Seeking a small business loan? What you should know

(BPT) – Small businesses still struggle to obtain credit; nearly half of those who applied for credit in 2016 didn’t get all the funding they sought, and 17 percent of those who didn’t apply for financing skipped it because they didn’t think they could get what they needed, according to the Federal Reserve Banks’ Small Business Credit Survey. However, a growing number of small businesses are turning to alternative sources of financing.

“The process for accessing and receiving funding can be slow and cumbersome and alternative forms of lending are greatly helping to improve the availability of financing for small business owners,” says Jacqueline Reses, head of Square Capital. “Ensuring that the financial system is more inclusive and addresses the needs of small business owners who may have been previously underserved by traditional lenders is paramount.”

The Federal Reserve study has shown steadily increasing numbers of small businesses, with annual revenues of less than $1 million, seeking financing through non-traditional sources such as online lenders. In 2014, just 18 percent applied to online lenders, while in 2016, 21 percent did.

As the alternative lending industry continues to grow, small business owners should keep five points in mind when evaluating loan offers, Reses says:

Total payback amount of a loan

Knowing how much a loan is going to cost isn’t always easy. For a small business owner, being able to see exactly how much you will need to repay and accounting for that in your budget is crucial, and you should always look for transparency. Total payback amount is the dollar value that represents all costs, so business owners know exactly what they will owe over the life of the loan. Businesses should look for this when they assess loan offers. Assessing offers solely on other metrics like APR may not always provide a fair or easy comparison.

Repayment Method

The ease of repayment is also important to consider and there are some unique options available to small businesses looking for flexibility when it comes to repayment. With Square Capital for example, a fixed repayment amount is automatically deducted from the business’s daily card sales processed through Square until the loan is repaid, enabling the business to pay more when things are busy and less if things slow down. Businesses also have the opportunity to repay early and without penalty at any time before the end of the loan term.

Speed

Traditional small business loans can take weeks to process from the time you collect all the paperwork to apply, to the time you actually get approved, to when you see the money in your account. Yet, according to the Fed’s survey, the majority of small businesses that applied for credit in 2016 did so in situations where time was a factor; 64 percent wanted to expand their business or take advantage of a new opportunity, and 45 percent needed the money to cover operating expenses.

While some funding sources have a reputation for being faster to approve, getting the money can still take time small business owners don’t have. Others have been able to tackle both of those challenges. For example, Square Capital can see the health of a small business based on its sales and transaction data, allowing it to evaluate the business’s stability and actual ability to repay over time. With this unique insight, it can assess eligibility for a loan and deliver offers right to the small business owner. From there, an application takes as little as a few clicks to complete and once approved, funds are deposited as quickly as the next business day.

Affordability

Business owners may know how much they need, but be less aware of what size loan they can afford. It’s important to accept a loan offer that your business can repay within a reasonable time period while also helping it grow.

Square Capital’s ability to use unique data to assess the eligibility of a business for a loan also enables it to provide access to loan offers tailored to a business’s cash flow, reducing the risk of businesses borrowing more than they can afford to repay. Loans are sized based on a reasonable projected payback period so that a small business can use its funds to grow and not be stuck in debt for extended time periods.

Trust

Before applying for credit from any lender, it’s important to do your research. Know how they present their offers, look for transparency and flexibility that puts the borrower first and understand customer satisfaction and lender dependability. Working with a trusted brand is important to many small business owners and should be to you as well.

While online lenders are opening up access to the financing small businesses need to run and grow, it’s important to do your homework and carefully determine which financial partner best meets the needs of your business. To learn more about small business loans through Square Capital, visit www.squareup.com/capital.

Read more

Tips to prepare your budget before buying a home

(BPT) – It’s virtually impossible to know what size home you can afford if you aren’t fully aware of how much money you are earning and how much you are spending each month.

Start with your income: How much do you bring home after taxes and retirement plan contributions?

Next, look at your expenses: What are your necessary expenses? How much are you paying each month toward your debt? What additional expenses do you have that wouldn’t be deemed “necessary?” How much money do you have left (if any)?

