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Apache is functioning normally

September 27, 2023 by Brett Tams

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A personal loan is money borrowed from a lender that can be used for almost any purpose, from debt consolidation to home improvement projects.

Most people don’t have $5,000+ sitting in their bank accounts—that’s where personal loans come in. Just like a mortgage or auto loan, personal loans allow you to cover large purchases or expenses under the terms that you’ll pay off the loan over time, typically with interest.

If you’re considering taking out a personal loan, here’s all you need to know to ensure you’re making the right money moves to fund your future investment.

What Is a Personal Loan?

A personal loan is money borrowed from a bank, credit union, or other financial institution that can be used for virtually any personal expense. Like any other installment loan, personal loan borrowers are expected to pay the money back over a set period.

The typical amount you can take out for a personal loan can range anywhere from $1,000 to $50,000, depending on several factors. Interest rates are just as variable—they can be as low as 6% and as high as 36%, depending on your unique financial situation. The current average interest rate for personal loans is 11.04% as of May 2023.

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Why Would I Need a Personal Loan?

If you’re planning on making a big purchase, getting a better handle on your debt, or have run into some unexpected expenses, applying for a personal loan can help cover the costs. People usually take out personal loans for:

Debt consolidation
Unexpected medical expenses
Home remodeling
Emergency expenses
Vehicle repairs or financing
Moving expenses
Vacations
Wedding expenses

While you could technically use this type of loan for, well, anything, there are a few things you should avoid using a personal loan for, like:

College tuition: It’d make more financial sense to use a federal student loan vs. a personal loan to pay for college tuition. Federal student loans typically come with lower interest rates, plus most don’t require a credit check. You may even qualify for a subsidized loan or an income-driven repayment plan.
Home down payment: Most mortgage lenders won’t accept a personal loan as a down payment, and even if they did, the increase a personal loan could cause to your debt-to-income ratio might disqualify you from the loan anyway.
Starting a business: Taking out a personal loan to open a business won’t help you build business credit since the loan is in your name. Instead, consider applying for a business credit card to start building credit so you can apply for a business loan down the road.
Everyday expenses: If you’re strapped for cash now, taking out a personal loan to cover bills and other living expenses may just create a bigger problem in the long run since you’ll have to repay the loan amount plus interest. Consider re-budgeting or finding ways to increase your income instead.

Personal Loans vs. Lines of Credit vs. Payday Loans

Personal loans, personal lines of credit, and payday loans are all money-borrowing options that can help you manage your finances or cover a significant expense. However, they’re typically used for different purposes.

Personal loans vs. lines of credit: Personal loans are typically used to cover large purchases or expenses since all the money is available upfront. On the other hand, personal lines of credit allow the borrower to use the credit available as needed and pay it off on their own timeline, so they’re more ideal for smaller everyday purchases.
Personal loans vs. payday loans: Whereas personal loans allow you to borrow a large sum of money with a loan term typically spanning several years, payday loans offer borrowers a small amount of cash—typically around $500 or less—at a higher interest rate that has to be repaid within 2-4 weeks. Payday loans are best if you have an urgent expense and know you can repay the loan within the term offered.

	Definition	What it’s best for
Personal loan	Supplies the borrower with a large sum of money upfront that must be paid back in fixed monthly payments throughout the loan term	Large purchases or expenses
Personal line of credit	Lets the borrower use credit as needed and pay it back on their own timeline with a variable interest rate	Building credit on everyday purchases
Payday loan	Gives the borrower a small sum of money—around $500 or less—at a high-interest rate that usually has to be repaid within 2-4 weeks	Quick cash for urgent needs, especially if the borrower does not qualify for a traditional loan

Types of Personal Loans

Before you apply for a loan, research the type of personal loan that will best serve your unique financial needs. Your credit history, credit score, and reason for needing the loan will determine which is best for you.

Here’s a quick breakdown of the seven most common types of personal loans:

Type of personal loan	Definition	Who it’s best for
Unsecured personal loans	Do not require any sort of collateral to qualify	Borrowers with excellent credit and a steady source of income
Credit-builder loans	Allow you to take out a small sum of money to demonstrate that you’re a reliable borrower by making regular on-time payments	Borrowers with low or no credit history looking to improve their credit score
Debt consolidation loans	Typically can be borrowed at a lower interest rate than most credit cards or other bills you plan to consolidate, saving you money on interest	Borrowers with multiple debt balances or balances with high interest rates
Co-signed and joint loans	Allow a co-signer to assume responsibility for a loan if the borrower does not qualify	Borrowers who do not qualify for a traditional loan or are hoping to be approved for a lower interest rate
Fixed-rate loans	Come with an interest rate that does not change over the repayment term, so the borrower pays the same amount every month	Borrowers who plan on paying off their loan over an extended period
Variable-rate loans	Come with a fluctuating interest rate that could increase or decrease monthly payments over time, but rates are sometimes lower vs. fixed-rate loans	Borrowers who only need to borrow funds for a short period

How Do Personal Loans Work?

You have to receive a personal loan through an authorized lender, typically a bank or credit union. Here’s how the personal loan process works:

You must first apply for a personal loan. The lender will decide if you qualify based on your creditworthiness, income, and the type of personal loan you’re interested in.
If you qualify for a loan, your lender will usually set a loan term to determine how long you have to pay the money back. This can range anywhere from months to years, depending on the lender and your needs. A fixed or variable interest rate—the cost of taking out the loan—will also be applied to your monthly payments.
If you qualify for a loan, you’ll be issued a lump sum deposited into your bank account. You’re free to do with the money as you wish, but you’re expected to make regular monthly payments until the loan is paid off.

How to Apply for a Personal Loan

Personal loans are a great tool for financing some of life’s most important—and unexpected—milestones. If you’re ready to apply for a personal loan, follow these steps:

Check your credit: Your credit history will be one of the biggest determinants of whether or not you’re approved for a loan, so it’s important you know where you stand. Most lenders will want to see a “good” credit score (620) or above to ensure you can be trusted to meet your loan terms.
Decide how much to borrow: You may qualify for a $50,000 loan, but before you sign on the dotted line, you need to know how much you can realistically afford to borrow. Carefully consider your current and future financial situation before jumping into any personal loan.

Pro tip: Try our loan payment calculator to easily estimate monthly payments for different personal loan options.

Know your consumer rights: According to the Truth in Lending Act, lenders must disclose the APR finance charges, principal amount, and any fees and penalties associated with a loan offer. If you come across a lender that refuses to share this information, you’ll want to look for a different lender.
Gather essential documents: In addition to your credit report, potential lenders may also want to see the following documents to speed up the application process.
1. Proof of your annual income
1. Your debt-to-income ratio
1. Your Social Security number
1. Recurring monthly debt (like your house payment)
1. Employer information
1. Your cosigners financial information (if applicable)

Research loan options: Personal loan requirements and terms vary by the type of loan and lender, so you’ll want to research before applying. Details that may sway your decision include the loan amount, APR, monthly payments, loan term, secured or unsecured, and more. Ask lenders for this information in advance before applying for a personal loan.
Submit your application: Once you’ve settled on a loan that meets all your requirements, fill out your application, read it carefully for typos or errors, and submit it to your potential lender. You’ll likely know whether your application was approved within a day or two whether your application was approved.

How to Qualify for a Personal Loan

Each lender is different, so minimum requirements for personal loans vary. However, if you’re hoping to qualify for a large unsecured personal loan with a competitive interest rate, here are a few general requirements most lenders will want to see:

A minimum credit score of 620
A positive and established credit history
A debt-to-income ratio less than 36%
A steady income with proof of employment

Again, these requirements vary from lender to lender. In some cases, you may qualify for a loan with no credit at all. Some lenders even prioritize things like education and work history when evaluating applicants. Inquire with potential lenders before you apply for a personal loan to better understand what you need to qualify.

