Here’s How You Can Earn $1,500 for Taking Naps — Really

You could get paid $1,500 to nap every day for a month.

Is there anything that’s more of a dream job? Literally.

Eachnight, a website that’s all about sleep and mattress reviews, is conducting a study on napping. Sign up by May 31 and you might be one of the lucky five people chosen for the paid study.

Nappers will provide feedback to help researchers determine how various durations of naps affect fatigue, memory, motivation and productivity.

“The idea that napping is for young children and burnt-out university students is slowly dissipating, and an increasing number of working adults are beginning to see the benefits of a daytime snooze,” said Jasmin Lee, a writer and researcher at eachnight. cq lower case

“Understanding that napping can be a tricky thing to get right, we wanted to test out some of the theories behind the practice and decided how better to gather our findings than on real people who might benefit from a nap the most,” Lee added.

Here’s What’s Required to Get Paid to Nap

  • Applicants must be 18 or older.
  • Nap reviewers must be committed to napping every day for 30 days.  (That’s a high bar but somebody’s got to rise to the occasion.)
  • They will need to nap alone during the testing period and know for certain their naps won’t be disturbed.
  • Nap reviewers will have a video call before and after each experiment.
  • They will complete a verbal questionnaire detailing their experiences.
  • Applicants from all countries are welcome, but they must be able to write well in English.
Pro Tip

Is napping your thing? Find other sleep studies in your area that pay you to sleep.

Tips for Good Napping

Even if you don’t become a professional napper, you can work on your amateur game to maximize the benefits of a snooze. Eachnight offers these tips for getting the most out of your nap.

1. Set an alarm.

This ensures you don’t sleep too long and prevents you from waking up stressed and panicked.

2. Nap in a quiet, dark place in a comfortable temperature.

These conditions help you fall asleep faster.

3. Don’t nap late in the afternoon.

A late afternoon snooze can make it harder to fall asleep at night.

4. Allow time for “waking up.”

Try to plan on at least five minutes to be still, stretch, and transition back to wakefulness.

Katherine Snow Smith is a senior writer at The Penny Hoarder.

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Source: thepennyhoarder.com

16 Repurposing Ideas to Help You Waste Less and Save More

In this photo, a wine bottle is repurposed to be a vase.

You can repurpose a wine bottle as a vase to make your home more inviting. Chris Zuppa/The Penny Hoarder

As we’ve adjusted to economic uncertainty brought on by the pandemic and developed new consumption habits, the “waste-not, want-not” mentality has come back into play.

But actually, “waste-not, want-not” — known today as “upcycling” or “repurposing” — is simply common sense, such as using plastic grocery bags to line the bathroom trash.

But that’s just the beginning of what you can do with your trash. We’ve gathered some other repurposing ideas that can save you trips to the store, save you some money and even save (some of) your sanity.

To Entertain Your Kids (or Your Kids-at-Heart)

This photo shows cardboard toilet paper tubes repurposed as a necklace.
Kids can repurpose cardboard toilet paper tubes as a necklace. Chris Zuppa/The Penny Hoarder

1. Toilet Paper Tubes

Rolls of toilet paper have tubes that, once decorated with crayons and stickers, can become kazoos or a village of towers.

Cut decorated tubes into smaller sections to create beads to string on a piece of yard or twine for a necklace. The Internet has many more suggestions for crafty kids of all ages.

2. Produce Boxes

Strawberries, blueberries and other produce come in plastic containers that have open slits on the sides. These can make great bath toys because water flows out of them like a sieve, which can create the perfect waterfall or rain forest.

3. Holiday Cards

If you have old Christmas cards packed away, punch a hole in the corner of each one and loop them together with a string or metal ring. Now you’ve made a book for little ones who love to look at photos, especially of other children.

4. Cardboard Boxes

Your Amazon delivery boxes can be stacked to create houses for Barbies or stuffed animals.

Here’s another option: Cut the bottoms out of boxes large enough to fit around your child. Help them decorate the boxes to look like a car, then use string or ribbon to create suspenders. Now you can hold speed-walking or running car races in the backyard or living room.

To Use Around the House

5. Netted Produce Bags

The netted bag that holds produce can be scrunched up to clean a really messy pot or two before you throw it away.

6. Broccoli Rubber Bands

Those thick rubber bands that come around bunches of broccoli are great “chip clips” to close bags of food or a hair-tie in a pinch.

7. Plastic Food Containers

The plastic tubs used for food like yogurt and hummus can make great storage containers. There’s really no need to ever pay for new plastic containers. By the time the lids are a little warped from the dishwasher, you can recycle them and start using the next round of empty food containers.