This will help you see how much breathing room is in your current budget, what expenses might be on the chopping block and the space you have for additional home and mortgage expenses when buying a home.

Consider the potential costs of being a homeowner

While rent payments are generally straightforward and predictable, the same can’t always be said for homeownership costs. Your situation can vary depending on a variety of factors, but here are a few things you might need to prepare your budget for.

Property taxes: The amount you pay will depend on the area in which you are purchasing a home. This amount can be subject to annual adjustment by the municipality or local taxing authority.

Homeowners insurance: Lenders will require you to provide proof of coverage before closing. The amount you pay will depend on your level of coverage, your property and the location. Insurance costs can increase from time to time.

Private mortgage insurance (PMI) or mortgage insurance premiums (MIP): If your down payment is less than 20 percent on a conventional mortgage, your lender will require you to carry private mortgage insurance. If you have an FHA loan, you’ll be required to pay mortgage insurance premiums throughout the life of the loan.

Home ownership assistance: A company like Unison Home Ownership Investors can strengthen your down payment overnight and eliminate the need for private mortgage insurance (see their Unison HomeBuyer program). Using this method will typically save you between 15 and 20 percent per month on your mortgage payment, but you could owe a portion of the appreciation on the home when you sell.

Homeowners association fees: Fortunately, not all homes have a homeowners association to pay into. Purchasing a home with HOA-covered amenities could cost, on average, an additional $200-$400 per month.

Maintenance fees: Ah, the pitfalls of being a homeowner. The costs that would normally fall to a landlord, like fixing broken plumbing or a heater on the fritz, will now fall on your shoulders. Some suggest saving one percent of your home’s value annually for maintenance.

Utility costs: Unless your rent has included the cost of utilities, this is probably already an expense you’re used to. However, if you’re moving into a bigger home with less energy efficient appliances, you should be prepared to see an uptick.

Start living like a homeowner

If you want to avoid experiencing sticker shock after your home purchase is complete, start living like a homeowner now.

Consider your current rental or home-ownership costs and compare them to the costs for a home in your target price point. Can your current budget handle the difference? Are you still able to pay for your necessities plus shore up your financial future through short- and long-term savings? Or do you find yourself feeling desperate by the end of the month?

Not only will this allow you to get used to the change before the stakes are higher, but it can also help you save more money to put toward unexpected costs for your future home purchase.

Determine where to make adjustments

Does living like a homeowner make you a little wary for what’s next? Now is the perfect time to create space in your budget by cutting back expenses and paying down debt.

Now that you know where your money is going, determine the unnecessary leaks. Maybe your monthly food bill is exorbitantly high. Or maybe your subscription services have gotten out of hand. If your priority is purchasing a home — and being financially comfortable in that home — work to cut expenses that are contradictory to that goal.

Next, tackle your debt. There are two big benefits to beefing up your debt repayments now: You can lower your monthly obligation and improve your chances of getting approved for a loan. It’s a win-win.

Read more

Finding success in direct sales

(BPT) – What’s better than being your own boss, setting your own hours, determining your own salary and having an office wherever you happen to be? It’s a Utopian idea that is reality for tens of thousands of people working independently in direct sales worldwide. But getting there isn’t easy. It takes grit to abandon the familiar grind and build a business — especially in direct sales.

Just ask Wayne Nugent, founder and chief visionary officer of WorldVentures(TM), the leading direct seller of travel and leisure club memberships. He got his start as a direct salesman and, after more than two decades in the business, he has seen it all. In that time, the industry has faced many challenges largely due to a minority of companies recruiting representatives, charging them large upfront fees and persuading them to purchase large volumes of nonreturnable inventory with little or no tangible value. Though many reputable companies exist today, mere mention of direct sales, multilevel marketing or network marketing can stir memories of the pyramid schemes and shattered dreams that made headlines in the past.