Personal Loan Alternatives

If credit history, high interest rates, or substantial fees are preventing you from applying for a personal loan, there are money-borrow alternatives that may be a better fit, like:

Home equity loans: Home equity loans or lines of credit (HELOC) are secured by the equity a borrower has built in their home. Because this is a type of secured loan, interest rates tend to be lower compared to an unsecured personal loan. The repayment terms are also longer than most personal loans, sometimes up to 20 years.
Credit Cards: Credit cards allow borrowers to use credit and pay it back as they go, offering more flexibility than personal loans. Many credit cards also offer rewards like cash back or airline miles for money spent.
Personal lines of credit: Like credit cards, personal lines of credit allow you to borrow money and pay it back as you go. However, personal lines of credit have a set draw period—once the period is over, you won’t be able to tap your line of credit and will need to pay back your balance. Interest rates for personal lines of credit are typically lower than credit cards, so they’re ideal for large ongoing projects.
Retirement loan: If you’re looking for more relaxed loan requirements, you may be able to borrow from your employer-sponsored retirement plan in the form of a 401(k) loan. This is a great alternative for borrowers with less-than-stellar credit, but keep in mind that you’ll be restricted to your current retirement accounts, and you may have to repay the loan early if you leave your current job before the loan term ends, often with penalties.

FAQs

Still weighing your personal financing options? We answered some of the most frequently asked questions about personal loans to help with your decision.

Will a Personal Loan Affect Your Credit Score?

Applying for a personal loan may cause a light dip in your credit score because lenders will run a hard inquiry on your credit. While a hard inquiry shouldn’t affect your credit score too much, it’s important to narrow down your options before applying to avoid multiple hard inquiries from multiple potential lenders.

It’s also wise to wait to apply for a personal loan if you’ve just opened another line of credit, which could cause an even bigger drop in your score.

Do You Need a Down Payment for a Personal Loan?

You do not need a down payment for a personal loan. However, In the case of a secured loan, you’ll need collateral, such as a car or money in a savings account.

Can You Use a Personal Loan for Whatever You Want?

A personal loan can be used for just about any purpose. Some lenders may want to know what the money will be used for, but others just want to be certain you’ll be able to pay it back. However, a better financing option may be available if you plan on using your loan for things like tuition or daily expenses. Research your options before applying for a personal loan.

How Big of a Loan Can I Get With a 700 Credit Score?

You’ll likely be able to borrow higher limits with a 700 credit score or higher, but other factors, including your income, employment status, and the type of loan you’re applying for will also impact how big of a loan you qualify for.

How Often Can You Apply for a Personal Loan?

There is no limit to how often you can apply for a personal loan. You can have multiple personal loans open at once, but remember that too much existing debt may lead lenders to disqualify you from taking out more loans or opening new lines of credit.

Researching personal loans can be daunting, especially if you’ve run into sudden unexpected expenses. The best loan for you will depend on your unique financial situation. Check out the personal loans at Credit.com to quickly compare options and see potential APR, terms, and maximum loan amounts.

Source: credit.com

Apache is functioning normally

September 27, 2023 by Brett Tams

According to IBM’s annual Cost of a Data Breach report, the average cost of a data breach to an organization in 2021 was 4.24 million dollars. That’s the highest average figure in its 17-year history. Most of these breaches were the result of compromised user credentials (where an attacker is able to gain unauthorized access to an account) and are often more costly where remote working is involved.

cyber attack

These breaches aren’t just costly for large enterprises, though. Many small organizations fail to recover from a serious data breach (where the average cost is just under $700,000), with 60% of them going out of business within 6 months of an attack.

But of course, we can also fall victim to cyber attacks as individuals, and the cost to us can be significant, too. If you’ve been unlucky enough to have been a victim of a data breach, or (worse), identity theft, you’ll know that you can lose eye-watering and potentially crippling sums: this hacking victim lost over $13k in 2020.

But when we talk about the cost of a cyber attack to an individual, we’re not talking simply about financial losses.

How to Avoid a Cyber Attack

Psychologically, the after-effects of a cyber attack can be damaging. The feeling that you’ve been manipulated by a stranger (and your personal data has been ‘invaded’) can be deeply unsettling. It can lead to a serious loss of confidence, and make you increasingly wary of trusting others. It can cause embarrassment, too, as a victim of a hack can be made to feel as if it’s their fault.

I just watched a documentary on the dark web, and I will never feel safe using my credit card again!
Luckily I don’t have to worry about that. I have ExtraCredit, so I get $1,000,000 ID protection and dark web scans.
I need that peace of mind in my life. What else do you get with ExtraCredit?
It’s basically everything my credit needs. I get 28 FICO® scores, rent and utility reporting, cash rewards and even a discount to one of the leaders in credit repair.
It’s settled; I’m getting ExtraCredit tonight. Totally unrelated, but any suggestions for my new fear of sharks? I watched that documentary too.
…we live in Oklahoma.

In the most extreme cases (where a cyber attack has led to a significant loss of funds or even the loss of a job) the effect can be even more harmful, leading to stress, anxiety and even depression. Whatever the financial cost of an attack, the emotional cost is often far more significant in the long run.

Fortunately, there are a number of steps you can take to secure your data and ensure you’re aware of the threats you might face while online.

Check If Your data Is at Risk

Without knowing it, your data might have already been involved in a breach. A breach usually occurs when a hacker gains access to the database of a service or company which contains users’ private information, including (but not limited to) usernames, passwords, email addresses and, in the worst cases, bank account details. If you’ve been involved in a data breach, some of your personal information might have been made public without you realizing, which could put you at risk of identity theft.

But don’t panic. You can check if your email address or phone number has been exposed in a data breach by going to Have I Been Pwned. If any of your accounts may have been compromised, change those passwords immediately, and make sure you’re not reusing the same passwords across multiple accounts.

Use Strong Passwords

Speaking of passwords, nearly a quarter of Americans have admitted to using a password like “password” or “123456”. These should clearly be avoided, as they’re easily guessable and won’t take long for a hacker to crack. The longer and more complex a password is, the stronger it is. You can check the strength of your passwords at Security.org.

Using a “passphrase” (a series of unrelated words with spaces in between) is often more effective than using a simple combination of letters and numbers, as these can be harder to crack. This can help to protect your accounts from threats like brute-force attacks, in which attackers will submit vast numbers of possible passwords in an effort to guess correctly.

Protect Your Website(s)

This action may not apply to you, of course — but if you happen to run a website (for a small business, perhaps, or even just a hobby such as blogging) then your personal information is inextricably linked to it, and it can be a huge point of vulnerability. If someone gains access to it through a CMS exploit or a comparable weakness, they can learn your passwords, uncover private information, or even hold the site hostage in an effort to extort you.

Keeping extortion efforts at bay is largely a matter of investing in technical safeguards. Top managed hosting platforms are particularly good at keeping ahead of potential attackers, and some (e.g. Cloudways with its 2022-launched Cloudflare CDN integration) are investing in native features that make it all but impossible for run-of-the-mill hackers to gain access. Overall, though, the biggest thing you can do is refrain from storing any sensitive information on your website. Anything intended for public viewing inevitably makes a bad storage vault.

Beware of Suspicious Emails

One of the most common ways individuals fall victim to cyber crime is through phishing attacks, a type of ‘social engineering’ where an attacker sends a fraudulent email to an intended victim enticing them to click a suspicious link or hand over personal information. Phishing emails often appear as though they’re from a legitimate organization (like your bank, for example) but there are some classic signs to look out for.

Check the email domain (the bit after the @ symbol) to see if it looks legitimate. If it’s misspelled (or a public domain like gmail.com) it could be a scam. Next, check for poor spelling and grammar in the body of the email, as phishing attempts are often shoddily written. If you have the slightest suspicion that the email may not be legitimate, do not respond or click any links in the email. To ensure you’re aware of the telltale signs, IT Governance has produced a handy guide on the ways to detect a phishing email.

Update Your Software

Cyber threats are constantly evolving, with hackers developing newer, more sophisticated ways to gain access to our devices and our personal data. That’s why it’s so important that our operating systems and software programs are always updated to the latest available versions. These newer versions will fix previously discovered vulnerabilities and offer greater protection against emerging threats.