8. Old Towels and T-Shirts

Old towels and T-shirts with stains can’t be donated, so use them as dish towels or rags.

You can also cut them into strips and braid them to make a chew toy for your pooch.

9. Empty Shoe Boxes

If you have the time and energy to reorganize, use empty shoe boxes or smaller shipping boxes to create drawer organizers. The boxes’ height can be cut to fit drawers if needed.

10. Muffin Tins

One of the extra muffin tins that crowds your kitchen cabinet is perfect for organizing jewelry.

To Take Care of Your Yard

11. Wine Bottles

Fill a wine bottle with water, wildflowers and greenery to make a deck, patio or the front steps a little more inviting.

12. Two-Liter Bottle

An empty two-liter soda bottle can be converted into an easy, light watering can for the extra landscaping you put in during the first weekend of social distancing.

13. Old Sheets

In this photo, an old sheet is repurposed as a bag for yard leaves.
An old sheet is repurposed to collect yard leaves. Chris Zuppa/The Penny Hoarder

When raking up piles of leaves, pile them onto an old sheet, pull the four corners together and take to the trash or mulch pile. The sheet can be used over and over so you won’t need to buy lawn and leaf bags, trash bags or even a wheelbarrow.

To Take Care of Yourself

14. Water Bottles

Fill empty water bottles with sand or rocks for hand weights. Plus here are more ideas for making homemade weights and other DIY fitness gear.

15. Old Bras

A cup from an old bra makes for a great mask. And here are three more ways to make a DIY mask with materials you already have.

16. Cucumbers

Cucumber slices soothe eyes that are strained from binge-watching “Bridgerton.” Don’t stop there: We have even more inexpensive suggestions for a DIY spa day.

Katherine Snow Smith is a senior writer at The Penny Hoarder.

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Source: thepennyhoarder.com

If you’re out of work and…

If you’re out of work and making ends meet with the help of a $300 a week federal unemployment extension, that extra money could disappear sooner than you expected. Officials in least 11 states have announced they plan to opt out of unemployment benefits early, before the extra $300 weekly benefit offered by the American Relief Plan ends Sept. 6.

Many have cited large numbers of unfilled jobs in their states, along with widespread availability of COVID-19 vaccines.

Is Your State Cutting Unemployment Benefits Early?

As of May 12, governors in the following 11 states have notified the U.S. Department of Labor that they plan to end extra jobless benefits early. More states are expected to follow.

Unemployed workers can still qualify for state benefits, but in some states, they’ll face stricter requirements. For example, many states are now requiring workers who receive benefits to document their job search, a mandate that was mostly waived at the start of the pandemic.

As states withdraw from federal unemployment programs, they won’t just be cutting the extra $300 a week. They’re also ending:

1. Alabama

Extra federal unemployment benefits end June 19. The maximum state benefit is $275 per week.

2. Arkansas

Extra federal unemployment benefits end June 26. The maximum state benefit is $451 per week.

3. Idaho

Extra federal unemployment benefits end June 19. The maximum state benefit is $463 per week.

4. Iowa

Extra federal unemployment benefits end June 12. The maximum state benefit is $481 per week.

5. Mississippi

Extra federal unemployment benefits end June 12. The maximum state benefit is $235 per week.

6. Missouri

Extra federal unemployment benefits end June 12. The maximum state benefit is $320 per week.

7. Montana

Extra federal unemployment benefits end June 26. The state will substitute expanded benefits with a one-time $1,200 “return to work” bonus. The maximum state benefit is $552 per week.

8. North Dakota

Extra federal unemployment benefits end June 19. The maximum state benefit is $618 per week.

9. South Carolina

Extra federal unemployment benefits end June 30. The maximum state benefit is $326 per week.

10. Tennessee

Extra federal unemployment benefits end July 30. The maximum state benefit is $275 per week.

11. Wyoming

Extra federal unemployment benefits end June 19. The maximum state benefit is $508 per week.

What to Do if Your Unemployment Benefits Are Ending

If your benefits are ending soon, consider looking for a bridge job, which is pretty much anything that can help pay the bills. It probably won’t be your dream job, but you can continue searching for work that’s a better fit. Due to widespread hiring shortages, you may find that even low-wage gigs are paying better than they did in the past.

If you aren’t quite ready to leave your home just yet, whether due to COVID-19 concerns or caregiving duties, try searching for an online job. While some opportunities require a high level of expertise, there are plenty of entry-level remote jobs available. The Penny Hoarder has a portal of vetted work-from-home job opportunities.