Nugent contends you can’t paint all network marketing companies with the same broad stroke. He created his company in 2005 to help people find fun, freedom and fulfillment through affordable travel with family and friends. The company’s success is based on the principle of work-life balance, a philosophy Nugent is spreading through a growing network of representatives who — in his words — Make a living … Living!(TM)

“I have a creation goal,” says Nugent, who also serves on the board of WorldVentures Foundation(TM), a nonprofit that supports sustainable programs for children in need worldwide. “If we get somebody making a little extra money per month, it gives them some financial breathing room. If they’ll pursue that with some consistency, and it’s fun, we can get them making more. At that point, they’re feeling abundant. So now, guess what they do? They give back. Network marketing makes this possible.”

On the move

According to the latest figures from the World Federation of Direct Selling Associations, global direct sales grew 7.7 percent in 2015, reaching a record $183.7 billion. The industry’s potential is particularly appealing to millennials now entering the workforce. These individuals born between 1977 and 2000 have witnessed their parents lose jobs despite devotion to their employers, then struggle to find work regardless of their education and experience. As a result, millennials embrace entrepreneurship as an alternate path to financial freedom.

The direct-to-consumer model has been leveraged successfully to sell goods and services in the cosmetics, household wares, nutrition, travel and technology industries for more than half a century. Growth and longevity aside, there are several reasons to consider a career in direct sales, including:

  1. Entrepreneurial freedom: You can be your own boss — with virtually no overhead costs. It’s recommended that you keep your day job at first and work your business part time. If you finesse it just right, you can ultimately be on your own full time.
  2. Unlimited earnings potential: Unlike in the corporate world, where your rise in rank may hinge on anything from your talent and tenure to your temperament, direct selling allows you to determine your worth. No salary caps here. Set a financial goal, then go for it.
  3. Personal development: Direct-sales companies are big on helping you become your best self. This ensures you become a more effective entrepreneur, and promotes continued company growth. From books and videos to conferences and one-on-one coaching, you’ll have the tools you need to tap your full potential.
  4. Continuous training: You are your own boss without being on your own. Much like personal development coaching, career training is always accessible. No more filling out a training request and waiting for your boss to approve it based on budget. Everything you need to know to be successful in your business is at your fingertips. Ongoing support is available through sales, product and marketing tools such as websites, back offices, print collateral and more.
  5. Camaraderie: There’s nothing like connecting with people who share your vision. As the saying goes, “Iron sharpens iron.” By joining a direct-sales organization, you will align yourself with like-minded people who can identify with your struggles and support your success.

After you’ve taken the leap and joined a direct-selling organization, what’s next? You’ve probably heard it so much that it sounds cliché, but staying around the campfire is key. Partnering with others and plugging into the trainings can mean the difference between mediocrity and meteoric success.

Whether you want to earn supplemental income or replace your current salary, Nugent says, “If you lean in and give 100 percent, this industry has the power to support all aspects of your well-being — financial, physical, emotional, spiritual and intellectual.”

Read more

3 tips to save money every wedding guest should know

(BPT) – Wedding season fills summer weekends with nuptials, and while we enjoy celebrating the bride and groom, all the “something borrowed and something blue” adds up to some serious green. In fact, a new survey from Bankrate.com (April 2017) found that nearly half of those surveyed — 47 percent — will spend $100 or more on a wedding gift for close friends or family.

Here are three tips for taking in the festivities without going broke:

1) Use gift cards: You may be used to giving gift cards as wedding presents, but you also can use them to save money on gifts, guest attire, travel and other wedding expenses. Gift card exchanges like Cardpool.com buy gift cards from people who don’t plan to use them in order to sell them, at a discount, to someone who does. Gift cards for airlines, hotels and registry staples, like Target, as well as retailers where you can find the perfect guest attire, including Saks Fifth Avenue, Nordstrom and more are all available at great discounts on Cardpool.com, saving you money on everything you need to get through wedding season without breaking the bank.