If you’re still using an outdated operating system, for example, it may contain weaknesses that can quite easily be exposed by an attacker, especially if those weaknesses are public knowledge. Use a tool like Soft4Boost to check for out-of-date and potentially vulnerable software, and update to the latest supported versions where necessary.

Secure Your Devices

It’s also important to protect our physical devices, as a lost or stolen device could present an easy opportunity for an attacker to gain access to your personal data. Ensure a password or PIN is always required to access the device (and don’t use anything easily guessable like 0000 or 1234). Many devices now enable facial recognition or fingerprint access, so enable these functions where possible. When you’re not using your device, make sure it’s locked.

Backing up your data is essential, too, so that it can be recovered in the event of a data breach. Most computers will include a backup facility, while mobile phone data can usually be backed up using cloud storage. Finally, beware of unsecured public Wi-Fi networks (where no password is required for access) as these are often prime targets for an attacker, and disable your Bluetooth function when you’re not using it.

Source: credit.com

Apache is functioning normally

September 27, 2023 by Brett Tams

“U.S. home prices continued to rally in July 2023,” Craig Lazzara, managing director at S&P DJI, said. “Our National Composite rose by 0.6% in July, and now stands 1.0% above its year-ago level. Our 10- and 20-City Composites each also rose in July 2023, and likewise stand slightly above their July 2022 levels.”

“Although the market’s gains could be truncated by increases in mortgage rates or by general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results,” Lazzara added.

In July, prices rose in all 20 cities after seasonal adjustment, and in 19 of them before adjustment.

Chicago (+4.4%), Cleveland (+4.0%) and New York (+3.8%) posted the largest price gains on a year-over-year basis, repeating the ranking we saw in May and June.

At the other end of the scale, the worst performers were Las Vegas (-7.2%) and Phoenix (-6.6%).

The Midwest (+3.2%) continued as the nation’s strongest region, followed by the Northeast (+2.3%). The West (-3.8%) and Southwest (-3.6%) remained the weakest regions.

“The Case Shiller index indicates that the typical home price in July 2023 is about 45% higher than it was four years ago in July 2019,” said Bright MLS Chief Economist Lisa Sturtevant. “This is about the same rate of price growth that occurred during the 2002 through 2006 period when subprime lending drove exuberant housing demand.

“But that is where the similarities end. Today’s housing market is very different from the one that led up to the 2008 financial crisis and ultimately a 20 to 40% home price correction. Inventory is still very low by historic standards and buyers who are able to handle higher mortgage rates are still finding the market very competitive. Mortgage holders are well-qualified and subprime loans are rare. Housing equity is at an all-time high, providing homeowners a very deep cushion against a downturn. Demand is strong, driven by the large millennial population that is in prime first-time homebuying age.”

The rental market has offered a more extended break in pricing

Indeed, rents dipped for a fourth month compared to a year ago, Hale said. However, the cumulative drop in rents remains relatively modest nationwide, only down 2% from the peak. Furthermore, regional trends vary, with some markets still seeing relatively robust rental growth. Meanwhile, a record-high number of multi-family units are on the way, which will provide some relief over the next several months, even as multi-family starts slow, Hale concluded.

Source: housingwire.com

Apache is functioning normally

September 26, 2023 by Brett Tams

Does being an authorized user affect your credit? Well, becoming an authorized user can help you build your credit under the right circumstances. Before you agree to be an authorized user or add an authorized user to your account, it’s important to understand the potential risks and benefits. This article provides more information about how adding an authorized user works and how it could impact your credit.

In This Piece

What Is an Authorized User?

An authorized user is a person who has the authority to use another person’s credit card account. In many cases, the authorized user receives a credit card in their name. Unlike co-signers and joint account holders, authorized users aren’t financially responsible for making payments.

Typically, cardholders only add someone they trust, such as a child or significant other, as an authorized user. There are a few reasons a cardholder might want to add an authorized user to their account, including:

To help the person build their credit history
To make it easier for the authorized user to make payments when the cardholder isn’t available
To allow someone to make purchases on the cardholder’s behalf

The primary reason a person wants to become an authorized user is that they’re unable to secure a credit card on their own. For example, a child may not have the established credit to get a credit card, so a parent adds their child as an authorized user under their account.

Authorized Users Versus Joint Accounts

Authorized users aren’t the same as joint account holders. Authorized users can charge money to your account, but they can’t add other authorized users and they can’t dispute charges. They also can’t request credit limit increases, transfer balances, or close your account.

In contrast, joint account holders can do all of those things and more. Joint account holders are jointly liable for the account, and they’re also jointly liable for repayments.

How Do Authorized Users Work?

The process of adding an authorized user to your account varies between credit card companies. Some credit card providers may have age and other requirements that must be met before you can add an authorized user. You may also be able to set limits on how much the authorized user can charge to your credit card.

You’ll need basic information about the person you’re adding, such as name, date of birth, and Social Security number. You should contact your credit card company directly to see how this process works.

Once the application process is complete, the authorized user receives their card. They can use it just like any other credit card. Depending on the specific credit card company and your preferences, you may be able to give the authorized user access to your account information so they can track packages and report a lost card, errors, or potential fraud. Keep in mind that giving the authorized user access to your account may also allow them to see your purchase history and redeem special rewards.

It’s important to note that authorized users don’t receive credit card bills and aren’t responsible for making payments. This responsibility lies solely with the cardholder.

Can I Build Credit as an Authorized User?

For a long time, authorized users were able to build credit by “piggybacking” on the primary account holder’s own good credit record. Many modern scoring models no longer recognize this loophole—but a few still do. If you’re hoping to build credit by becoming an authorized user, you need to do two things:

Check if the card company reports authorized users to credit bureaus.
See if authorized users are reported as if they’re account holders.

If the account holder’s card company does report authorized user activity, you’ll see an individual account on your credit report. Providing the primary cardholder continues to make payments and handle the account responsibly, you’ll likely benefit from the listing.

Can Adding Authorized Users Hurt Your Credit?

Before adding an authorized user to your credit card account, you need to ask yourself several questions.

Does adding an authorized user affect my credit?
Will adding an authorized user hurt my account?
Will adding an authorized user help their credit?

The answer to these questions depends a lot on your specific credit card company. Not all credit card companies report authorized users to the credit bureaus. If your credit card company doesn’t report authorized users, adding them to your account will have no impact on their credit score. If, on the other hand, your credit card company does report authorized users, it can help them start building up credit.

Either way, adding an authorized user to your credit card account shouldn’t automatically effect your credit history. However, there are several ways taking this step could hurt your credit score over time.

First, if the authorized user charges too much to your credit card, you may have difficulty making your monthly payments. Payment history makes up 35% of your FICO score. So if you can’t make your monthly payment because of charges accrued by an authorized user, your credit profile, and wallet, could take a hit. If possible, set limits for how much your authorized user can charge to your credit card account. This step can help to reduce the risk of overspending.

Secondly, additional charges to your credit card account can also increase your credit utilization ratio. The more you charge to your credit card, the higher your credit utilization ratio is. Your outstanding debt accounts for about 30% of your overall credit score. You should try to keep your debt ratio under 30%.

What if an Authorized User Misuses Their Card?

Let’s imagine you are the primary account holder, and your teenager is the authorized user. What would happen if they decided to buy a new wardrobe without telling you? The answer is simple—you’d be on the hook for the whole amount. Your wallet could take a serious hit.

Does Removing an Authorized User Hurt Their Credit?

If your authorized user doesn’t behave, you can remove them from your account pretty quickly. At that point, they can no longer use their card and can’t charge any more money to your account.

Credit age history makes up 15% of your credit score. If your credit card company previously reported the authorized user as an individual account holder and they suddenly get removed from your account, the removal might look like a closed account, regardless, it will likely be removed for age calculations. In that case, the formerly authorized user’s credit score could dip.

Does Being an Authorized User Affect Your Credit?

Becoming an authorized user could affect your credit if the credit card company reports your status to the credit reporting agencies. If the credit card company doesn’t report your authorized user status, taking this step won’t impact your credit score at all. However, you’ll still have the benefit of charging purchases to a credit card.

