Credit, Credit Score

Protecting Your Credit During the Coronavirus Pandemic

By: Consumer Financial Protection Bureau (CFPB)

Your credit reports and scores play an important role in your future financial opportunities. You can use the steps below to manage and protect your credit during the COVID-19 (coronavirus) pandemic.

Get a copy of your credit report

If you haven’t requested your free annual credit reports, you can get copies at AnnualCreditReport.com. Each of the three nationwide credit reporting agencies (also known as credit reporting companies) – Equifax, TransUnion, and Experian – allows you to get your report for free once every 12 months. You can request additional reports for a small fee if you’ve already received your free report. Be sure to check your reports for errors and dispute any inaccurate information.

In addition to your free annual credit reports, all U.S. consumers are entitled to six free credit reports every 12 months from Equifax through December 2026. All you have to do is get a “myEquifax” account at equifax.com/personal/credit-report-services/free-credit-reports/ or call Equifax at 866-349-5191.

If you can’t make payments, contact your lenders

Many lenders have announced proactive measures to help borrowers impacted by COVID-19. As with other natural disasters and emergencies, they may be willing to provide forbearance, loan extensions, a reduction in interest rates, and/or other flexibilities for repayment. Some lenders are also saying they will not report late payments to credit reporting agencies or waiving late fees for borrowers in forbearance due to this pandemic. If you feel you cannot make payments, contact your lenders to explain your situation and be sure to get confirmation of any agreements in writing.

The CFPB has resources to help you discuss the impact of COVID-19 on your financial situation with your lenders.

Credit reporting under the CARES Act

The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act places special requirements on companies that report your payment information to credit reporting companies. These requirements apply if you are affected by the coronavirus disease pandemic and if your creditor makes an agreement (called an “accommodation” in the Act) with you to defer a payment, make partial payments, forbear a delinquency, modify a loan, or other relief.

How your creditors report your account to credit reporting companies under the CARES Act depends on whether you are current or already delinquent when this agreement is made.

  • If your account is current and you make an agreement to make a partial payment, skip a payment, or other accommodation, then the creditor is to report to credit reporting companies that you are current on your loan or account. This applies only if you are meeting the terms of the agreement.
  • If your account is already delinquent and you make an agreement, then your account will maintain that status during the agreement until you bring the account current.
  • If your account is already delinquent and you make an agreement, and you bring your account current, the creditor must report that you are current on your loan or account.

This CARES Act requirement applies only to agreements made between January 31, 2020 and the later of either:

  • 120 days after March 27, 2020 or
  • 120 days after the national emergency concerning COVID–19 ends.

The CARES Act also applies to certain federal student loans and includes requirements relating to suspending payments and credit reporting. During the period that payments on federal student loans are suspended by the Department of Education, any payment that has been suspended is to be reported as if it were a regularly scheduled payment made by the borrower.

Routinely check your reports

If you’re working with lenders and other creditors on payment assistance programs or forbearance, routinely check your credit reports to make sure they are accurate and reflect your agreements. For example, if your lender agreed to let you skip one month’s payment, make sure they didn’t report it as delinquent or a missed payment.

There are other reports you may want to check too, such as reports that monitor your bank and checking account history, among others. The CFPB has a list of consumer reporting companies where you can learn more about which reports might be important to you, depending on your specific situation.

Report and dispute inaccurate information

If you find inaccurate information on your credit reports, use the CFPB’s step-by-step guide to dispute that information with the credit reporting agency and the company that provided that information to them, also known as a furnisher.

If an investigation doesn’t resolve your dispute with the credit reporting company, you can ask that a brief statement of the dispute be included in your file and included or summarized in future reports. You can also submit a complaint to the CFPB at consumerfinance.gov/complaint.

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Christian Credit Counselors

Cutting Credit Cards – The Credit-to-Cash Transition

It’s one of the most exciting moments of your life. You’re tired of using one credit card to pay off another. You can no longer bear the intense pressure building within your chest each time the electric bill collides with a credit card bill in the mailbox. You’ll never again feel financially helpless because you’ve decided to stop the madness.