2) Stack savings: Be sure to search for coupons for the stores on the bride and groom’s registry to save money on purchases. While most retailers don’t allow you to stack coupons, there is a discount-stacking trick you can try: use coupons in addition to discounted gift cards. Doing so means you save by redeeming the coupon and by using a gift card you purchased at a discount as your method of payment.

3) Gift as a group: Gathering up a group of friends to buy a nice bottle of champagne or a larger registry item helps you stay in budget while still giving a more extravagant gift than you’d give on your own. In fact, a number of popular retailers for newlyweds are making group gifting even easier. Target, for example, allows groups to set up accounts where friends and family can chip in toward items on the couple’s registry.

No matter the venue, registry location, travel needs or attire, these go-to tips could save you hundreds of dollars this wedding season. Whether you have one wedding to attend or 10, keep these in mind while shopping or booking travel.

Read more

How to use your home equity in retirement

(BPT) – Most of us save and plan for decades to enjoy the period of our life when we no longer need to go into the office and work an eight-hour day for a paycheck.

But even with those decades of hard work, it can be tough to save up enough cash to cover all your costs in retirement. Many soon-to-be-retirees face a shortage between what they saved for retirement and what they actually need to live on.

For homeowners, that may be a problem that’s relatively easy to solve. Tapping into the equity in your home can help you stretch your nest egg quite a bit further.

Use a home equity loan or line of credit

You can tap the equity in your home with a home equity loan or a home equity line of credit (known as a HELOC). A home equity loan works like most other loans: you agree to borrow a set amount of money, receive a lump sum, and pay that back with interest and in installments each month.

A HELOC works a little differently, because it’s not a loan with pre-determined monthly payments. Instead, it’s a revolving line of credit, similar to a credit card. You usually have between five and 25 years to borrow against a certain amount of equity and repay (with interest) whatever you take out.

The time during which you can use the HELOC is called the draw period. The line of credit revolves during this period, so you can borrow and repay the balance multiple times. The total amount is due back in full with interest at the end of the draw period. Any time you have an amount outstanding, you will make monthly payments.

You can use a HELOC or home equity loan during retirement, but remember that you will need to pay the money back. You should have a plan in place for how to repay the funds — and the interest — before you agree to take a loan or a line of credit on your home.

Use a home ownership investment

A home ownership investment is a powerful way to unlock some of the equity in your home without taking out a loan.

The Unison HomeOwner program can unlock up to $500,000 of your home equity and the money can be used for anything you want — including paying monthly expenses, paying off debt or making home improvements. Because it’s a home ownership investment, not a loan, there are no monthly payments and no interest charges. Learn more at www.unison.com/homeowner.

Unison invests in the home alongside you. In return for the company’s investment in your home, they receive a portion of the future change in the value of your home. Unison shares both the upside and downside risk with you. When you choose to sell your home, up to 30 years later, if the home value rises, both you and Unison share in the appreciation. If the home value falls, both you and Unison share the loss.

Consider a reverse mortgage

A reverse mortgage can allow homeowners 62 years or older to turn equity in their homes into cash in a way that provides them with the income they need through retirement. You can get your cash in a lump sum or in monthly payments, or in a line of credit.

But it’s important to remember that a reverse mortgage is still a loan that comes with origination fees and interest charges. It requires that you have no other debt on your property, so if you have an existing mortgage loan, you will have to repay that in full from the reverse mortgage proceeds. You will also need to pay the reverse mortgage loan back when you move out of the home, sell it or pass away.

A reverse mortgage can give you income in retirement and whenever the home is sold, the money is used to pay off the loan. However, reverse mortgages can cause a lot of trouble if you’re not careful, and the high fees that you incur when you sell the home can leave you in a worse financial position than if you skipped the reverse mortgage altogether.

Read more

5 Investment Strategies That Can Outlast Market Spikes

(BPT) – You’re familiar with the saying “If it seems too good to be true, it probably is”?

Just like any other scheme to “get rich quick,” attempting to buy low and sell high based on intermittent fluctuations in the stock market—also known as “market timing”—is almost always a losing proposition over the long term for the investor. Studies have repeatedly shown that those who attempt to align their investments with short-term fluctuations earn less than those who stay in over the long haul.