How being an authorized user impacts your credit depends largely on the cardholder’s payment history. If the cardholder has a strong history of making on-time credit card payments, it could help you build your credit and increase your credit score. On the other hand, if the cardholder has frequent missed or late payments, it could hurt your credit score.

It’s important to understand the cardholder’s credit history before agreeing to become an authorized user. It’s also important to repay the cardholder for any purchases you make as quickly as possible. This step will help the cardholder make their payments on time.

How Long Does It Take an Authorized User to Show Up on Credit Report?

It takes about 30 days for your authorized user status to reflect on your credit report. However, not all credit card companies report authorized users to the credit bureaus. In these cases, your credit report may never show that you’re an authorized user.

What to Consider About Authorized Users

If you want to build your credit by becoming an authorized user, start by talking to friends and family members you trust. Be sure the cardholder has good credit and makes on-time payments.

If a friend or family member agrees to add you as an authorized user, it’s important to set clear boundaries right from the start. For example, determine your specific credit limit right away and whether the cardholder wants you to ask for permission before using the card.

You also need to make a clear payment agreement. Determine exactly how much you’ll pay each month and the date monthly payments are due. Make sure you create a budget so you know exactly how much you can afford to pay each month. Also, be sure to track your purchases so you know exactly how much you owe.

It’s crucial to have this agreement in place before becoming an authorized cardholder. This agreement allows you to know exactly what’s expected of you. It can also help you determine if this is the right option for you.

Four Tips to Bear in Mind

Set clear spending rules before you make family members authorized users.
Talk to prospective authorized users about credit, including credit utilization.
Set up text message alerts to make sure you know when authorized users make purchases.
Remove authorized users if they don’t stick to the rules you make.

Simply Adding Authorized Users Won’t Hurt Your Credit—but Be Careful

Ultimately, authorized users aren’t a threat to your credit unless they misuse your credit card account. Many authorized users coexist happily with main account holders for many years. Problematic authorized users, unlike joint account holders, can be easily removed.

If you’re thinking of adding an authorized user and you want to keep track of your credit, why not subscribe to ExtraCredit from Credit.com? ExtraCredit is great if you’re an authorized user—tools like Build It can help you strengthen your credit profile by letting you add rent and utilities as trade lines to your credit history.

Source: credit.com

Apache is functioning normally

September 26, 2023 by Brett Tams

Your credit score communicates with lenders your level of credit trustworthiness. As a result, those with higher credit scores qualify for higher credit limits and better interest rates. Your credit score will play a major role if you plan to purchase a house or apply for a loan in the future.

Understanding credit scores and what they mean can improve your financial literacy. We gathered the following credit score statistics to help you get a better sense of where your credit score stands compared to other Americans.

Key findings:

The national average FICO® Score is 716 as of April 2022 (FICO)
About 10% of the U.S. population doesn’t have a credit record and are “credit invisible.” (Consumer Financial Protection Bureau)
Ages 76 and up have the highest average credit score at 760. (American Express)
Women’s and men’s average FICO Scores are virtually the same. (Experian)

Average U.S. credit score

The national average FICO Score is 716 as of April 2022. This is the same as when FICO last reported on it a year ago.

Average credit score by state

While your location doesn’t affect your credit score, some states have a higher average credit score than others as seen in the statistics listed below.

While 31 states (and the District of Columbia) have average FICO scores that are higher than the national average of 716, the upper Midwest and New England continue to have the best average FICO Scores. (FICO)
Minnesota, Vermont, New Hampshire and Wisconsin all have scores that are 23 points higher than the national average, with scores of 742, 739 and 737, respectively. (FICO)
Mississippi, Louisiana, Alabama and Arkansas have the lowest credit scores at 662, 668, 672 and 673, respectively. (WalletHub)

Average credit score by age

Since credit history length is a factor that influences your credit score, it makes sense that the average credit score increases with age as seen below.

Approximately 58% of consumers with the highest credit score are between the ages of 56 and 74. (Money Geek)
The average score for adults aged 18 to 29 increased by 24 points between April 2017 and April 2022; 19 points for those aged 30 to 39; 19 points for those aged 40 to 49; 13 points for individuals in their 50s; and 10 points for those aged 60 and older. (Nerd Wallet)
As of 2021, ages 18-24 have the lowest average credit score at 679. (American Express)
Ages 76 and up have the highest average credit score at 760. (American Express)

Average credit score by race

Average credit scores can differ across demographics like race. However, keep in mind that race doesn’t directly influence your credit score.

Average credit score by gender

Although women couldn’t legally apply for credit until 1974, women’s and men’s average FICO Scores are still very close in range at 705 for men and 704 for women as of 2019, according to Experian.

Average credit score by income

A common credit score myth is that your income contributes to your credit score. Although this is untrue, the statistics below show a correlation between income and credit score.

Approximately 25% of low-income consumers don’t have enough knowledge to raise their credit scores. (Consumer Federation of America)
The median credit score of 658 for lower income individuals suggests that many borrowers are unlikely to have access to affordable credit as those with scores above 720. (Federal Reserve Bank of New York)
Those considered high income have the highest average credit score at 774. (American Express)

Average FICO Score in the U.S.

FICO is an analytics firm that developed the credit scoring models used today. The national average FICO Score is 716 as of April 2022, the same as when FICO last reported on it a year ago. Here are some FICO statistics.

Average FICO Score by generation

The Silent Generation (ages 77 and up) has the highest average credit score at 760. (Experian)
The average credit score of baby boomers (ages 58-76) is 742 in 2022, up two points from 2021. (Experian)
Generation X (ages 42-57) has an average credit score of 706. (Experian)
The average credit score of Millennials (ages 26-41) is 687. (Experian)
Generation Z (ages 18-25) has an average credit score of 679 in 2022, the same as 2021. (Experian)

Generation	Average credit score (2022)
Silent Generation	760
Baby Boomers	742
Generation X	706
Millenials	687
Generation Z	679

Average VantageScore in the U.S.

VantageScore is the second most popular credit scoring model in the U.S. As of September 2022, the average VantageScore was 697.

Credit card utilization statistics

Credit utilization refers to the amount of your available credit you’re currently using. Your credit utilization ratio is calculated by adding up your balances and then dividing by the total of your credit limits. Keeping your credit utilization ratio low can help raise your score.

Individuals with credit scores 800 to 850 have an average credit utilization ratio of 5.7%. (Experian)
Consumers with credit scores considered “very good” (740-799) have an average utilization ratio of 12.4%. (Experian)
Those with credit scores in the “good” range (670-739) have an average credit utilization ratio of 32.6 %. (Experian)
47.6% of the population opened at least one new credit account in the last year. (FICO)
Approximately 26 million U.S. adults, or 10%, don’t have a credit record and are “credit invisible.” (Consumer Financial Protection Bureau)
19 million Americans have a credit history but lack a credit score because their report is insufficient or out of date. (Consumer Financial Protection Bureau)
The 15% growth in credit card balances from 2021 to 2022 is the highest in more than 20 years. (Federal Reserve Bank of New York)
Currently, 83% of American people own at least one credit card. (Zippia)
There are currently 26.5% more credit card holders in 2022 than there were in 2017—just five years ago. (Zippia)

FAQ

Whether you’re new to credit or just need a refresher, we’ve answered some common questions about credit scores below.

What is a good credit score?

According to FICO, a good credit score is 670-739 or above, while a very good credit score is 740-799. A credit score that is 800 or above is considered exceptional.

How to check your credit score

To check your credit score, order a free copy of your credit report from each of the three credit bureaus. You can also check your credit score for free by visiting Credit.com.

What contributes to your credit score?

The factors that contribute to your credit score are payment history, amounts owed, credit history length, credit mix, and new credit.

What is the highest credit score?

The highest credit score is 850 for most FICO and VantageScore models.

How to work on your credit score

You can see from the above credit score statistics that everyone’s credit varies. If you checked your credit score and it’s currently low, we have resources available to help educate you about your credit so that you can qualify for the best rates available.