This is the day you cancel your credit cards. You’re so proud of yourself, and you can’t wipe the smile off your face. Armed with a sense of empowerment gained from Christian credit counseling, you see a future of financial peace ahead of you.

Taking a step like this is exciting, but there are always hard times to come when you make a drastic life change. If you’ve been living on credit for years, it’s difficult to suddenly start living within your means without the plastic in your wallet screaming, “I got your back! Go on and splurge!”

A Moment of Panic

It will likely happen when your teenager selects the most expensive pair of shoes in the mall or when your colleagues suggest dinner and drinks at the most exclusive club in town. You walk toward the register with those expensive shoes or get excited about a fun night out, and then reality smacks the smile right off your face.

You don’t have that plastic card backing you up. The shoes are double the price you can really afford to pay. Your budget isn’t quite generous enough to accommodate the best after-work party in town.

It’s as if someone just whacked you in the throat with a hockey stick. You feel sick. You can’t breathe. You want to cry. This is the death of a credit card, and you’re having your first credit-to-cash panic attack. You don’t want to turn your colleagues down or ask your teenager to find a more affordable pair of shoes, but you now understand: If you don’t sacrifice now, you will have to sacrifice your peace of mind in the future.

You Will Get Through This!

These experiences are normal for anyone transitioning from a lifestyle of debt to a lifestyle of financial responsibility. Now that you know it’s coming, here is one tip that will help you survive this transitional period: think in terms of substitutions rather than eliminations.

You can’t afford routine after-work visits to that exclusive club, but can you make another suggestion to your group? Maybe you can take turns hosting the group at your homes once a week, or you can suggest a venue that’s more appropriate to your budget. You may find that others are relieved you made the suggestion. They may not admit it, but you’re not struggling alone.

We’re on Your Side

Another way to make this process easier is to invest your time in ongoing debt counseling. Just like a recovering alcoholic is more successful if they attend weekly AA meetings, your chance of enjoying financial success increases if you meet with your Credit Counselor and attend classes on financial topics.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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    Credit, Credit Counseling, Credit Score, Debit & Your Credit Score, Debt, Debt Consolidation, Debt Settlement, Uncategorized

    Credit Conscious Living Webinar

    Credit Conscious: The Ins and Outs of Credit

    Looking to build, maintain, or improve your credit? Christian Credit Counselors, a nonprofit 501 (c)(3) with a mission to provide free financial education to individuals and families both locally and nationwide, is now offering a free, online webinar entitled, Credit Conscious: The Ins and Outs of Credit. Christian Credit Counselors is committed not just to helping people get out of debt, but providing them with free resources and education to STAY out of debt and live a life of financial freedom.

    The Credit Conscious webinar will teach you the ins and outs of credit and give you the tools you need to obtain and build, improve, and wisely use credit. You will also learn to research credit reports and scores, as well as your rights and responsibilities as a consumer. Whether you are trying to climb out of mounting debt or you simply want to learn how to view your credit report online, this webinar is a great tool in understanding credit so you can make the best decisions to achieve your financial goals.

    Click on the video below to view the webinar.

    Click here to download the free handout:

    When you are done with the webinar video you can also take a quick survey using the button below:

    If you have questions or would like more information, email education@christiancreditcounselors.org or call 1-800-557-1985 ext. 131.

    Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips:

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      Credit Counseling

      Your Credit Score – Tips to Raise it

      Unfortunately, credit is an important part of our life. Good credit is required for so many things, like applying for a car or home loan, applying for a credit card, and even some seemingly unrelated things, like getting a job. If your credit score is lower than average, you’ve probably already found out that life can be a lot harder for someone with a low score. Fortunately, there are plenty of ways to improve your credit score. Of course, there is no overnight fix, but here are a few ways to get started fixing your credit score.