“Once again, market fluctuations are messing with average investors’ minds,” says J.D. Roth, author of “Your Money: The Missing Manual” in Entrepreneur. “They panic and sell when prices drop, then fall victim to what Alan Greenspan in 1996 called ‘irrational exuberance’ and buy when prices soar. That’s a sure way to lose money.”

The truth is that even the most stellar investment advisor lacks a crystal ball into the future, and can only make recommendations based on historical research, industry guidelines, and experience. Unfortunately, past performance in the stock market is not at all an indicator of future performance.

So what are some better guidelines for investing in the stock market? Consider the following sound strategies, built on the mounds of evidence saying market timing doesn’t work as a long-term strategy:

1. Establish a long-term plan.

Set clear goals and objectives such as funding children’s college educations or investing for your own retirement. An advisor can help you evaluate risks, decide on asset allocation and set benchmarks for success while minimizing risk.

2. Use dollar-cost averaging.

Instead of trading when you think it’s the right time, the principle of dollar-cost averaging (DCA) says to invest a fixed dollar amount at predetermined intervals. The result is that you’ll end up buying fewer shares when prices are high and more shares when prices are low.

The advantage of dollar-cost averaging is that you put your money into the market earlier—increasing the likelihood of price change—rather than holding onto cash until you think prices are low. Regardless of whether you have a flat, positive, or negative price return, if your investments earn dividends, dollar-cost averaging is a useful strategy for earning dividend returns.

3. Ride the market by tracking an index and optimize your costs.

Trying to achieve alpha—i.e., beating the market with price returns—isn’t necessarily the most evidence-based way of getting the highest returns over time, especially looking at your returns net of costs and taxes.

By investing in funds that largely track a market index (index funds), historical results show that the lower fees typical of index funds and the long-term gains often outperform actively managed funds with higher fees. Investors should always focus on what they take home over the long term after fees and taxes. Looking purely at the price return can lead to lower-than-expected results.

4. Be aware of tax implications.

A major reason why investors should lean on professional support in today’s world is so that they can optimize their investments to lower taxes. Specifically, how assets are located within tax-advantaged and taxable accounts can be managed to lower your tax liability. Also, investment losses can be “harvested” via a process called “tax-loss harvesting,” and that’s generally a process many investors cannot do themselves.

Finally, any time you want to reinvest dividends or have reason to switch to a different investment, there are ways to make regular transactions as tax-efficient as possible. The same goes for making your eventual withdrawal. This kind of back-office tax work can have a major impact on how much you, as an investor, keep from your investment, so it’s important to find the right solution—whether that’s a financial advisor or learning to do it yourself.

5. Stay skeptical.

When it comes to outlasting a spike in the market, any investor should be aware of their own biases and behaviors. Pay little attention to financial TV shows and other media reports that hype short-term fluctuations. And be cognizant of the speaker’s motivation. Those who think they have a real get-rich-quick scheme are unlikely to share it with others.

Above all, don’t let uncertainty stop you from investing. If you look back all the way to 1926, keeping your money in cash/cash equivalents has underperformed both bonds and stocks. The key thing is to just get invested.

Betterment optimizes its technology and experience to help you make informed decisions in your investment strategy. Founded in 2008, the company manages $9 billion in assets. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and Betterment’s charges and expenses. Betterment distributed this article through Brandpoint. Visit Betterment.com for more information.

Read more

7 tips for balancing retirement savings and paying for college

(BPT) – Most people want to help their children pay for a quality college education, but it can be difficult to balance personal financial goals and funding your kids’ educational aspirations. When retirement savings is sacrificed for college costs, it can be a disservice to the entire family.

To help guide you in determining the best way to pay for your kids’ college while still funding your retirement savings, personal finance expert and host of the So Money podcast Farnoosh Torabi offers seven smart tips.

Tip 1: Don’t put retirement on the back burner.

