Defynance - Blog , Credit

How to get the lowest possible credit score

Mon, 01 Nov 2021 21:45:59 +0000

Credit scores range from a low of 300 to a max of 850 and most people lie somewhere in between. However, there are a few people, approximately 30,000, who have the lowest credit score possible. In most cases, having a credit score of 300 is the opposite of desirable and makes it nearly impossible to secure any credit. So what had to happen in order to get them there and how can you avoid the same mistakes?

Disclaimer: Do not follow the advice below, unless you want to hurt your credit score.

Don't pay any bills

Making payments on time makes up a large portion of your credit score, 35% to be exact. This is the largest factor that affects your score, so never paying for anything will make your score fall faster than the price of Bitcoin. In fact, being 30-days late on a payment can lower your score by as much as 110 points. Imagine if you were 30-days or more late on multiple payments.

Max out any credit cards you have

The second biggest credit factor is the amount of credit you use. If you have a few credit cards, max them out. In fact, try to spend more than the limit. Once you've done that, make sure you don't make any payments on them. If you start paying them off, you'll lower your utilization and also have an on-time payment that will help boost your score. Talk about a double whammy.

Apply for multiple credit lines

You can also lower your score by having multiple inquiries on your record. The more accounts you apply for, the lower your score will be. An added bonus here is if the creditor approves you for anything, you can just not pay it to lower your score even further.

Only use one type of credit

Credit companies like to see people utilizing different types of credits, like mortgages, credit cards, and auto loans. So don't do that. Stick to one type of credit, like credit cards, max it out, and don't pay it off to really put your score in the gutter.

Give up to get the lowest possible credit score

After all this work, you could just declare bankruptcy and give up on your debt altogether. The best part, bankruptcy will stay on your credit report for upwards of seven years. This gives you a lot of time to utilize the other tips to lower your score as much as possible. If you follow these tips, your score will be lower than you ever thought possible.

We're not saying to follow any of these tips, in fact we're saying the exact opposite. However, we thought you might want to know just how you can get the lowest possible credit score. If you want to join the <1% club, these tips will get you there, even though they are not recommended.

4 Things To Remember When Creating a Budget

Mon, 23 Aug 2021 19:25:03 +0000

Creating a budget can be stressful and extremely difficult if you've never done it before. You want to make sure you don't limit yourself and that you cover all of your expenses throughout the month. It can also be a lot of work to track where your money is going and make cuts to your spending. It's difficult to keep up with a budget, but it's extremely rewarding. Creating a budget is the first step toward a financially healthy life.

Creating a budget with room for the unexpected

A lot of people will only add a budget for their everyday expenses, but forget that life happens. You may get a flat tire or need to hire a plumber for an issue at your house. You can't always predict what will happen in life. That's why it's always a good idea to create a monthly budget for the unexpected. You can also take the money not spent each month in this category to create an emergency fund.

Track your expenses for a couple of months first

You never want to start making your budget by going in blind. If you aren't sure where your money is already going, it can be difficult to decide how to allocate that money. Trying to make your budget without first knowing where you spend money will lead to some trial and error before you finalize your budget. It's ok to take a couple of months and log every one of your expenses before you start to make your budget.

Remember the minor expenses when creating a budget

You want to make sure you're tracking every penny when you make your budget. Don't forget about small things, like a haircut, that you spend money on each month. It can be easy to forget about these things in your budget, but it's necessary to make sure you create the right budget and know where your money is going.

Find and cut unnecessary spending

After tracking your expenses and setting a budget, you can see where you may be overspending also. If you see a disproportionate amount of your money going to a certain category/place, you can make a cut. This is another good benefit of creating a budget or tracking expenses. Now you will know where you spend the majority of your money and can start to cut back expenses to work towards financial freedom.

If student debt is eating up a large part of your budget, consider refinancing using an income share agreement through Defynance. This new funding model allows you to pay a percent of your income for a period of time, in place of a loan with interest. With this model, your payments adjust with your income and if you're ever making less than $25,000 a year, your payments pause until you earn above the threshold again.

Tips to Keep a Good Credit Score

Mon, 10 May 2021 18:48:17 +0000

You spent the last few years building up your credit by limiting spending on credit cards and making all your payments on time. Now you finally got the credit score that you were aiming for, but now what? A good credit score can help you get access to more and cheaper lines of credit, but how do you make sure that it doesn't just go back down? The following tips can help you keep a good credit score after working so hard for that achievement.

Avoid unnecessary credit inquiries to keep a good credit score

A factor, although a tiny one, is the number of inquiries you have on your credit report. Once you see that you got a great credit score, you may be attempted to apply for many new lines of credit. This could end up hurting you and your credit score. Each time you apply to a new line of credit, an inquiry will show up on your account and stay there for two years. Even though it plays a minor role, this can still hurt your new credit score and affect access to credit.