      Pay Everything On Time

      This might be obvious to some, but it’s one of the most important steps to raising and maintaining a credit score. Whether you have bills from credit card companies, banks, or companies that provide anything else like power and water, every time you don’t pay them completely, your score drops a little. If you can’t pay every bill off completely, pay off as much as you can each time. This might also be a good time to talk to a debt counselor, as you may have more trouble than you realize.

      Apply for Credit at the Same Time

      If you do need to apply for credit, for example, a debt consolidation loan, try to complete all of the applications in a relatively short period of time. When the credit agencies notice that you’re applying for credit a large number of times, they assume that you’re applying for multiple lines of credit, which could drop your score. However, as long as the applications are within a shorter period of time, say a month or so, they are more likely to understand that you are simply applying for a single line of credit in multiple places.

      Wait for Good Credit

      This is not the most efficient way to raise your credit score, but it can be helpful to you. Credit agencies only consider activity within the last seven years. This means that even if you have terrible credit now, and you do nothing more than follow the rules of maintaining good credit, such as paying bills on time and keeping a reasonable debt-to-credit ratio, your score will go up by itself over time, and in seven years, you’ll have pristine credit.

      Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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        Christian Credit Counselors, Credit Score, Debt

        Five Tips to Avoid Damaging Your Credit Score

        Your credit score not only determines your interest rates, but it could also determine your eligibility for that new job you have applied for. Like it or not, your credit score is an important number. Some of the most common questions our clients ask us are, how can they improve, build, and maintain their credit scores?

        Tips to Raise Your Credit Score

        • Pay your accounts on time. When you pay your bills 30 days late it could result in a negative credit reporting and could effective your score.
        • Borrow no more than you can comfortably pay back. Avoid maxing out your credit cards. Limit your utilization to no more than 30% of your available credit. Practice good spending habits by charging something simple like your gas and then paying off the whole balance at the end of the month. This will help you to develop good spending habits while building your credit.
        • Be cautious about co-signing or guaranteeing loans for others. By co-signing or guaranteeing a loan you are a joint account holder and equally responsible for funds owed. Your credit report will also be equally affected by negative reportings.
        • Do not apply for credit you do not need. We know that store retail accounts are tempting with their promotional offers, but when you read the fine print they often have high interest rates. If you choose to do one of those 0% deals for a year, make sure you can pay it off in the time allotted because after the expiration date the interest rate will shoot upwards of 20% which will end up being very costly.
        • Pull and review your credit report annually and dispute inaccurate information. You can pull your credit report from each bureau once per year for free at: annualcreditreport.com. By reviewing your credit report annually, you can catch any inaccurate reporting or suspected identity theft.

        Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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          Credit Counseling – Choosing it over Bankruptcy

          Avoiding Bankruptcy in Retirement

          Bankruptcy lawyers sometimes present bankruptcy as the only way out of a debt problem. In nearly every situation, it’s better to receive credit counseling before even considering damaging your credit score and endangering your lifestyle with bankruptcy.

          According to an article by U.S. News & World Report, a growing number of senior citizens opt for bankruptcy in retirement. In fact, the number of people age 65 or older who filed for bankruptcy tripled between 1991 and 2007 or from about 2 percent up to 7 percent.

          Of course, younger people also have challenges with credit card debt. By meeting with a trained credit counselor through Christian Credit Counselors, you can receive a free debt analysis. You will be under no obligation, but can learn about possible solutions. Before you decide, it’s important to know some of the negative outcomes associated with bankruptcy, especially in certain circumstances.

          When you need a new job

          It’s never a good idea to declare either Chapter 7 or Chapter 13 bankruptcy when you are about to go job hunting. Many employers run a credit check on their employees to see if they are financially responsible. If you plan to work in the banking industry, it’s especially important to have a good credit score.