While funding your children’s college education is important, your retirement savings should take priority. Strive to contribute 10 to 15 percent of your take-home pay toward retirement savings. The reality is college is four years and retirement can be 30+ years. Plus, there’s no scholarship for retirement like there is for college!

Tip 2: Take the free money.

If your workplace retirement plan comes with a match, take it. Contribute the minimum to receive your employer match. At the end of the day, it’s free money and that’s the best kind.

Tip 3: Involve your children in the college cost discussion.

College is expensive, so make sure you’re discussing with your kids overall costs and what you’re willing to contribute. Have them help research financial aid and scholarship opportunities, too. Remember, you want to find a school that’s the best fit — so don’t let the initial “sticker price” scare your children from applying. Some private colleges may give the best aid packages, but other times they may not. Don’t make assumptions and always keep your options open. The goal is to find the college with the best value.

Tip 4: Don’t take on more than you can afford.

While involving your children in the discussion, it’s also important to make sure you’re not setting them up for failure when they graduate. As they research student loan possibilities, make sure they’ll be able to comfortably afford payments once they graduate, and that they’re not taking on too much debt.

An easy way to start researching together is to visit College Ave Student Loans and use the configure-it-out tool. Answer a short series of questions regarding how much you’ll borrow, how many years of schooling are left, whether you want to make payments during school or not, etc. This shows your child what repayment will look like under each option so you can both be clear on the details and agree on a game plan.

Tip 5: Consider the college savings plan that’s best for you.

Consider opening a 529 that allows flexible spending toward higher education. Should your child choose to forgo traditional college education or not require the funds set aside, you can easily change the beneficiary to another child or relative.

If you’re skeptical of a 529, consider a Roth IRA if your income limits allow. Although typically used for retirement, the Roth IRA has an exception where you can withdraw your contributions from the account at any time tax- and penalty-free for qualified education expenses. The remaining money can be collected in your retirement.

Tip 6: Starting late? Play catch-up.

If saving for retirement has not been a priority, it’s time to get aggressive. Pare down costs where possible and take advantage of catch-up contributions. People who are 50 or older can contribute an extra $6,000 to their 401(k) or an extra $1,000 to an IRA this tax year.

Tip 7: Don’t become the “bank of Mom and Dad.”

You want to help your kids, but once you set the precedent that it’s OK for your children to ask for money (or a contribution toward college), they may feel they can frequently approach you later in life for funds. Don’t set the tone that you’ll always be there to financially support them. You want them to grow wings so they can fly independently (and so you can happily enter retirement and enjoy those golden years).

While you should talk with your child about potential majors and career paths, it’s important also to add financial conversations into the mix. For more tips, and to learn more about personalized student loan solutions, visit www.collegeavestudentloans.com.

Read more

Tips to help save money on prescription drug costs

(BPT) – Modern medications can work wonders, improving quality of life, curing illness and even saving lives. However, those miracles can come at a high cost, as anyone who’s had to pay for branded prescription medication knows. In fact, spending on prescription drugs has increased 73 percent in the past seven years, according to a new report from the Blue Cross Blue Shield Association (BCBSA).

What’s driving the increase

The Health of America Report found prescription drug spending by Blue Cross and Blue Shield (BCBS) members increased 10 percent annually since 2010. High costs of patent-protected drugs account for the lion’s share of the total increase.

Generic drugs account for 82 percent of total prescriptions filled, but account for just 37 percent of total drug spending. By contrast, patent-protected prescription drugs comprise less than 10 percent of all prescriptions filled but account for 63 percent of total drug spending, the report found.

“Experience and past price trends suggest drug costs will continue to rise in the future,” says Maureen Sullivan, chief strategy and innovation officer for BCBS. “The need for more affordable generic alternatives to costly patent-protected brand-name pharmaceuticals is urgent. As prices continue to rise, more consumers will be looking for ways to curb the cost of their medications.”