Don't open too many accounts too quickly

One of the largest factors in your credit score is the average age of your credit. Opening too many accounts in a short period of time could tank your average credit age, especially if you don't have many credit lines. While also adding new inquiries, your credit score would lower until you hold the credit for a longer period of time.

In a similar vein, closing any open accounts that you have will also affect your average age of credit. If you've had a credit card for a few years and decide to close it because you got a new one, you would only be hurting your score further. Having both the cards would be beneficial for the length of credit and also your debt utilization. If you keep the old card, you will have a higher total credit limit to utilize.

Keep making payments on time to keep a good credit score

This one should be a no-brainer. You made payments on time to get your credit score and now you have to continue to do so to keep your good credit score. Remember that late payments will stay on a credit report for up to seven years, so they're not easy to get rid of. Just keep making your payments on time and avoid using too much credit that would stretch your income.

Don't use too much of your credit

Another large factor in your credit score is your credit utilization. You generally want to keep the amount of credit you use across all your credit cards to below 30% of your total credit limit. Of course, the lower you can keep it the better. One way to do this is to just pay off your credit card in full at the end of each month, if possible. This way you never have to worry if you are using too much of your credit and tank your credit score.

Remember that credit isn't free money and just because you have access to more credit, doesn't mean that you should use it. It can be easy to go crazy and start spending, but this could end up hurting you and your credit score in the long run. Also, always track your credit score using a tool like Credit Karma. These tools can show you how your credit score is progressing and also give you tips to keep your score high or even improve it.

If student loans are giving you and your credit score headaches, you could try refinancing them. Defynance offers a refinancing solution that uses income share agreements, instead of a traditional loan. This helps ensure that your payments are always affordable, so even if you're in a cash crunch, it can be one less debt payment to worry about.

How to get a loan without a cosigner

Mon, 17 Aug 2020 18:22:55 +0000

Securing a loan with a cosigner, especially in cases like student loans, can be great in order to secure the lowest rate possible. However, we know it's not always possible to get a loan with a cosigner. If that's the case, we want to help you find the best option for you. With all these options out there, it can be difficult to decide which is the right one for you.

Focus on your Credit

The best way to never have to worry about getting a cosigner is to focus on your credit score. If you improve your credit score, then you can unlock access to a whole lot of financing options without having to worry about getting someone to cosign. Make sure you understand the factors that make up your credit score so you can improve it.

The easiest way to improve your credit score is to make on-time payments and keep your credit card balances as low as possible. While this isn't always possible, it's a good idea to start paying down those balances whenever you can.

Look for alternative loans without a cosigner

There are plenty of loans out there that will accept students even if they do not have a cosigner. Sometimes you just have to do a little digging to find these companies, especially if your credit score may be lower. If you need a student loan, you could look for scholarships, grants, or other options to secure a loan.

There are even some loans that don't require a cosigner, but beware because these can come with significant interest rate hikes.

Are there any other alternatives?

If you have student loans and you’re trying to avoid debt altogether, you can look at Defynance who is working on a student loan refinancing product that is based on income share agreements. This debt-free solution to financing has payments based on a small percent of your income. This means that if you lose your job or have a low salary, then you do not have to make payments. It removes debt from the financing equation.

How to avoid getting scammed on the Internet

Mon, 09 Dec 2019 22:40:21 +0000

By now, everyone has heard of the Nigerian Prince email scam, but scammers are getting smarter. They can take a company that you have an account with and make an email that is almost indistinguishable from the actual company. They trick you into giving them some personal information, so they can steal your identity. You may think that it can't happen to you, but 44% of millennials were victims of online crime in 2015. Getting scammed can cause huge issues and even ruin your credit. You can follow these tips to avoid getting scammed and having your information stolen.

Don't click any links or call any numbers

If you get an email/letter from your bank, IRS, or anything else and it seems fishy, go to their official website and call the phone number listed there to see if they actually sent you something. They will have a record of your account and know if they contacted you recently. If it was them, you can resolve the issue using that line as well. DO NOT CLICK ON ANY LINKS OR CALL THE NUMBER LISTED IN THE LETTER.

Double check the website and email sent to you to avoid getting scammed

These scammers often use websites with very similar names and design them to look just like the site they want your information on. They will also disguise their email to make it look like the company they're impersonating. Double check the link they sent and make sure it's the exact website of the company (but avoid clicking it anyways). Also, double check the actual email sender to see who it is from. If the email sent to you is from something like adipur@jaij3pa.xyz, it is definitely a scammer trying to steal your information.

