choose the right auto loan

Beware of Auto Loans That Can Break Your Budget

High finance charges and long payment terms can make a car loan seem more like a mortgage

You need transportation — that’s a given. For most people, that means owning a car and, often, making monthly payments on it. When you purchase a car, whether it’s new or pre-owned, you’re careful to make sure it’s in excellent running condition. Do you put the same effort into finding the loan that best fits your budget?

If you have less than ideal credit, you may not qualify for the best terms or the lowest interest rates, but you still need to determine a monthly payment that you can afford. It’s important to consider your other bills and budget when making a car payment decision. While there’s no way around the fact that most of us need a car, try to make sure you don’t sign for a loan that may undo everything you’ve done to improve your credit history.

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build an emergency fund

Manage Unexpected Expenses by Building An Emergency Fund

Unexpected expenses come in many forms. Whether it’s an obvious expense, such as a car repair or a medical bill, or something you might not think about, like a trip across the country to care for a sick relative, an unexpected expense can put a dent in your budget. If you’re working to build or repair your credit, your good intentions can be derailed by adding another expense to your carefully planned budget. Many people who are unprepared for such situations often resort to paying for unexpected expenses with their credit card, sometimes sending themselves even deeper into debt.

 

While it helps to have a credit card for emergencies, with some planning and forethought, you can create an emergency fund that will help you be better prepared. You might think “I can’t afford one more expense on my budget,” and if you do, an emergency fund is even more important to you. It is separate from holiday and birthday gifts, monthly bills or vacation money, and it can keep you from incurring the interest charges associated with using a credit card.

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The shelf life of bad credit

The Shelf Life of Bad Credit

When a credit card bill, loan payment or other financial obligation is not paid as agreed, lenders may send a negative report to credit reporting agencies such as Equifax, Experian, and TransUnion, known in the U.S. as “the big three.” According to Equifax, consumers inquire most often about how long negative information will remain on their credit report.1 Considering the importance of a good credit profile and credit scores, it’s not surprising that this is a topic of great concern among consumers. As you might know, a bad credit score can affect your ability to qualify for a loan, rent an apartment or even get a job.

According to the Fair Credit Reporting Act (“FCRA”)2, negative information can remain on your credit report for up to seven years.3 Additionally, bankruptcies will follow you for 10 years, and unpaid tax liens stay in your credit history indefinitely. Those kinds of scenarios can be very daunting. For example, in the next seven to ten years you may need a new loan, such as a car loan or credit card. A low credit score can cause you to be denied for a loan, or may mean a higher interest rate, or larger down payment requirement.

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Myths and facts about your credit score

The Truth and Fiction About Your Credit Score

As with many financial topics, credit scores are often misunderstood, creating myths about them and how they may affect you. Understanding how credit scores work is important because it can impact so many aspects of your daily life. Here are a handful of myth busters to help you get a better picture of the truth and fiction of credit scores:

 

Errors — You may have thought that your credit report is generally very accurate. However, the Huffington Post reports that 80 percent of all reports contain a big error.1 That means it’s probably in your best interest to be proactive and check your report routinely. Don’t wait to find out that you have an issue.

 

Inquiries — Many believe that pulling your own credit report will negatively affect your credit score. Actually, those types of inquiries have no effect on your score. However, when a lender pulls your credit because you’ve applied for a loan, their inquiry (also known as a “hard inquiry”) may have a small negative impact. Keep in mind that if you apply for several credit accounts, which create hard inquiries, in a short period of time, collectively they may have a greater impact on your credit. The exception is applying for loans when you are shopping for an auto loan or mortgage. The reporting agencies tend to see those types of inquiries as single versus several when they occur in a relatively short period of time.2

 

Cash — When someone has credit problems, their first inclination might be to go to cash only to fix their problem. While there’s nothing wrong with using cash to manage your budget or finances, just using cash will not correct any credit issues you have. Besides, you can’t build a healthy credit profile unless you use your credit and use it wisely.

 

Quick Fixes — Debt settlement and consolidation services may promise a quick fix, but as with most challenges, there simply aren’t any. The most effective way to improve your credit score is to pay your creditors on time and pay down the amounts you owe them.

 

More Income = Better Credit — Income level actually has no impact on your actual score. People that have a higher income do not automatically have a higher credit score, or a better credit history. However, income can play a role in lending decisions, along with your score, your employment history and the amount of debt lenders believe you can manage.

 

Credit Scores from the Big Three are the Same — Most lenders and creditors now report information to the three big credit-reporting agencies — TransUnion, Experian and Equifax. They are all separate companies, so the rate at which they update reporting information and what information gets updated is different.3 Thus, your score will likely be different with each at any given time.

 

Perhaps the biggest lesson learned here is that when it comes to your credit, it’s important to always know where you stand and to understand how your credit can both work for you and hurt you. For more information and insight on credit scores, check back for other articles on the topic.