What you can do

It is possible to lower your drug costs while still taking the medications your doctor has prescribed to help your health. BCBSA offers some guidance:

* If your doctor prescribes a costly name-brand medication, ask your physician or pharmacist if a generic version is available. Generic drugs are identical to their brand-name equivalents in dosage form, safety, strength and quality, how you take them, performance and intended use, according to the Food and Drug Administration. Generics typically cost less than name-brand medications. The BCBSA report shows how costs for medicines like Lipitor (atorvastatin) and Avapro (irbesartan) plummet when generic alternatives become available.

* It may be possible for your doctor to prescribe a higher strength than you need of a particular medication and allow you to split the tablet or pill to get the lower dose you need at a lower cost. In fact, many pills that can be safely split come pre-scored with an indentation that makes it easier to cut them in half. However, not all prescription medications can be safely split, so be sure to talk to your doctor or pharmacist about whether it’s safe to split your medications.

* Ordering prescription medications through the mail could lower drug costs, but it’s important to ensure you’re buying from your pharmacy benefit manager, typically listed on the back of an insurance card. The FDA recommends you only purchase drugs from organizations located in the U.S. and licensed by the state board of pharmacy where the company operates (find a list of state boards of pharmacy at www.nabp.info). The mail order pharmacy should have a licensed pharmacist available to answer your questions, require a prescription from your doctor in order to sell you medication, and have someone you can talk to directly if you have questions or problems.

* Another way to reduce drug costs is to ask your doctor to write your prescription for a 90-day supply so that you will get a three-month supply of the medication for the price of one co-pay.

* Finally, review your prescriptions with your doctor at least every six months to ensure you’re not taking any more medicines than you absolutely need. However, never skip doses of medicine, avoid refilling a prescription or stop taking medicine altogether without first consulting your doctor.

For more information about prescription drug costs, and to read the full Health of America report, visit www.bcbs.com/healthofamerica.

All product names, logos, and brands are property of their respective owners and used for identification purposes only. Use of these names, logos, and brands does not imply endorsement.

Read more

5 steps that can improve your credit score in 100 days or less

(BPT) – Low interest rates, a strong economy and the turn of the seasons are all causing the real estate market to heat up. More homes on the market bring more competition to buy the inventory that is out there. And one way to stand apart from other buyers who are vying for their dream home is to take steps to improve your credit score now.

“Preparing your finances is a must before the busy real estate season,” says Barrett Burns, president and CEO of credit score model developer VantageScore Solutions. “Knowing your credit scores and making improvements is essential to getting the best loan at the best rates. This also makes you a more attractive home buyer, especially in a competitive market.”

With limited time, you may think there’s nothing you can do to improve your score. Burns says that’s an incorrect assumption. While you can’t make dramatic jumps in just a couple months, there are several steps you can take that may influence your score to increase enough to get you prequalified for the loan you want.

Keep in mind, lenders will pull your scores from all three major credit bureaus (Equifax, Experian and TransUnion), so it’s wise to check your credit report from each of them. You can do so for free once every 12 months at AnnualCreditReport.com. For best results, monitor at least one credit score from each of the bureaus. You also can check your credit score for free through a large number of online services, such as CreditKarma.com, NerdWallet.com or Credit.com. Other sites offering free VantageScore credit scores can be found at VantageScore.com/free.

Once you have your reports in hand, you can take steps that may have a positive impact on your scores.

Step 1: Check for errors

A credit report gives a comprehensive list of your lines of credit and payment history. The first step is to review your credit report for errors and take steps to make corrections, including past and present names, loan amounts and credit cards in your name.

When checking your credit score, bear in mind that some differences in credit scores across bureaus is normal. But if one of the three credit scores is an extreme outlier, it could be worth double-checking your credit report from that bureau to make sure it doesn’t reflect any questionable or erroneous activity.

Step 2: Don’t miss a payment

Creditors are interested in seeing how you manage credit, and the consistency of behavior counts. You should always pay at least the minimum amount due on bills on time every month. An easy way to ensure you don’t miss a payment is to sign up for automatic bill pay when available.