          When you face repossession

          If you choose Chapter 7 bankruptcy, your are subject to liens against your home and other belongings, depending on where you live. A bankruptcy trustee will sell your non-exempt assets to pay off your debt. While laws protect money you have in personal IRA, 401(k) and other retirement accounts, any inherited retirement accounts are not protected in bankruptcy. If a lender wants to repossess a vehicle, it’s usually better to work out a way to budget for the payments instead of letting it go in a bankruptcy.

          When you want to buy a home or rent

          If you plan to move, you don’t want to have a bankruptcy on your records. Most property manager conduct a credit check. In many cases, a rental application will ask if you have declared bankruptcy. As for buying a home, bankruptcy usually prevents a prospective buyer from receiving a mortgage loan approval.

          Fortunately, you can receive credit counseling instead of going through bankruptcy. Bankruptcy isn’t a cure-all as many debts can’t even be eliminated such as child support, student loans and money owed to the IRS. With credit counseling, you learn how to budget all your obligations. After receiving a budget and debt analysis, you can get started on a Debt Management Plan.

          At Christian Credit Counselors, our team lowers your interest rates and consolidates you debt into one easy to manage payment.

          Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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            Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Money Management, Personal Goals, Saving

            Credit Cards: Considering Credit History

            Considering Your Credit cONSUMER-cREDIT

            Do you have credit card accounts that you don’t use? Are you thinking about closing these unused accounts to clean off the slate? Read this article to learn more about the effects of closed accounts on your credit history.

            A Fair Isaac representative reported that closing accounts does not directly hurt one’s credit score, regardless of whether it was closed by the cardholder or the credit grantor. That’s the good news. The other side of the story, and there is always another side, is that closing accounts indirectly affects your credit history and therefore, your credit score.

            Closing Credit Card Accounts

            Closing unused credit card accounts can increase one’s credit utilization ratio. Credit utilization is a measurement of the difference between one’s available credit and the amount being used. This figure is calculated by taking the sum of your credit card balances and dividing that by the sum credit card limits. One’s credit utilization ratio directly affects credit scoring. Simply put, the higher one’s credit utilization ratio the lower his or her credit score.

            How does this come into play with regards to cancelling unused credit cards? The unused credit cards have low utilization since the entire credit limit is available. This offsets the higher utilization that one’s other credit cards may have. Thus, it reduces one’s overall credit utilization ratio boosting his or her credit score.

            Putting that into perspective, let’s say you have a credit card with a $5,000 credit limit and another card with the same. That’s $10,000 of total credit limit. Now let’s say you spend $2,500 on one card and some minor purchases on the other, which you have paid off. Your total balance, or debt, is $2,500, which equates to a credit utilization of 25%. If you were to close the card with no balance, your overall credit limit would decrease to $5,000, which would in turn increase your credit utilization ratio to 50%.

            Considering Credit History

            Closing credit card accounts can also lower one’s credit score by reducing the credit history age. Credit age is essentially that. How old are your accounts? In the credit scoring world, the older the better. Age is one representation of stability. Since older is better when it comes to credit card accounts and credit scoring, if you’re thinking of closing old unused accounts, think again. These accounts can actually help your credit score. Keep in mind, however, the FICO score does take into account both closed and open accounts, and closed accounts can remain on a credit history report for up to a decade.

            Setting all that aside, if keeping credit card accounts open leaves an open door to more spending – close them! Better to be financially free of debt and its negative impact on your finances, which we all know can lead to increased stress. And, who needs that!?

            Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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              Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Goals, Investing, Money Management, Personal Goals, Saving

              Financial Planning: A Dose of Truth and Grace

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              Planning for a Financial Planner

              So you’re considering a financial plan! Perhaps your finances have told you that you need one. Planning with purpose for your financial future is a noble task. Sure many good things come to us in unexpected surprises, but planning for a good future, especially when it comes to finances, is a wise strategy indeed! You’re reading this article because financial planning interests or excites you, and just doing so is taking the first step.

