for a credit card or loan, a good credit score can help you qualify for a lower interest rate, thereby saving you money. This can help advance your financial future because if you save money in interest costs you can put those savings towards other financial goals, like retirement or an emergency fund.

Qualify for Housing

A credit score doesn’t just affect you when you are trying to take out a loan, it can also affect your personal life by determining whether you will be approved for rental houses or apartments. Landlords may look at your score to determine whether you may be at risk of not paying rent. A good score makes you more likely to be approved for housing.

Avoid Security Deposits: When you have a good credit score, you can use it to your advantage by not having to pay some security deposits or paying a reduced security deposit. This can come into play with utility companies, like electric and water companies, as well as with cable and internet companies. With a lower credit score, you may have to pay a high security deposit when you are signing up for utilities. A higher credit score leads to more savings!

Help Get a New Cell Phone

If you are looking to get a new cell phone, but won’t be paying for it outright, you may need to lease a phone. Some carriers will require a good credit score to qualify for a lease plan on a new cell phone. Otherwise, you may have to pay the entire cost up front or choose a different phone.

Qualify for Refinancing

If you want to refinance your mortgage or student loans, having a good credit score can help you qualify and obtain a lower interest rate. Refinancing can help decrease your monthly costs, as well as your interest costs over the life of the loan.

More Options from Different Lenders

With a high credit score, you will be able to qualify with many different lenders when you are trying to obtain a loan. Having many different lenders willing to work with you enables you to obtain the lowest interest rate and best terms. With a lower credit score, you may qualify with fewer lenders and would be forced to use lenders that offer less than ideal rates and terms.

How to Improve Your Score

A credit score is determined by information in your credit report, such as your payment history, whether you make late or on-time payments, how much debt you have and how much available credit you have. If your credit score isn’t where you want it to be, here are a few ways to improve it:

Pay your bills on time every month.

A major part of your score is based on the consistency of your payments. If you don’t have a budget, create one to make sure all your payments can be made.

Pay down debt.

The next major factor in determining a credit score is the amount of outstanding debt. Try to pay down your balances to keep the debt amount low.

Do not apply for a lot of credit.

Every time you apply for credit it causes an “inquiry” on your report. All inquiries for the past 12 months are shown. A lot of inquiries can raise a red flag that a person needs credit and would have a difficult time paying it back.

Do not close long-standing accounts that are in good credit.

Some of your score is based on the length of your credit history. A longer credit history can help improve your score.

Having a good credit score can help you in the future, whether with financial aspects or your personal life. If your credit score is negatively affecting you, follow the above steps to improve it. And if you have a high credit score, put it to good use and keep up the good work!

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Making Sense of Cents

Making Sense of Cents has a little bit of everything when it comes to building money management habits. Whether you have questions about student debt, insurance or budgeting, this is the blog for you. It’s also been named one of the top personal finance blogs by FinCon, Zillow and the Plutus Awards. This blog maintains a light, fun tone so it’s easy to read, and it handles a lot of top-level questions about personal finance. Author Michelle also shares about her experiences living in an RV and on a sailboat touring the world. If you’ve caught the travel bug, then you may find some exciting content here.

Millennial Money Man

Bobby Hoyt, the founder of Millennial Money Man, teaches millennials to pay off debt and live their best, self-employed lives. His blogs focus primarily on trending finance apps and ways to monetize your hobbies. He also shares useful budgeting and spending tips to help set you up for financial success. If you have a passion for entrepreneurship, Bobby is your man. Enjoy insider tips on growing your business and expanding your income streams, from someone who's done it himself.

The Budgetnista

Tiffany “The Budgetnista” Aliche is passionate about teaching personal finance. She's also one of Amazon’s #1 bestselling authors for her books on personal finance. Her background as a preschool teacher makes her incredible at explaining high-level financial topics in an engaging, easy-to-understand way. Although she’s developed near-celebrity status as a blogger and speaker, Tiffany's down-to-earth style makes for a relatable, fun read. From banishing debt to building a strong business, her blog covers best practices for achieving financial success. She debunks money myths with topics like “Debt Freedom Doesn’t Equal Wealth,” to help her readers build money management habits. If you have an entrepreneurial personality and are ready to take the next financial step in your personal life or your business, The Budgetnista blog is for you.

Afford Anything

If you’re a travel fanatic, you’ll love “Afford Anything." Author Paula Pant has traveled to more than 40 countries. She speaks to financial independence and real estate investing, her two primary categories of expertise. She’s built self-sustaining wealth by investing in real estate and uses her free time to teach others how to do the same. Her blog is all about cutting back expenses in unnecessary areas while spending on the things you love. She writes for readers who want an actionable strategy for spending and saving wisely. If you’re interested in building wealth or in real estate investing, this is one blog you won’t want to miss.