While you’re searching for your next full-time job, try earning extra money with a side hustle. Uber and Lyft drivers are in big demand right now. Both companies are reportedly offering bonuses to get more drivers on the road. You also may find that some side gigs, like pet-sitting and house-sitting, are in greater demand as some sense of normalcy returns.

Even if your state isn’t on the list yet, don’t count on your extended benefits continuing through early September. It’s essential to ramp up your job search now so that you have the best chance of landing employment before extra benefits end. Be sure to keep records of each job you’ve applied for in case you need to prove to your state’s unemployment office that you’re looking for work.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]

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Source: thepennyhoarder.com

Will Paying Down a Mortgage or Auto Loan Faster Improve My Credit Scores?

“John, last week I read an article suggesting that if I were to pay my mortgage or auto loan faster than scheduled it would improve my credit scores. That seems to make sense. Less debt equals better credit scores, right? Is it a good idea to thrown more money at my home loan?”

It seems like every day brings a new article revealing tricky ways to improve your credit scores. Many are wrong, some are partially wrong, but some are right.

If you read an article advising that your credit scores would improve by being out of debt that is correct.

Credit scores get a bad rap by a very vocal and uneducated minority of consumer advocates that suggest credit scores reward and even entice you to get into debt.

Of course, nothing is further from the truth.

Was someone from FICO standing over your shoulder forcing you to swipe your credit card?

Was someone from VantageScore Solutions leaning on you to finance an expensive car?

Credit is voluntary. Getting into debt is voluntary. In fact, credit scoring systems reward you considerably for NOT being in debt.

Revolving Debt Vs. Installment Debt

When we dissect the issue of debt it’s important to differentiate between the debt types as it pertains to credit scoring.

Revolving debt and installment debt are the two most common forms of debt that appear on credit reports.

Revolving debt would include credit cards. Installment debt includes fixed payment loans like mortgages and auto loans.

The influence of the two debt types are radically different. Revolving debt is very high risk where installment debt is considerably less risky.

If you were to default on a credit card you have no fear of the credit card issuer coming to your home and taking away the items purchased on the card.

If you were to default on an auto or home loan, and you’ll eventually lose your house or car.

That’s the difference between high risk debt and low risk debt…lenders have more exposure when there’s nothing to repossesses.

When you get into a large amount of installment debt, even hundreds of thousands of dollars, the impact on your credit scores is minimal.

When you get into even a modest amount of credit card debt your scores can be considerably lowered. This is important because it foreshadows the impact on your scores of paying it early.

What Paying Debt Down Faster Actually Does

Accelerating the pay off of your mortgage or auto loan is great because it will get you out of debt faster and will likely save you a considerable amount of interest.

But, do not expect it to make much of an impact to your credit scores. If the debt didn’t hurt much at the beginning of the loan it won’t improve much at the end of the loan.

A few years ago I sold a home and immediately shed almost $250,000 of installment debt. My score went up 4 points.

This is a real life example of the minimal influence of installment debt on your credit scores.

This should also act as a subtle warning to those of you who are thinking of creating taxable events simply to pay off installment debt.

Watch Out for Taxable Events

Borrowing from a 401K, selling a bond, or selling stock housed in a brokerage account will all create a taxable event.

If you did so just to knock out the last $25,000 of your auto loan or to pay down your mortgage, you made a huge mistake because of the tax liability and the lack of value the zero balance yields.

I remember a few years ago getting an angry email from a consumer who had sold $25,000 of stock to pay off his truck loan.

His scores didn’t move one point yet he had to pay taxes on the sale of the stock.

His assumption after reading some blog was the being out of debt is the best way to improve your credit scores.

Now if he would have used that money to pay off credit card debt, now we’re talking!

Even paying down a much more modest amount of revolving debt could have yielded an impressive score improvement.

Why?

Because you’re getting rid of high risk debt.

John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at Mint.com, CreditCardInsider.com and the National Foundation for Credit CounselingHe is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Twitter here.

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Source: mint.intuit.com

EverQuote Can Help You Pay Final Expenses for as Low as $26/Mo

Did you know it can cost $7,000 to $15,000 to cover funeral costs and other final expenses? Your loved ones shouldn’t have to pay thousands out of their own pockets to cover outstanding credit card debt, medical bills and memorial services.

If you’re between the ages of 50 and 85, there’s an answer for this: a final expense life insurance policy. These policies pay out to your beneficiaries in just a few days, so don’t try to cover those expenses in your last will and testament. Wills take weeks or months to fully settle.