               

              Financial planning is a well marked plan to thrive financially, and I don’t know anyone who doesn’t want a secure, successful financial portfolio. It’s never too late to start making changes and never too late to pursue financial freedom. The key is: start where you are. Don’t dwell on where you have been or the mistakes and poor choices that you may have made. Everyday is a fresh start to the life you want to live, to the best you yet!

              Your Dreams, Desires, and Goals

              You have dreams, desires and goals. Everyone does. But, not everyone lives in such a way as to see them come to pass. Why do some succeed where others fail? Why do some thrive while others seem to strive after the wind? Not all of life’s answers come sugarcoated and some pills are hard to swallow. But, taking in wisdom, advice and eating humble pie is good for us all. With humility comes honor, and sometimes taking a long, hard look at ourselves is truly a humbling endeavor.

              Finances are a major test and testimony of our maturity and level of personal responsibility. It’s important in the process of self-discovery to admit the truth about your behaviors and choices and the effects they have had on both your life and the lives of those you influence, whether for good or for bad. Be sure to give yourself a healthy measure of both truth and grace. As imperfect people, who make not so perfect choices, grace is something we all need.

              Consider Your Financial Peace

              Start today by considering who you are, who you want to be. Consider what your financial situation looks like and what you want it to look like. Consider what it will take to get you there. Look at the situation objectively. Keep negative thoughts and emotions at bay. You are strategizing, planning, preparing and leading. It takes a strong mind and a strong spirit to be a good leader. The first person you lead is always yourself. And the truth is, if you can’t lead yourself, you really can’t lead others, not well, anyway.Financial grace is not a credit card with no limits and no consequences. If you charge, you owe. Same goes in life.

              Your material choices have consequences, both positive and negative. Grace goes the extra mile, however. It says, “Yes, you are where you are, but…you don’t have to stay there, and you certainly don’t have to return.” Grace gives us the opportunity to make a change, to make the change we desire. It helps us to feel empowered to walk out the lifestyle we want for ourselves and to make the daily choices that both get us and keep us there. Mary Poppins should have said a spoonful of grace helps the medicine go down.

              Planning Short and Long Term Goals

              As you begin to plan, look at both short and long term goals. Write out the steps it will take to accomplish them. With your basic plan in hand, your road map, determine if further help is needed to bring clarity or to implement your newly devised strategy. Share your newfound view with others and invite them to partner with you where appropriate. Your close family and friends are key players in the game called “your life.” And, be proud of who you are because no matter where you’ve been, what you have or have not done, you are this day, an overcomer.

              Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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                High Car Payments Can Drive You Over the Edge

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                High Car Payments

                It is an all too common story. Many people struggling with debt can trace the beginning of their debt problems to a new car purchase – a big monthly payment, financed for too long. Some households even have two vehicles with large payments in the $400 to $500 range. With the budget maxed out, you can see how this type of financial burden could lead to a crisis. It’s easy to start falling behind on your budget and ultimately turning to credit cards, cash advances or loans to make up where your cash flow is lacking.

                Test Drive the Monthly Payment

                You may think you’re getting a steal of a deal on that new SUV or speedster. After all, the dealer said he’d take $2,000 off the sticker price – how could you pass that one up! You know the saying: Buyer beware. Be aware of what you can afford, and go into the purchase with a plan. Find a comfortable monthly payment that allows room in your budget for maintenance, and possible gas and insurance increases. You want a vehicle that improves your lifestyle, not one that enslaves you to a high monthly expense.

                Car Payment Facts

                • Monthly payment

                Financial experts recommend spending no more than 15% of your monthly take-home pay on a car payment. If your budget is tight, a more conservative figure like 8% would be appropriate. Even though a lender may approve you for more than you have budgeted, you don’t need to spend it. Consider the future effects of your decision and your other lifestyle and financial goals. Balance is key to budgeting.