Source: credit.com

Apache is functioning normally

September 26, 2023 by Brett Tams

Wachovia said today that it will discontinue wholesale loan origination beginning this Friday, leaving very few players in the broker-originated space.

It’s unclear how many jobs will be lost as a result of the shift in operations, but that will likely be disclosed when the company announces second quarter results tomorrow.

It is assumed that loans already locked and in progress will continue to be processed until a certain funding cut-off date.

Tim Wilson, Head of Loan Origination for Wachovia Mortgage, explained that the bank and mortgage lender was repositioning itself to work with clients who have existing relationships and live in areas where the bank’s franchises are located.

The Charlotte-based bank’s third-party origination unit Vertice is apparently not affected by the changes, and will continue to offer broker-originated loans.

Wachovia has been hard-hit by the ongoing mortgage crisis, especially after acquiring option arm specialist Golden West for a staggering $25 billion in 2006.

The company has since stopped originating option arms with the negative amortization feature, and has waived prepayment penalties tied to the so-called toxic loans.

In early June, Wachovia said it would contact all portfolio loan applicants whose loans were submitted by mortgage broker clients in what it referred to as “enhanced customer service”.

The bank is expected to report a second quarter loss in the range of $2.6 billion to $2.8 billion, according to Reuters estimates.

That includes a $4.2 billion increase in loan-loss reserves, with $3.3 billion going towards those nasty pick-a-pays.

Shares of Wachovia slipped 71 cents, or 5.37%, to $12.52 in after hours trading.

Source: thetruthaboutmortgage.com

Apache is functioning normally

September 26, 2023 by Brett Tams

Data Mining, Digital Lending, Real Estate Database, Servicing Products; Conventional Conforming Program Shifts

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Data Mining, Digital Lending, Real Estate Database, Servicing Products; Conventional Conforming Program Shifts

By:
Rob Chrisman

49 Min, 7 Secs ago

As if lenders and vendors don’t have enough other stuff to worry about, the budgetary standoff in the U.S. doesn’t look like it will abate soon, raising the likelihood of the first government shutdown since 2019. Current funding for federal operations will end on October 1 unless a deal is reached or the proverbial can kicked down the road. Thousands of federal workers might be furloughed without pay. Sure it will be temporary, and its wider impact will likely be limited, but still even talking about it is lousy. According to Morgan Stanley, the last 20 government shutdowns that occurred since 1976 “appear to have had limited impact on the economy.” As for bond prices, a shutdown may cause some “temporary instability”, but this is not a given. There is talk of a short-term Continuing Resolution (CR) providing funding until later this year, but federal agencies, including HUD and Treasury, will cease to function normally. The National Flood Insurance Program (NFIP) authorities also expire on October 1st. The Mortgage Bankers Association created a guide outlining how HUD (including FHA and Ginnie Mae), VA, and USDA would be directly affected by the furlough of government employees and the curtailment of agency operations. (Today’s podcast can be found here and this week’s is sponsored by Built. Built is powering smarter and faster money movement for the entire construction and real estate ecosystem, all while reducing risk. Hear an interview with Servbank’s Bryan Crofford on how companies can best invest in employees, promoting longevity and success.)

Lender and Broker Software, Programs, and Services

Life can change on a dime, and sometimes even the most prepared borrowers end up facing financial hardships they never would have imagined. Forward-thinking credit unions are preparing today, so they can be there for their members when they need help the most. It’s why Mission Federal Credit Union implemented the MSP® loan servicing system, to not only improve their own efficiencies, but better serve their members who are facing financial difficulty. Are you ready to join Mission Federal Credit Union by enhancing your technology to be there for homeowners in life’s most challenging moments? Learn more about MSP today.

One thing that you can always count on in the mortgage space, is that regulatory requirements are always changing. This is why it’s critical for Banks or Mortgage Servicers to stay vigilant with comprehensive Compliance Testing and Monitoring to mitigate exposure and minimize risk. At the MBA Annual in Philadelphia, PA, Servbank’s Shayna Arrington will be helping us all do exactly that. Watch her moderate the panel, “Today’s Top Regulatory Issues” on Tuesday, October 17 at 1:30 PM, on 200 Level, Exhibit Hall E. Want to dive deeper into how Servbank can partner with you? Servbank will have a meeting space at the W Philadelphia on 10/16 and 10/17. Schedule some time to meet with them here: [email protected] or learn more at www.servbank.com.

One-Time Close (OTC) Volume Soars to record highs at AFR Wholesale® (AFR)! While housing inventory is still at an all-time low, OTC loans have witnessed an unprecedented surge in volume! In August, AFR closed more One-Time Close loans in one month than at any other time in their long history of offering the product. Homebuyers are increasingly drawn to the convenience and cost-saving benefits of OTC loans, as they streamline the construction process, reduce paperwork, and offer more favorable terms. This surge in OTC loans at AFR is not just a testament to its effectiveness but also an indicator of the outstanding clients and partners of AFR. Breaking news: As a thank you to their clients, AFR has also brought back FHA OTC on site-built homes!! This long-awaited product is back for partners of AFR to utilize now. Partner Today or contact AFR, email or call 1-800-375-6071.

One of the biggest questions for LOs in a down market is “How do I find more agent partners?” The answer is MMI. To find the right agent partners, you need the right data. MMI has assembled the industry’s most comprehensive real estate and mortgage transaction database which is leveraged by thousands of mortgage professionals daily. Using MMI’s database, LOs can easily search & filter, find an agent and at the click of a button, push the info to a CRM like Bonzo. Sign up for a demo today to see why a majority of the top 25 lenders rely on MMI.

Free eBook: Market-Proof: How to Build a Flexible Lending Business Resilient in Upcycles & Downturns. The exaggerated upcycles and downturns of the past few years underscore just how crucial it is for lenders to build resilience and flexibility into their businesses. To overcome today’s challenges, lenders need to hone their lending process at each step. In this new eBook, Maxwell provides 12 tips from industry veterans to help you optimize your mortgage process from loan application to the secondary market. You’ll get insight from exclusive interviews with industry veterans on how to increase efficiency, access economic scale, and become resilient to market volatility like never before. Click here to download Maxwell’s new eBook “Market-Proof: How to Build a Flexible Lending Business Resilient in Upcycles & Downturns.”

The transformation from paper to digital processes offers substantial benefits, including cost reduction and improved borrower experiences. Most lenders are in a hybrid phase, blending paper and digital processes. To navigate this ongoing change and ongoing innovations in the digital lending space, lenders should consider embracing five best practices: create a successful strategy, prioritize borrower experience, ensure compliance, harness technology, and stay adaptable in the evolving digital landscape. Tackle the future of lending by staying informed and proactive. For deeper insights into this digital lending revolution and actionable steps, read the full article.

“Heading to Vegas? The Total Expert team is in full force at the Digital Mortgage conference in Las Vegas! There are three ways to interact with us. The first is to stop by booth #501 to get your Customer Intelligence ROI report and learn how you could increase funded loan volume by 20 percent. You can watch a LIVE demo of Total Expert on Tuesday 9/26. Lastly, catch our Founder & CEO Joe Welu for a panel discussion: The Customer Data Goldmine Goes Way Beyond Credit Triggers on Wednesday 9/27.Schedule time to meet with the Total Expert team in Vegas.”

Freddie Mac, Fannie Mae, Conventional Conforming News

The Federal Housing Finance Agency (FHFA) released its second quarter 2023 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (the Enterprises) completed 47,370 foreclosure prevention actions during the quarter, raising the total number of homeowners who have been helped to 6,818,471 since the start of conservatorships in September 2008. View the News Release

FHFA-OIG released two reports: Within the Federal Housing Finance Agency (FHFA), the Division of Federal Home Loan Bank Regulation (DBR) is responsible for supervising the Federal Home Loan Bank (FHLBank) System to ensure the safe and sound operation of the FHLBanks. In response to market disruptions, DBR adapted the scope of its Federal Home Loan Bank Supervisory Activities in 2023.