Broke Millennial Blog

Broke Millennial Blog author and speaker Erin Lowry wants to teach you how to get your financial life together with a 5-step plan designed to help you take charge of your finances. Her blog focuses on popular millennial topics, like budgeting strategies for different personality types and awkward money situations. If you feel like you could use a little financial direction, this blog is probably a great fit for you. If you love the Broke Millennial Blog and want to take the next step in your financial journey, Erin makes it easy! You can subscribe to the blog’s email list for access to a free money management worksheet designed just for readers.

Stefanie O’Connell

Stefanie O’Connell wants to help you travel the world, create a living space you love and have healthy financial conversations with your significant other. Her blog addresses financial conundrums you may have wondered about but have been afraid to ask, like “Why I’m Not Having Bridesmaids at My Wedding” and “4 Ways to Buy a Home When You don’t Have Enough of a Down Payment.” Stefanie’s upbeat, relatable blog gives readers a sense of familiarity. She doesn’t cut corners and gets straight to the heart of financial questions. Her blog offers direction if you’re interested in investing, budgeting or establishing healthy financial boundaries in your relationship. Every reader interested in learning more about financial topics should check out ELFI’s recommended blogs. If you’re loving the ELFI blog, don’t forget to check out the rest of our topics for even more great information about managing your student loan debt.

2020-09-25

3 Financial Goals to Achieve Before Marriage – And Some That Can Wait

Marriage is both a personal and financial turning point that opens up a new world of financial opportunities and struggles. However, with proper planning, you can minimize the challenges and make the most of financial opportunities. Check out these financial goals to achieve before marriage, as well as a couple of others that you’ve still got time to work toward:

Financial Goals to Achieve Before Marriage

The Emergency Fund

For many couples, the COVID-19 pandemic has made the importance of emergency funds exceptionally clear. Especially as you enter into your first few years of marriage, it’s important to build a strong financial foundation so you’re prepared for unexpected expenses, from home repairs to medical bills. Financial hardship is a leading cause of divorce, and in these uncertain times, an emergency fund can help to weather the storm. In addition, an emergency fund provides a way to ease financial anxiety and distress even when times aren’t tough. When you know you’re prepared with emergency savings, there’s no need to panic if the unexpected happens.

Setting a Monthly Budget

Even if you aren’t getting married, creating a budget is a great financial step, and is something you should do right away. Work with your partner to outline your regular expenses, as well as any expenses that may arise in your first year of marriage. Make sure you provide yourself with some flexibility in your savings and begin building an emergency fund if you haven’t already. There are several useful tools that can help you keep track of your budget, including apps like Mint. You can also employ a budgeting strategy to keep your saving and spending on track. Several popular budgeting methods include the 50/20/30 rule, the Zero based budget and the cash envelope system. Not only will a budget be good for your finances, but it will be good for your marriage, as well.

Setting Goals for the Future

Yes, setting goals is a goal. You and your future spouse should lay out financial goals before getting married. It’s important to be on the same page when it comes to debt repayment, housing plans, savings goals and other major financial milestones. Plus, it’s good to know what your spouse is looking for, and a good plan helps to avoid financial stress that can really harm a marriage.

More Flexible Financial Goals

Making a Down Payment

While it’s great to start saving for a down payment before marriage, it’s not necessary to be entirely ready to buy a home before tying the knot. Especially if you’ve already established good money management habits, you can always continue working toward this financial goal as a married couple. Even if you don’t have the money for a down payment right away, you can easily establish a strategy to save toward a down payment. Experts recommend planning on putting a minimum of 10% down for your down payment and the more you can save, the better. Stay focused and keep saving. You’ll have that down payment in no time.

Becoming Debt-Free

Some couples choose to pay their student debt off before getting married, however, student debt is another financial goal you can afford to wait on, especially if you consider refinancing. After your wedding, you may choose to prioritize other expenses that come with building a life together, like a new car or home, before tackling the remainder of your student debt. That said, you certainly don’t want to forget about your student loans. By refinancing your student loans, you could earn greater financial flexibility by lowering your interest rate or changing your student loan repayment term. Refinancing can provide you with the options you need to achieve financial goals with your new spouse.

Tips for Tackling Student Debt

As a general rule, it’s best to first tackle whichever debt is incurring the most interest. Debts with high interest rates can easily spiral out of control, and while it may not be essential to totally eliminate your student debt before your marriage, it is advisable to develop a plan to do so. The good news is, you can employ several strategies to make paying off debt a less intimidating ordeal. Two of the most popular repayment strategies are the debt snowball and the debt avalanche. These two plans take opposite approaches. While the debt avalanche calls for dealing with the highest interest debt first, the debt snowball calls for dealing with the lowest amount of debt first and using the momentum to pay off debts one by one. The right method for you depends on your situation, but both can be incredibly effective if used correctly. Again, it’s worth noting that it isn’t necessary to have your debt entirely paid off before getting married, but you should develop a plan for paying it off before you say “I do.” A marriage is a big change, but it doesn’t have to be stressful. By taking the time to have fun and create a few financial goals, you’ll set yourself up for success even before tying the knot. If you’re getting married soon, you also might be interested in budgeting for your wedding. Check out our guide here.

person making pros and cons list for refinancing private student loans

2020-09-25

10 Pros and Cons of Refinancing Private Student Loans

This year we have seen record low refinancing rates for student loans. If you have private student loans and have been thinking about whether you should refinance them, we hope this post will help you make a decision. We will run through the essentials and the pros and cons of refinancing your private student loans.