                • Term of the loan

                According to the Federal Reserve, the average auto loan term has been creeping up over the years. In 1998, the typical car loan was a 4-year term, and now, lenders commonly offer 6-year terms. It certainly lowers your monthly payment and may help you reach the 8% you budgeted for. However, it doesn’t come free of charge. Obviously, you’ll pay a lot more than you signed for because of the increase in overall interest. And, if you want or need to sell, chances are you’ll owe more than what the car is worth. It takes longer to build equity with a long-term loan. Consider what you can afford monthly and base a purchase on a four year loan. This doesn’t have to mean less car. Shopping used cars in your price range can offer a fleet of options.

                • Interest

                Do some investigating and shop around for the best interest rate before negotiating a purchase with a dealer. Check other dealerships and financial institutions. Dealerships and financial institutions often run promotions, offering incentives like lower interest rates, zero down and cash back. Also, if you can afford to send in payments above your monthly payment, it will pay down your premium faster, save on the overall interest and shorten the life of your loan.

                • Pleasure

                Don’t buy a vehicle that you don’t like or are embarrassed to drive. It is important that you are happy with your purchase for more reasons than simply the cost. The best car deal is one that you can afford, meets your lifestyle needs and that you enjoy driving.

                Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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                  Budgeting, Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Goals, Money Management, Personal Goals, Saving

                  Credit – The Four Most Common Forms

                  What is credit? art-credit-cards-620x349

                  Credit is defined in a couple of ways. One is the amount of money you are approved to borrow from a lending institution. With this approval comes an agreement to repay the charges, any additional fees that can or will be applied, and to abide by time restrictions.

                  Credit can also be classified as your borrowing reputation. It paints a picture of your payment history and provides the lender with information regarding the likelihood of your repayment, in other words, your risk factor.

                  Use of Credit

                  When used responsibly, credit can be a convenient and effective financial tool. From a simple credit card to an auto or home loan, credit is the American way of life. Cashless transactions are soon becoming the way of the future, and credit cards are among the most prevalent. Understanding credit is important in order to use credit to your advantage and to prevent the common financial pitfall – debt.

                  Four Common Forms of Credit

                  Revolving Credit

                  This form of credit allows you to borrow money up to a certain amount. The lending institution sets a credit limit, or the most you can borrow. In revolving credit, the borrower revolves the balance by rolling from month to month until it is paid in full. Interest charges typically occur for any revolving balance. As the money is paid back, the difference between the maximum credit limit and the current balance is available to be borrowed. This is the most common form of credit issued by credit cards, such as Visa, MasterCard, and store and gas cards. Credit cards are considered unsecure credit because there is no collateral securing the amount borrowed.

                  Charge Cards

                  This form of credit is often mistaken to be the same as a revolving credit card. However, the major difference between a credit card and a charge card is the credit card can carry a balance, whereas the charge card must be paid in full each month. If the balance is not paid on time and in full, penalty fees will be added. American Express is an example of a well-known charge card. This form of credit is advantageous against accumulating credit card debt.

                  Installment Credit

                  Installment credit involves a set amount borrowed, a set monthly payment and a set timeframe of repayment. Interest charges are pre-determined and calculated into the set monthly payments. Common forms of installment credit agreements are home mortgages and auto loans.

                  Installment credit is also typically secure. Secure credit requires security for the lender. The borrower must provide collateral, something of value pledge in order to guarantee loan repayment. If the borrower fails to repay, or defaults on the loan, the lender may confiscate the collateral. A home is an example of collateral on a mortgage, and a vehicle on an auto loan. If the borrower were to default, the home or vehicle would be repossessed.

                  Non-Installment or Service Credit

                  This form of credit allows the borrower to pay for a service, membership, etc. at a later date. Generally, payment is due the month following the service, and unpaid balances will incur a fee, interest, and/or penalty charges. Continued non-payment will result in service cancellation and can be reported to the credit bureau, affecting your credit score. Service or non-installment agreements are very common in our everyday life. Cell phone, gas and electricity, water and garbage are all examples of service credit.

                  Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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