Regulated entities have not been immune to the trends affecting the labor market over the past few years. Some of the regulated entities experienced higher attrition in 2021 and 2022, consistent with trends in the broader labor market, but one Enterprise reported that its turnover rate started declining in 2022. Read the full report, People Risk at FHFA’s Regulated Entities.

Freddie Mac will update Loan Product Advisor® (LPASM) in October to support multiple recent Single-Family Seller/Servicer Guide announcements, plus more enhancements, described in Freddie Mac October LPA Releases.

Freddie Mac Loan Selling Advisor September Updates includes the following information: Uniform Loan Delivery Dataset (ULDD) Phase 4a Updates and Phase 5 Specification, Auto Evaluate on Import Loan, New Loan Delivery Rules Supporting the Duty to Serve Credit Fee Cap, Initial Principal and Interest Payment Amount Conditionality update, Auto Re-evaluate: Improvements to Modify and Evaluate, and Enhancements to Mandatory Cash Contracting.

Leverage Fannie Mae’s new edition of Beyond the Guide to help your organization build a best-in-class quality control (QC) program. Specific examples and scenarios provided can help teams understand and apply Selling Guide concepts in a way that is most impactful to their organization. A robust QC program helps strengthen loan quality ensuring a safe, sound, and resilient mortgage industry.

Fannie Mae Appraiser Update September 2023 edition focuses on dual themes of delivering high quality appraisals and understanding recent policy changes. Topics include updates to the Appraiser Independence Requirements (AIR), new options for 1004D completion, our stance on 3D printed homes, and more.

Fannie Mae posted the September Appraiser Quality Monitoring (AQM) list. Read the AQM FAQs.

Chris Whalen writes, “Our short take on the future of the GSEs (Government Sponsored Enterprises) looks a lot like the character played by Bruce Willis in the 1995 Terry Gilliam film, ‘Twelve Monkeys.’ Imagine if the GSEs were released from conservatorship, but then were immediately designated as a ‘systemically important financial institution’ (SIFI) by the FSOC. How do you think that would work for private investors? What would happen to the guarantee fees?”

Pennymac Conventional LLPAs updates effective for Best Efforts Commitments: Pennymac Announcement 23-58 replacement of ‘Purchase Special’ LLPA Grid with new ‘Area Median Income Adjustments’ LLPA Grid. Pennymac Announcement 23-59 introduces new ‘Investment Property’ LLPA to the ‘LLPAs by Product Feature for All Eligible Loans’ LLPA Grid. Pennymac Announcement 23-60 updates values for the ‘2nd Home Additional’ LLPA on the ‘LLPAs by Product Feature for All Eligible Loans’ LLPA Grid.

Pennymac is aligning with the FHFA based updated project review and eligibility requirements announced in Fannie Mae SEL 2023-06 and Freddie Mac Bulletin 2023-15, with the exception of any reference to co-op projects. View Announcement 23-61: GSE Updated Condo Project Review Requirements

Citizens Correspondent National Bulletin 2023-16 provides updates on the following topics: Conventional Conforming Products, Review requirements for condominium eligibility – DU and LPA, Gifts and Gifts of Equity – DU, 3D printed homes, Trust Income – DU, USDA-RD Product, Fiscal Year 2024 Conditional Commitment Notice, All Products, Disaster Tax Filing Relief.

PHH Mortgage Corporation updated Conforming Product listings for both Delegated and Non-Delegated loans.

Pennymac announcement 23-62: Fannie Mae SEL 2023-06 Condo Project Manager Updates

Citi Correspondent Lending Bulletin 2023-08 provides Credit policy updates regarding Non-Agency Depreciating Markets list updated, Condo & Co-Op Critical Repairs, Shared Equity and Shared Appreciation, LPA Asset, and Income Modeler (AIM), Continuity of Obligation: Limited Cash-Out, Hazard Insurance Update: Effective Date, and Taxpayer First Act.

On September 6, 2023, Fannie Mae and Freddie Mac announced Selling Guide policy changes addressing multiple topics in Fannie Mae SEL-2023-08 and Freddie Mac Bulletin 2023-18.

AmeriHome Mortgage accepts all revisions, view Product Announcement 20230910-CL for details.

Capital Markets

Ahead of today’s $48 billion 2-year Treasury auction, headlines to open the week revolved around increases in oil prices that’s evidence of inflation’s stickiness, Chinese developer Evergrande calling off talks with creditors as it appears headed for bankruptcy, and reaction to hawkish Fed remarks which is forcing yet another reprice from markets. There is growing sentiment that central banks across the globe aren’t done hiking rates, and Treasury yields trended higher to open the week as a result. With the calendar turning to fall, the economy is facing a few headwinds such as the run up in oil prices, student loan payment resumption, an expanding auto workers strike, and a partial shutdown of the U.S. government.

Every lender knows that mortgage rates remain above 7 percent, and housing data released over the last week highlighted another decline in builder sentiment. Housing starts fell 11.3 percent to a 1.25-million-unit pace in August. Existing home sales were down 0.7 percent in August as low inventory, high prices, and high mortgage rates continue to weigh on sales. Hoping for lower interest rates? A recession would likely mean lower interest rates, but workers with stable jobs (most individuals) would want to take advantage of low interest rates, causing home prices to rise faster. Initial jobless claims fell to 201k for the week ending September 16, which was the lowest weekly reading since January. The JOLTS report indicated that the demand for new workers is moderating somewhat however, significant layoffs are not on the horizon.

Today’s calendar includes the Philadelphia Fed non-manufacturing surveys for September, Redbook same store sales, July house price indexes from S&P Case-Shiller and FHFA, September consumer confidence, August new home sales, Richmond Fed manufacturing for September, Dallas Fed Texas services for September, the aforementioned Treasury auction of $48 billion 2-year notes, and remarks from Fed Governor Bowman. We begin Tuesday with Agency MBS prices a few ticks (32nds) better and the 10-year yielding 4.50 after closing yesterday at 4.54 percent. The 2-year is up at 5.12.

Employment

“At Fairway Independent Mortgage Corporation, customer service is a way of life. #FairwayNation mortgage loan officers are dedicated to finding great rates and loan options for our customers while offering some of the fastest turn times in the industry. Our goal is to act as a trusted mortgage advisor, providing highly personalized service and helping you through every step of the loan process, from application to closing and beyond.”

Logan Finance Corporation, a national Non-QM mortgage lender, is excited to welcome Aaron Samples to Logan’s Executive Leadership Team as Chief Revenue Officer. To learn more about why Aaron joined one of the fastest Non-QM lenders in the nation, contact Randy Viars.

The FHA has a job opening for a Senior Underwriter: Job Announcement Number 23-HUD-2915-P. Job duties include assisting the Branch Chief in monitoring the status of goal accomplishment. Advise the Chief of potential problems in attainment of goals and objectives. Research required underwriting procedures and techniques. Serve as an expert-level resource within his/her Office on matters relating to Underwriting and other Direct Endorsement issues.

Don’t forget that private mortgage insurance companies are hiring: MGIC, National MI, Arch MI, Radian, Essent, and Enact (in no particular order). And while’s we’re at it, Fannie Mae and Freddie Mac. And my cat Myrtle’s friend the CFPB.

Dovenmuehle Mortgage, Inc. announced that Robert Howerton has joined the organization as Chief Information Officer where he will be maintaining and expanding Dovenmuehle’s current information technology (IT) infrastructure.

Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

September 26, 2023 by Brett Tams

Federal student loan payments resuming on Oct. 1 will negatively affect consumer loan asset quality, including credit card, auto and, to a lesser extent, residential mortgages. However, the overall effect will be modest, according to a Moody’s Analytics report.

On Oct. 1, repayments are due to restart on Department of Education (DOE) federal student loans (Direct Student Loans), which began accruing interest again on Sept. 1.

In total, 24 million borrowers whose payments were suspended since the onset of the COVID-19 pandemic will owe an average of $275 per month when federal student loan payments resume, per Moody’s Analytics estimates.