If you follow these simple tips, you can easily avoid all the scams on the Internet. Scams will constantly evolve and find ways to trick you into giving your information away. Always be cautious when receiving emails and make sure your security is always up to date. An easy way to make sure a website is secure is to look for 'https' in the address bar. This let's you know that the website is secure and is most likely safe to use.

How to get the lowest possible credit score

Mon, 29 Apr 2019 23:00:52 +0000

Disclaimer: Do not follow the advice below, unless you want to hurt your credit score.

Don't pay any bills

Max out any credit cards you have

Apply for multiple credit lines

Only use one type of credit

Give up to get the lowest possible credit score

3 Reasons Americans Aren't Saving Money

Tue, 23 Apr 2019 02:08:39 +0000

The American dream is becoming just a dream for more and more people. As of 2017, over half of all Americans have less than $1000 in their savings account. This includes 39% of people who saved nothing and also 25% who have saved over $10,000. This money saving issue also affects those who are looking to retire. 43% of people aged 50-64 expect to rely on social security once they retire. It's clear that people are saving less than they used to, but why is this?

Debt stops people from saving money

It's extremely easy to borrow money today. For example, federal student loans have no qualifications, which is actually good for improving access to education. However, this also puts many people in a situation that ends up hurting them more than helping. The student loan default rate sits at around 10% and total student loan debt is over $1.5 trillion. Paying off this debt can prevent people from saving in general.

Besides student debt, more than 20% of people have used high-cost borrowing in the last 5 years. This includes high interest payday loans and pawn shops. Credit cards are also very accessible, but come with high APR rates that can build up if not used properly.

Debt borrows against your future income. Anytime you take out debt to fund something, you will pay more in the end and take away from your future income. This lowers your potential to save money.

Wage growth is slow

The economy is growing at a rapid rate, but wages aren't keeping up. Real wages declined 1.3% since the end of 2017 when accounting for inflation. This means that cost of living is outpacing wages. On top of that, Bankrate data shows that over 60% of Americans didn't even get a pay raise last year.

When the growth of wages slows, it makes it harder to save. From 1960 to 1973, income grew at an average rate of 3.2%. This rate fell to 1.5% for the next 20 years afterwards, which led to a slowdown in savings as people needed to spend more on everyday expenses.

Financial Literacy

When we're young, we don't learn the importance of saving or how to do it effectively. As we get older, there's no one to teach us these things. Either you know it or you don't. Those who don't have a hard time. In fact, the adult financial literacy rate in the US is only 57%. On top of that, financial literacy has been falling in recent years.

Financial literacy can affect savings. Some people don't have a budget and spend more than they earn. When they aren't sure where their money is going, it's easy to overspend and affect their savings. This issue relates to many of the other issues causing Americans to save less. Even though Americans are saving less these days, it does not mean everyone has to suffer the same fate. They can start saving today by improving financial literacy and avoiding unnecessary debt. We will be offering more tips for financial wellness in the future.

How to create a budget that fits your needs

Tue, 16 Apr 2019 04:37:23 +0000

Creating a budget can be intimidating and overwhelming if you've never done it before. You want to be able to stick to your budget, but you also want flexibility for everything that happens. A budget can be a really helpful tool to prevent overspending, if you do it right. Having the right budget in place also sets you up for success in the future. It will allow you to save more money and pay off any extra debt you may have.

Track where your money goes

Before you create a budget, you need to know where your money has been going every month. This can help you learn where you're overspending and make cuts for your budget. Using a tool like Mint can let you track and categorize all your transactions. Once you link all your financial accounts to Mint, it automatically collects past payments and categorizes them for you. However, you should still double check the transactions and make sure they are in the right category.

Now that you know where your money goes, you can build your budget around it. You can set limits on how much you want to spend in each category. Also check your transactions for overspending in certain areas. If you're spending $300 on gourmet coffee each month and struggling to make payments, maybe you should look for alternatives and set a lower budget.

Create a budget for freedom

When you create your budget, make sure you leave a little room for the things you want to do. Add a small budget each month for fun stuff. Make a budget that includes flexibility for activities like bowling, skydiving, or whatever you're into. Just because you made a budget, doesn't mean you can't have fun.

Always leave extra room

When you make your budget, don't allocate every single dollar you earn. Make sure you leave a little wiggle room so that you can save some money or have extra money if something pops up. Leaving some extra money will also allow you to go slightly over budget in one or two categories if you need to. This gives you some extra flexibility to pay down debt, save, or invest.

Don't budget less than you need

Another big problem that can happen is budgeting less than you actually need. If you budget less than you need for groceries, you could force yourself to break your budget or eat ramen for a week straight. Of course, always make sure your essentials are taken care of first (bills, food, etc.). If you need to, make cuts in areas that are less important so that your essentials are covered.