Step 3: Lower credit utilization levels

Credit utilization is the ratio of a credit card balance to the credit limit. If your balance is $5,000 and your credit limit is $10,000, then your credit utilization for that credit card is 50 percent. In general, a good credit utilization is less than 30 percent, so if you have a higher ratio, consider using your tax refund to pay down this debt.

Step 4: Don’t close old credit cards

If you have a credit card that is no longer used but was previously paid off on time each month, don’t close the account. Not only is this good for your credit utilization ratio, but it also is another indicator you’re a responsible candidate for a loan.

Step 5: Don’t apply for new credit

Avoid applying for any new credit, such as an auto loan or a new credit card account, between now and the time you will close on a home purchase. Lenders considering your loan application request your credit score from one or more credit bureaus. And these lender “inquiries” are recorded with one or more of the three national credit bureaus, which may lower your credit score by 10 to 20 points. The score decreases typically only last a few months, as long as you continue to make payments on time. But unless they’re absolutely necessary, try to avoid additional inquiries until after you’ve secured your mortgage.

If you follow these five steps, you may see an increase in your score within a few months so you can get a loan and be an attractive buyer when it comes time to put in a bid for your dream home.

Keep in mind, the more you can put toward the down payment, the more instant equity you’ll have, the lower your monthly payment will be, and the better your chances are of not needing private mortgage insurance (PMI), which can add hundreds of dollars to your monthly payment.

Plus, if you’re able to put down more than a lender requires, a mortgage company may be willing to give you a pass on other issues on your application, such as a less-than-stellar credit score.

Read more

3 tips when buying a used car

(BPT) – If you’re in the market for a used vehicle, the car-buying process can be both an exciting and daunting experience. Whether you are a first-time buyer or looking for a different model, a car is one of the largest purchases you will ever make. It’s not only important to make sure you have the right car for your lifestyle, but one that makes the most sense for your personal financial situation.

If you are one of the millions of Americans looking to buy, here are some tips to consider.

Get pre-approved

Similar to buying a house, it’s important to know what you can afford before you start hunting for your dream car. If you will be financing a vehicle, getting pre-approved for a car loan may save you a lot of heartburn during your car search.

Interest rates continue to be at historic lows, but it’s important to check in on what rates you may qualify for and how it will affect the price of what you can afford.

“It’s easy to get caught up in the excitement of looking for a new car and forget about the affordability piece,” says Renee Horne, vice president of Consumer Lending at USAA. “Before you even begin your search, give your lender a call to see what you can actually qualify for and what will fit in your budget.”

A good tip to keep in mind is to not let your car payment exceed more than 15 percent of your monthly net income. While you don’t have to stick to it, this rule will help give you a rough estimate of what you may be spending each month.

Know what you can afford

Knowing what you can afford reaches beyond your car loan payment. Although used cars are typically less expensive, they may have more maintenance and ownership costs.

“It’s important to look at the total cost of ownership,” says Heather Pollard, vice president of Auto Experience at USAA. “Everyday expenses such as gas, insurance, taxes, maintenance and future repairs are all associated with owning a vehicle.”

Knowing a rough estimate of these expenses will help you stay on budget in the long run. Simple online loan calculators, like this one at USAA, can help give you an idea of how much you can afford.

Narrow your choices

With countless choices available, finding the right car for you can be a challenge. Your budget should help narrow some of your choices, but consider your lifestyle as well.

Do you have young children or plan to start a family soon? Then you might want to consider the highest IIHS safety ratings. Do you frequently travel for work? In that case, improved gas mileage and reduced emissions are important factors. Remember, all those extra upgrades come with a higher insurance price tag and are depreciating assets once you drive off the lot.

Although you may be more inclined to go after a new car with the latest cutting-edge technology, a pre-owned vehicle may be the better alternative for your lifestyle and budget. Better still, used car prices are the lowest they have been in years. Even if you opt for a slightly older version of the model you’re interested in, many used models still offer similar advanced features while saving you thousands of dollars in the end.

Need help finding the right car for you? The USAA Car Buying Service can help.

Read more