Getting life insurance used to be complicated and time-consuming, but thanks to websites like EverQuote, it’s easier and more affordable than ever. You’ll be able to quickly see all of your life insurance options at once, helping you make the best choice.

No in-person medical exam is necessary. Final expense policies range from $5,000 to $30,000 in value. You could get $10,000 in coverage for as little as $26.08 per month.*

There are no hidden fees and no monthly payment increases. As long as you make your payments on time, your coverage can’t be canceled or reduced in value.

Get Up to $1M in Life Insurance Coverage

EverQuote is an online marketplace that helps people find life insurance. Do you need term life, whole life or final expense coverage? EverQuote will walk you through the process to find the right amount of coverage for you.

Even if you think you don’t qualify for life insurance, EverQuote can help find a policy for you. They’ve already helped more than 5 million people figure it out.

You’ll need to fill out a pretty detailed form, but it’s all important information to make sure you get the most accurate quote. Do you smoke? Are you an avid sky-diver? Once you answer these questions, you’ll be connected to a licensed insurance agent, who will find the coverage that makes the most sense for you.

You can leave your family up to $1 million in term life insurance, and rates start as low as $7 a month**. So whether you need it for 10 years, 30 years or your whole life, EverQuote can find the right policy for you and your budget. Get started here — it just takes a few minutes.

*Rate for final expense coverage is for a 50-year-old non-smoking woman.

**Rate for term life insurance is for a 30-year-old non-smoking woman.

Source: thepennyhoarder.com

Get 15% Cash Back on Online Purchases this Week with Rakuten

If you do any of your shopping online, this is the week to do it. You can get 15% cash back on your online purchases.

We’re not kidding. Fifteen percent.

A free browser extension called Rakuten has the hookup with just about every website you shop on, which means it gives you a kickback every time you buy.

From May 10-17, it’s running a promotion called Big Give Week, where it’s offering 15% rebates from hundreds of stores, brands and services. This eight-day shopping bonanza covers a wide range of purchases including fashion and apparel, health and beauty, travel, electronics, home goods, subscription services, dining and more.

Another eye-opening offer: a whopping $30 referral bonus. If you refer a friend to Rakuten during Big Give Week, and they join and spend at least $30 on a qualifying purchase, both you and your friend receive a $30 reward. So between the two of you, you’d spend $30 to earn $60.

Once you download the browser extension (it’s safe and secure), it automatically does three cool things:

  1. It gets you cash back on your online purchases from more than 2,500 stores, including Target, Walmart, eBay, Kohl’s, Macy’s, Petco, Sam’s Club, Best Buy and Lowe’s.

  2. It automatically applies coupon codes at checkout. Ta-da!

  3. It alerts you when a product you’re about to buy is available at a lower price somewhere else. Because really, why overpay?

Then you get your cash back via PayPal or check.

Finally, Rakuten is an official partner of the NBA, so here’s one more thing about Big Give Week: If you make a qualifying purchase of at least $25 at select stores, you’re eligible to receive a free Fanatics-brand player T-shirt and a New Era 9Forty team hat from top NBA teams.

It takes less than 60 seconds to create a Rakuten account and start shopping. All you need is an email address, then you can immediately start shopping at your go-to stores through the site.

Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He’s a giver.

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Source: thepennyhoarder.com

6 Tips to Help Women Return to Work

This past year hasn’t been easy for anyone, but it’s been especially rough for the overwhelming number of women facing job loss and financial instability.

According to a recent workforce analysis by McKinsey & Company, unemployment rates for women peaked in April 2020 at 15.8% (2 percentage points higher than men) and in September when schools reopened, 80% of the 1.1 million people leaving the workforce were women. These trends only continued to get worse, when in December preliminary numbers indicated that women accounted for 100% of the 140,000 reported job losses. (Official federal labor statistics released later listed job losses for women from November to December at 248,000 and 58,000 jobs lost for men.)

6 Tips from Career Counselors

With vaccines rolling out across the country and many schools planning on mostly in-person instruction in the fall, the promise of a somewhat normal existence is just around the corner. For many women, it may be time to dust off that proverbial briefcase.

We spoke to career experts and counselors from all over the country to gather their advice to help women who want to re-enter the workforce. Here’s everything you’ll want to know before dipping your big toe back in the applicant pool.

1. Tap into Your Network

One of the first and most important things to do when re-entering the job market is to tap into your network. This might mean seeing what former co-workers are up to, or even chatting with friends in a similar field. With so many jobs opening up every day, and many hires happening through non-traditional channels (like by word-of-mouth), now’s the time to put yourself out there and let your network know you’re looking.