6 Benefits of Refinancing Private Student Loans

Private student loans are loans borrowed through banks, credit unions or other private lenders and can consist of original private loans or a loan that you already refinanced. When you refinance, there are many benefits you can experience. Here are the pros of refinancing your private student loans:

1. Obtain a Lower Interest Rate

When you refinance a private loan, you are paying the loan off with the new loan you borrow. The new loan can have a lower interest rate than the rate you previously had on your old loan. A lower interest rate can lead to thousands of dollars in savings depending on the amount of the loan, your old interest rate and your new rate. A lower rate can help reduce your monthly payment and save you money in interest cost over the loan term.

2. Make Your Repayment More Manageable

If your monthly payment is becoming difficult to pay, refinancing is a good way to help make your payment more manageable. This can be done by obtaining a lower interest rate, as previously mentioned, that can help lower your payment. You can also lengthen the loan term when you refinance. When you extend the loan term it makes the monthly payment lower, but will increase the amount of interest charges you will pay.

3. Pay Debt Off Faster

Ready to pay your loan off faster? This can be achieved through refinancing in multiple ways. If you have 10 years remaining on your loan term and refinance to a 7 year loan term or shorter , you will have a higher payment but will have the loan paid off 3 years earlier. Another way to pay off your loan faster is if you refinance and obtain a lower interest rate, your payment will be lower monthly. But if you continue to pay your old monthly payment or more towards the new loan you will be able to knock out your debt quicker.

4. Release a Cosigner

When you refinance your private student loan you can use the opportunity to release a cosigner from your previous loan. As long as you have a strong credit history and credit score, along with stable income, you can qualify for the new loan on your own. To qualify for the best interest rates available most lenders look for a credit score at least in the high 700s. At ELFI a minimum credit score of 680 is needed for refinancing.*

5. Combine Multiple Loans

If you have multiple student loans, refinancing is a great way to simplify your finances. You are able to pay off all the previous loans and focus on paying off just one loan. It’s also easier to keep track of your due date so you never miss a payment. Having only one loan may also help keep you motivated on your debt paying journey instead of seeing multiple student loan debts you have to pay.

6. Choose a Different Lender

If you are not happy with your current student loan lender, refinancing allows you to change to a different refinancing lender by refinancing with whichever lender is the best fit for you. So if you have questions about your loan but can never seem to get answers from your lender, refinancing can help you fix that. At ELFI we pride ourselves on providing a simple and easy process for refinancing along with award-winning customer service loan advisors.

However, just like there are benefits to refinancing private student loans, there are also some cons to consider.

1. Lose Benefits with Your Current Lender

If you refinance your student loan with a different lender, you may lose benefits you have with your current lender. Some benefits that lenders may provide are an interest rate deduction for setting up auto-pay for your payment, forbearance options, or career coaching. Before you look to refinance with a different lender, weigh whether a new interest rate from a different lender outweighs any benefits you may be giving up.

2. Get a Higher Interest Rate

If you are refinancing to extend your loan term to make the payment more manageable, you may end up with a higher interest rate then the previous rate you had. This would make refinancing your loan more costly in the long term because of the additional interest you will end up paying. In order to avoid this, make sure to get personalized rate quotes from multiple lenders so you know your options and how it will affect your monthly payment and the total amount of interest you will pay.

3. Raise Monthly Payments

When you refinance you have the ability to choose a new loan term. Selecting a shorter loan term then the amount of time you had left on your loan can increase your monthly payments. Typically refinancing lenders provide loan terms of 5, 7, 10, 15, or 20 years. If you had 8 years remaining on the loan you want to refinance and select a loan term of 7 years you may see an increase in your monthly payment unless you are qualifying for a significantly lower interest rate.

4. May Extend Time to Repay

When selecting your loan term when you refinance, if you choose a longer loan term then the amount of time you had remaining on your loan, you will be stuck paying the debt off longer. However, this can be beneficial if you need to lower your payment to fit within your current budget. You can also combat this issue by paying more than the required monthly payment when you can afford it, to help pay the loan off quicker.

The Bottom Line

Every financial situation is unique so it’s best to determine what is right for your circumstances. When you weigh the pros and cons of refinancing private student loans, you will most likely find it is advantageous for you because of all the different potential benefits.

*Subject to credit approval. Terms and conditions apply. Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.