“As the interest burden on student debt increases, we expect the additional financial obligation will modestly strain borrowers’ ability to pay,” Moody’s analysts said in a report.

According to the analysts, job market conditions remain the primary driver of consumer loan performance. In August, the unemployment rate was 3.8%, compared to 3.5% in July. Although it’s a low rate by historical standards, unemployment is at its highest level since February 2022.

“Although student loans are non-dischargeable in bankruptcy, their priority in a consumer’s debt repayment hierarchy is low relative to the other major consumer debt classes,” Moody’s analysts said.

They added: “Borrowers are much more likely to prioritize servicing mortgage or auto loans and even credit cards since they stand to lose their house or car or access to credit or credit card rewards if they fall behind on such consumer loans.”

The report included data showing that delinquencies in major consumer debt classes are rising but are still at low levels.

For mortgage debt, the share of performing loans that were 30 or more days delinquent went from less than 2% in Q3 2021 to about 2.5% in Q2 2023. Credit card delinquencies jumped from 4% to about 7% in the same period. Meanwhile, auto loans rose from about 5% to 7%.

Source: housingwire.com

Apache is functioning normally

September 26, 2023 by Brett Tams

The Possible Card — issued by Coastal Community Bank, in partnership with Possible Finance — began slowly rolling out to the public in April 2023. As of this writing, the card is available in most states, with the exception of Hawaii, Nevada and Maryland.

While still in its early stages, the Possible Card won’t help propel your credit journey forward because it currently doesn’t report payments to major credit bureaus like TransUnion, Equifax and Experian. Even once it begins reporting payments, it still won’t be your most cost-effective option. Possible Finance touts “peace of mind” that you won’t be charged interest, but there’s a big caveat: Instead of an annual percentage rate, the card has a monthly fee.

Monthly fees on credit cards are a hot trend now, especially among young financial technology companies (fintechs). But depending on the balance you’re carrying, that fee can be more expensive than interest charges you’d find on a traditional credit card.

The Possible Card does offer predictability in terms of your monthly payment, and it also allows you to bypass a credit check and security deposit. But unlike a security deposit, which is refundable, those monthly fees won’t be. Plenty of other credit cards can jump-start your credit-building goals at a lower cost.

Here’s what you need to know about the Possible Card.

🤓Nerdy Tip

While any credit card’s rewards, benefits and fee structure can be adjusted at any time, new cards from startup financial technology companies are particularly prone to significant changes as they find their place in the market. Keep that in mind as you research your credit card options.

1. The monthly fee adds up

The monthly fee to hold the Possible Card is either:

$8 per month ($96 annually) for a $400 credit limit, or
$16 per month ($192 annually) for an $800 credit limit.

That makes the Possible Card more expensive than similar newcomers in its class. For example:

The Tomo Credit Card (currently waitlisted as of September 2023) charges $2.99 per month. There’s no credit check, upfront deposit or APR.
The Pesto Mastercard costs $3.33 a month, and while a deposit is required, it can be an asset instead of cash.

In fact, for no monthly or annual fee at all, you could consider cards like the Chime Credit Builder Visa® Credit Card, which lets you set your own security deposit, or the Grow Credit Mastercard, which has a free membership tier. Neither card carries an APR, neither conducts a credit check, and all of these aforementioned cards report your payments to credit bureaus.

Or, you could fare even better with a traditional secured credit card. Yes, you’ll have to come up with a one-time security deposit upfront, but for many of the best secured credit cards, you need a minimum of just $200, or nearly what you’d pay — every year and nonrefundable — for the Possible Card’s higher-limit version. Plus, many traditional secured cards come with upgrade paths to better products. The Possible Card does not, nor do many newer fintech-backed cards, for that matter.

The Discover it® Secured Credit Card is a good example of the kind of features to look for in a starter card. It requires a minimum security deposit of $200, but it has a $0 annual fee and earns rewards. It reports payments to all three major credit bureaus, and Discover begins automatic reviews starting at seven months to see whether you qualify to upgrade to an unsecured card and get your deposit back.

🤓Nerdy Tip

If you’re approved for the Possible Card, you can immediately start using the virtual card if you enroll in autopay. Otherwise, you’ll have to wait for the physical card to arrive in the mail.

2. There’s no credit check

The Possible Card doesn’t require a credit check and instead relies on a cash-flow-based underwriting algorithm to determine whether you qualify. But that underwriting process requires you to link an eligible account through a third party called Plaid.

This practice of skipping a credit check in exchange for linking a bank account has become a fairly common practice for certain credit cards, especially newcomers backed by fintechs. But there are better credit cards that don’t require a credit check.

The previously mentioned Chime Credit Builder Visa® Credit Card, for instance, requires opening a Chime Spending Account, but it doesn’t charge any fees or interest. It’s a secured credit card with a flexible deposit. The amount of money that you move from the spending account to the Credit Builder secured account is the amount you have available to spend.

3. No APR or late fees apply, but don’t be fooled

Some credit cards that charge monthly fees instead of interest market the idea of being “predictable,” for budgeting purposes. Possible Finance claims on its website that the monthly fee is cheaper than the charges on a traditional credit card, but that’s misleading. For most credit cards, interest charges don’t apply at all if you pay off the balance in full every month.

With the Possible Card, you’ll owe the monthly fee whether you carry a balance or not.

Depending on the size of your balance, that monthly fee could cost more than the interest charged on a traditional credit card, especially in cases where the card’s credit limit is relatively low. You can use the sliding scales below to illustrate this:

For context, the average APR for credit cards assessed interest in May 2023 was 22.16%, according to Federal Reserve data. If you have less-than-ideal credit, that percentage may be higher.

Trying to get approved for a card?

Create a NerdWallet account for insight on your credit score and personalized recommendations for the right card for you.

4. You can carry a balance over a short term

Unlike some credit cards in its class, the Possible Card allows you to revolve a balance, up to a limit. The card’s Pay Over Time option lets you pay off the balance over four installments if you schedule automatic payments and enroll in the app. There’s no additional charge to use this option as long as the account has a balance of at least $50 and no pending payments.

The downside of the Pay Over Time feature is that the card will be locked and cannot be used for new purchases or automatic recurring expenses until the installment loan is paid off. But the benefit is that this guardrail can prevent you from taking on more debt than you can handle.

If you’re using your Possible Card to make automatic recurring payments for streaming services or other expenses, make sure to change your payment method when you opt in to the Pay Over Time feature.

5. It doesn’t report payments to credit bureaus

The Possible Card is still in its infancy and does not report payments to the credit bureaus as of this writing. The company shared in an email that it has plans to start reporting payments to one bureau in the fourth quarter of 2023.

When your goal is to build credit with a credit card, reporting payments to the three major credit bureaus is a must-have feature. Ideally, you want your credit history to be recorded by all of them so that future lenders can access that information easily.

See more from Chime

Chime says the following:

The Chime Credit Builder Visa® Card is issued by Stride Bank, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.
To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.
On-time payment history may have a positive impact on your credit score. Late payment may negatively impact your credit score. Chime will report your activities to Transunion®, Experian®, and Equifax®. Impact on your credit may vary, as Credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.
Money added to Credit Builder will be held in a secured account as collateral for your Credit Builder Visa card, which means you can spend up to this amount on your card. This is money you can use to pay off your charges at the end of every month.

Source: nerdwallet.com

Apache is functioning normally

September 26, 2023 by Brett Tams

By the end of 2022, 27 million Americans had an outstanding personal loan balance with the average amount owed being $11,116. The interest rates of these loans are also the highest they’ve been since 2011 at 11.23 percent.

Sources: TransUnion and the St. Louis Federal Reserve

As of the second quarter in 2022, Americans owed over $192 billion in personal loans, according to TransUnion®. This was a 31% increase from 2021 and is thought to be due to the financial hardships Americans experienced during the COVID pandemic that overwhelmed the nation in 2020.

If you’re one of the many Americans who took out a personal loan in early 2022, the good news is that interest rates were very low, according to the St. Louis Federal Reserve. Since then, rates have reached new highs, so many Americans are struggling to pay back these loans.