 

1 http://www.huffingtonpost.com/robert-siciliano/10-credit-score-truths-an_b_4631238.html

2 http://www.myfico.com/crediteducation/factsfallacies.aspx

3 http://www.bankrate.com/finance/debt/11-credit-report-myths-1.aspx

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Best practices for your tax refund

How Will You Spend Your Tax Refund?

If you’re waiting for a tax refund, chances are you already have some ideas of your own. For the past few years, the average tax refund in the U.S. has been around $3,0001. That’s a sizeable amount for most of us, but before you spend it all in one place (like a dream vacation), you might consider other options that could be better for your finances in the long run. After all, your refund is not free money from the IRS. It’s your money being given back to you.

A recent Edward Jones survey2 found the following about how respondents planned to use their tax refunds this year:

- 52% — Necessary items like groceries or credit card bills

- 30% — Save

- 8% — Something fun

- 8% — Investments

- 2% — Not sure

 

Though we don’t really know what people actually do with their refunds, maybe their stated intentions are a good place to start with suggestions.

 

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Debt problems and solutions

Need Help Managing Your Debt? Choose the Right Solution for You.

This is our second post in a series on managing debt challenges. As covered in our first post, Debt Problems? Work With Your Creditors First, your best bet, should you find yourself in this situation, can be in working directly with your creditors. If that doesn’t alleviate your particular challenge, there are other options you can pursue.

As one example, there are a staggering number of companies in today’s marketplace offering to help consumers get out of debt with a variety of services. However, according to the Consumer Financial Protection Bureau and other consumer organizations, dishonest debt-relief providers have made consumers wary1,even as they seek solutions. But, what should the average consumer look for in solutions to aid them in addressing their debt relief dilemma?

Credit counseling? Debt settlement? Is there a difference?

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Calculate debt solutions with Merrick Bank

Debt Problems? Work With Your Creditors First.

If you’re currently struggling to manage your monthly debt payments, you’re not alone. Financial challenges have continued to plague U.S. households since the financial crisis of 2008. Here are just a few sobering statistics that define the situations facing many of us:

  • An estimated 1.7 million people will file for bankruptcy protection this year.
  • Both in and out of bankruptcy, about 56 million adults will be set back by health care-related bills this year.
  • American student loan debt totals almost $1 trillion and affects more than 38 million Americans.
  • According to Bankrate.com, 45 percent of Americans have more credit card debt than emergency savings.
  • While unemployment has come down to about 7%, it was a staggering 10% between 2009 and 2010. And underemployment numbers are estimated to be in the neighborhood of 14.3% currently.

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Merrick Bank Works to Meet Customer Access Needs With goServices

Merrick Bank online servicesToday 86% of American adults use the Internet, according to Pew Research Institute. The use of mobile phones overall has climbed to 91%, and 55% of all mobile phone users are using smartphones1 in their daily lives. The way that information is now accessed makes it increasingly important that it’s available whenever, wherever. That said, you might have noticed a growing trend with your financial services providers. They have increased their online and mobile banking services to meet your needs for delivering relevant and timely account and financial information.

 

With all that in mind, Merrick now offers a full suite of online services. We developed them to help support our customers’ needs for access to information about their accounts, credit scores and overall financial information.

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Build your savings

Ways To Start Building Your Savings

With 40% of Americans saving less this year than last, building your savings can seem like an almost impossible task when there are bills to pay and your income doesn’t increase at the same, or a greater rate, as your expenses. But as part of a routine, finding ways to save money helps you to really think through your routine spending habits and can offer an opportunity to learn new habits that might provide better long-term financial outcomes.

 

There are countless ways to save, but these few suggestions offer a good place to start:

 

  • Create a place or places to put your savings — If you don’t have a savings account, you should open one. Some people open more than one savings account to help them set different savings goals (i.e.; vacation, holidays, education, etc.). Even a piggy bank can suffice if you don’t want to open a savings account. The idea is to have a repository for your saved dollars and a tangible savings location that allows you to see the results of your efforts ongoing and whenever you’d like.

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Your credit score and housing

Planning to Rent a House or Apartment? Check Your Credit Report First

Your credit score can affect your life in ways you may not have considered. Beyond its impact on your ability to get a loan or a mortgage, your credit score can be a determining factor in renting a house or apartment. Whereas landlords used to rely on their instincts when deciding whether or not to rent to you, online tenant screening programs have now made it easy and affordable to conduct tenant background checks that generally include a credit report. Primarily they are looking for negative entries that show you may not be a responsible tenant in terms of keeping up with monthly payments, such as rent. They will also check to ensure that the name, current address and employer listed on your rental application match what is on your credit report.

If you want to make a good impression on a potential landlord, you should start by getting your credit report in order.

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