Of course, when you first create your budget, not everything is going to be perfect and you'll have to adjust it over time. Just make sure that your budget always leaves you spending less than you make for the month and adjust it as your needs change.

Strategies that can get you out of debt

Mon, 08 Apr 2019 23:37:40 +0000

There's no quick and easy fix for debt, unless you come across a huge windfall. If you're like most people, you probably don't have a lot of extra cash laying around to deal with your problems. However, it's still possible to become debt free! It just takes discipline and creativity but it is possible, while also rewarding.

Let’s talk about the few main methods of removing your debt. Just remember that every strategy requires a payment more than the minimum required. If you have trouble finding extra money, there are plenty of useful tools that can track your spending and help create a budget to pay off debt such as Mint and You Need A Budget. A budget will help you know where your money is going and prevent overspending. You can still have fun with a budget but in a smarter and more responsible way.

The Snowball Method

The first popular method for paying back debt is the snowball method. It is calledthe snowball method because you slowly pay off debt based on the size of the loans. Using the snowball method you make all your minimum monthly payments. After that, you put extra money towards paying off the loans with the smallest balance first. Once the smallest is paid off, you can start paying off the next smallest balance. The snowball method is motivating because it starts getting rid of loans quickly and it is easier to monitor progress.

The Avalanche Method

The avalanche method is my personal favorite, because it helps you save the most in the end. This method is similar to the snowball method, but instead of putting extra payments towards the smallest balance first, you pay off the loans with the highest interest rates first. This method saves you the most money because it starts paying off the highest interest loans faster.

Other ways to get out of debt

Other useful methods of dealing with debt is transfer balances to lower APR credit cards or loans. There are many 0% APR options depending on your credit score and history. Using this method enhances the avalanche method because you can focus more resources on higher interest rates. This strategy can also work with the snowball method if you transfer the higher balance debt to lower interest rates and focus on paying off the smaller balances.

Another option for those with student loan debt is to refinance to an income share agreement (ISA). This instrument is debt-free to begin with, so refinancing will remove your debt immediately. With an ISA, you share a percent of your income for a set period of time and then you are free. The payments are always affordable because they are tied to your income. Interest never accumulates and you don't have to make payments if you don’t have income. The ISA is the best solution for those struggling with student loan debt. Currently, only Defynance offers a student loan refinance solution that utilizes ISAs instead of debt.

4 Tax Tricks you May Not Have Known About

Mon, 01 Apr 2019 22:52:15 +0000

With tax day right around the corner, everyone is trying to maximize their return. And with the current tax system there's always little deductions that you can add to help you get a bigger tax break. There are many deductions and credits that can be confusing to follow. Some deductions only work if you itemize your deductions, which is favorable in some cases. While other deductions will lower your taxable income regardless. These tax tricks and tips can help you understand the tax system and maximize your return this year.

Deduct the interest on your student loans

For every dollar you spent on student loan interest, up to $2,500, you can deduct it from your income. The $2,500 is available to those who earned under $65,000, while those making between $65,000-80,000 can deduct a lower amount of interest. This means that your taxable income can be lowered by up to $2,500, even if you take the standard deduction. This will lower the taxes you pay based on the bracket that you are in. If you are in the 22% bracket, this will save you $550 in taxes.

Those who work from home can claim a home office

If you regularly use an area of your home, such as a spare bedroom, exclusively for business related work then you could be eligible to claim a home office as a deduction. This tax trick allows you to claim a simple deduction of $5 per square foot for up to 300 square feet. Or you can do a more difficult method where you calculate the percent of your mortgage and insurance that goes towards your office. If the difficult method you can also use expenses related directly to your home office, such a painting and supply costs. Remember that this room must be exclusively used as an office.

Be careful with this deduction because there are some downsides to consider. One is that you may have to pay capital gains on a home if you claim it has a home office. However, this is only the case when you use the actual expense method to calculate the deduction. Using the actual expense method also means you have to calculate depreciation on your home.

Max out retirement plan contributions as a tax trick

One easy way to increase your tax break is to maximize the amount you contribute to retirement plans. If you maximize what you put into your 401K or traditional IRA, it will decrease your taxable income. The max contribution for 2018 is $18,500 for a 401K and $5,500 for an IRA. However, you typically can not put more into an IRA than you earned for that year. This can reduce your income to a lower bracket and lower the amount you pay. The added bonus is that it allows you to invest your income and allows it to grow over time.

Deduct costs for installing solar energy

You can also get a tax credit for 30% of the cost for installing solar panels in your home. This deduction applies to all solar energy sources installed by December 31, 2019. This doesn't just apply to solar energy, but also other systems such as small wind-energy property, geothermal pumps, and more. If you plan on installing such a system, do so soon, because the credit gets smaller with time and completely vanishes in 2022.