Understanding the current trends in personal loans can help you see where you stand financially. We’ve gathered 10 personal loan statistics that include the most common reasons people take out personal loans, delinquency rates and which states have the highest personal loan debt to help you make better financial decisions if you’re accumulating too much debt.

In This Piece

Must-know Personal Loan Statistic Findings

Millions of Americans are taking out personal loans, and the following are some of the most interesting facts on the topic.

Get matched with a personal
loan that’s right for you today.

Learn
more

27 million Americans have personal loan debt (TransUnion)
At the end of 2022, the average new loan amount was $8,018 (TransUnion)
The average amount owed in personal loan debt was $11,116 at the end of 2022 (TransUnion)
In November of 2022, personal loan interest rates were the highest they’ve been since May of 2011 (St. Louis Federal Reserve Bank)
New Jersey has the highest average new personal loan account balance at $13,494 (TransUnion)

Average Personal Loan Debt in America

According to TransUnion, Americans owed roughly $9,896 on average as of the first quarter in 2022, the highest it’s been in recent years. Americans took out loans at an average of $6,656 per loan, which was over $1,000 more than in the previous quarter of 2022.

The amount owed per borrower dropped significantly between Q2 and Q3 in 2022, but by the end of the fourth quarter, the average amount owed increased by over 100 percent with the new loan amount dropping to $8,018.

The increase in personal loan debt may have been due to the inflation the country experienced in 2022. TransUnion also reports that there were more loans approved to “super prime borrowers,” or those with credit scores over 720, stating, “On a percentage basis, personal loan originations for subprime and near-prime borrowers increased in the single digits [year over year] whereas super prime borrowers experienced a 33% rise in the third quarter.”

How Many Americans Have Personal Loans?

The amount of Americans taking out personal loans increased 12 percent from 23.9 million in the first quarter of 2022 to 27 million by the fourth quarter.

Prior to the beginning of the COVID-19 pandemic, the total amount of personal loan borrowers was 23.3 million at the end of 2019 and dropped to 21.2 million by the end of 2020. The number of borrowers then grew back to 22.8 million in the following fourth quarter of 2021 and continued to grow as the pandemic regressed.

Quarter	Q4 2022 Average new account balance
Q4 2019	23.3 million
Q4 2020	21.2 million
Q4 2021	22.8 million
Q4 2022	27 million

The Most Common Reasons to Take Out a Personal Loan

LendingTree conducted a survey of their users in 2022 and found that the most common reason consumers took out personal loans was to pay down other debts. Over 58 percent of borrowers used these loans to pay down debt, and the other main reasons included credit card refinancing, home improvements and other major purchases.

Rank	Reason	Percentage of respondents
1	Debt consolidation	41%
2	Other	17.3%
3	Credit card refinance	17.3%
4	Home improvements	6.2%
5	Major purchase	4.1%
6	Medical expenses	3.0%
7	Moving/relocation	2.9%
8	Everyday bills	2.9%
9	Car financing	1.7%
10	Car repair	1.1%
11	Business	0.9%
12	Vacation	0.5%
13	Homebuying	0.4%
14	Wedding expenses	0.4%

Average Personal Loan Interest Rates

During the second quarter of 2022, the Federal Reserve Bank of St. Louis reported that interest rates reached an all-time low of 8.73 percent. By the end of the year, these rates were the highest they’ve been since 2011 at over 11.2 percent.

Personal Loan Debt Compared to Other Debts

Based on TransUnion data, personal loans account for less than four percent of the total number of accounts when compared to other types of loans, such as credit cards, home and auto loans.

Account type	Number of accounts	Percentage of accounts
Credit card	518.4 million	76.3%
Auto loan	81.2 million	11.9%
Mortgage loan	52.6 million	7.83%
Personal loan	27 million	3.97%

It’s also important to note that not all credit card accounts carry a balance.

Personal Loan Delinquency Rates

Delinquent accounts are accounts 60 days or more past due and can hurt your credit score. The Q4 TransUnion report shows that the delinquency rate dropped year over year between 2019 and 2020, but was up 53 percent as of 2022, with an overall delinquency rate of 4.14 percent.

Quarter	Delinquency rate
Q4 2019	3.48%
Q4 2020	2.7%
Q4 2021	3%
Q4 2022	4.14%

TransUnion’s 2022 Credit Snapshot shows that in the last month of the report, those with the lowest credit scores have the highest delinquency rate of 23.9 percent, while super prime borrowers are only at 12 percent.

Credit score range	Percentage of delinquent borrowers
Subprime (300 to 600)	23.9%
Near prime (601 to 660)	23.7%
Prime (661 to 720)	23.3%
Prime plus (721 to 780)	17%
Super prime (781 to 850)	12%

Personal Loan Statistics by State

TransUnion’s 2022 Credit Snapshot reports that New Jersey has the highest average new account balance at over $13,000, and Oklahoma has the lowest at $3,170. Although Oklahoma has the lowest new account balance, they have the highest delinquency rate at 7.73 percent.

State	Q4 2022 Average new account balance	Q4 2022 Delinquency rate
AK	$10,296	2.9%
AL	$4,362	6.59%
AR	$7,089	5.18%
AZ	$9,343	3.78%
CA	$10,454	3.47%
CO	$12,322	2.03%
CT	$11,712	2.57%
D.C.	$9,016	6.55%
DE	$9,146	4.04%
FL	$8,379	3.94%
GA	$8,621	5.18%
HI	$12,224	2.28%
IA	$7,443	2.94%
ID	$9,072	4.38%
IL	$9,236	3.46%
IN	$7,439	2.97%
KS	$8,349	3.05%
KY	$6,875	3.36%
LA	$6,797	5.07%
MA	$12,518	2.24%
MD	$10,956	2.77%
ME	$6,651	1.67%
MI	$7,052	3.21%
MN	$10,692	3.73%
MO	$6,522	6.69%
MS	$5,179	4.96%
MT	$9,326	2.53%
NC	$10,035	3.03%
ND	$8,051	1.89%
NE	$7,755	3.65%
NH	$11,719	2.31%
NJ	$13,494	3.49%
NM	$5,418	6.31%
NV	$8,839	3.74%
NY	$11,843	2.77%
OH	$7,595	3.75%
OK	$3,170	7.73%
OR	$10,523	2.93%
PA	$10,418	3.06%
RI	$8,744	2.14%
SC	$5,924	4.89%
SD	$9,945	2.06%
TN	$5,355	5.38%
TX	$4,952	6.33%
UT	$7,966	4.23%
VA	$9,875	3.37%
VT	$6,180	0.82%
WA	$9,570	2.94%
WI	$6,489	3.95%
WV	$10,864	1.96%
WY	$7,698	2.66%

Personal Loan Statistics by Type of Lender

More and more Americans are turning to financial technology companies, also known as FinTech, for their personal loans. These are online banking services that are done via a company’s website or mobile app, and 32.9 percent of all personal loans are done through these types of companies.

Lender type	Distribution of total balances
FinTech	32.9%
Banks	20.5%
Credit unions	19.7%
Other finance companies	26.9%

Can Personal Loan Debt Affect Your Credit Score?

If you’re one of the 27 million Americans with a personal loan, you don’t have to let your debt harm your credit score. As you’ve learned from these personal loan statistics, many Americans have turned to personal loans to pay off other debts, but many people are delinquent with their payments, which can hurt their scores.

Credit.com provides a variety of credit tools and tips to help you work to repair and improve your credit. You can learn more about our services, like ExtraCredit, or click here to get your free credit report card.

Source: credit.com

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Must-know Personal Loan Statistic Findings

Average Personal Loan Debt in America

How Many Americans Have Personal Loans?

The Most Common Reasons to Take Out a Personal Loan

Average Personal Loan Interest Rates

Personal Loan Debt Compared to Other Debts

Personal Loan Delinquency Rates

Personal Loan Statistics by State

Personal Loan Statistics by Type of Lender

Can Personal Loan Debt Affect Your Credit Score?