“Leverage your network to not only discover opportunities in the hidden job-market, but to provide peer-support and spread word-of-mouth,” says author and networking expert Kelly Hoey. “All of this will potentially unlock a wider range of employers for your skills.” You never know what opportunities are out there until you start talking to people, and while that might feel scary, it’s also one of best ways to start your job search.

2. Update Your Resume

Just like tapping into your network, updating your resume is an absolute must before hitting the submit button on job applications. One of the best ways to do this? By starting with the job you want.

“Review the job description of a role you’d like to land, and compare the language in that job description to the descriptive words you’re using in your resume and LinkedIn profile,” suggests Hoey. “Recruiters seeking to fill roles will search on the basis of the skills (aka keywords) they desire, so be sure your headline or title (as well as the “About section”) on LinkedIn includes words relating to your core skills or talents.”

Another way to make sure your resume is up to snuff? By focusing on two key employer-minded questions. “Carve out 45 minutes, grab your favorite pen, and get ready to mark that sucker up,” says Jessica Williams of JMW Career Consulting. “Be honest and open during the process and ask yourself if you are answering these two questions in your resume: Am I demonstrating how I will make my manager’s life easier? and Am I showcasing my best techniques to make money or save money?”

Take some time to review your resume from the eyes of a prospective employer, then rework it to focus on the things hiring managers want most.

3. Strengthen and Flaunt Your Skillset

In the spirit of thinking like your employer, now’s the time to flaunt your most marketable skills — and not just the ones you had pre-COVID. When assessing new skills, think about what you might have learned by working with your children as they switched to online instruction. Are you now an expert in virtual conferencing platforms such as Zoom?

“Adaptability would be a key skill to highlight as you negotiate, because you’re communicating a leadership skill that’s improved over the last year,” says Williams. “Make sure to discuss how you learned new forms of virtual communication as well as your ability to work remotely.”

Besides flaunting all the new skills you have, it’s also a good time to brush up on your existing ones and make them stronger. This might include taking an online class, or even getting involved in a lucrative volunteer project.

“I would encourage those who did not feel able to gain many new skills during the pandemic, to take an online course now,” says career counseling expert Katherine Kirkinis of Wanderlust Careers. “It doesn’t have to be expensive or time-consuming — just something to be able to talk about. I had a client who took a $20, half-day public speaking course and used it to talk about skills she gained during COVID.”

Volunteer work can also help you brush on your skillset, and works as a great talking point during interviews. “If your visibility in an industry association or business group has been lacking, now’s a really good time to re-engage,” says Williams. “Raise your hand to volunteer or take on a committee role as it will not only help you get up to speed you up on the trends, forecasts and concerns of professionals in your field, but it will also ensure you’re top-of-mind when roles become available.”

4. Know Your Worth

It’s hard to put a price on a job well done, but then again— that’s exactly what a salary is. Just because you took a year or more away from work doesn’t mean you should have to take a major salary cut. But it does mean you’ll have to spend a bit more time getting acquainted with the going rates for your intended position.

“Understand the salary ranges for the roles you’re pursuing,” says Hoey. “Your network or websites such as Glassdoor can help.” No matter what site you use, remember to aim high.

“Research the market on sites like Payscale and grab your happy high-end figure,” says Williams. “Then decide on your ‘satisfied figure’ — the one you’d be more than happy to accept after negotiations. Always shoot for the high-end figure, just because you had time off doesn’t eliminate your skills.”

5. Consider Other Career Paths

If your pre-pandemic career isn’t what you want anymore, or if you were already considering a new career path, get serious about a switch.

“Now is as good of a time as any to consider a career change, especially because so much work will stay remote and/or will be flexible to be remote,” says Kirkinis. “Many industries are struggling right now, but many are thriving. Bio and health tech, streaming services, healthcare, pharma, and remote communication tools are all up. And needs have increased in government agencies and public and private healthcare systems working to provide care. Companies that connect people, promote wellbeing, and provide ways to stay healthy are also prospering.”

If you want to make a career change but aren’t sure what you’d like to do instead, spend some time identifying local workforce needs. “Think about how your life has changed in the past year (how and where you shop for example), as shifts in your behaviors could indicate new industries to explore (ie. cybersecurity, digital privacy, online education) or traditional industries to return to based on pent-up demand  (i.e. retail, travel, sports),” says Hoey.

6. Keep Your Head Up

There’s nothing quite like a global pandemic to kill your confidence when it comes to re-entering the job market. The important thing to remember, is that many women are going through the same thing. You won’t be alone in your search or your struggle, and employers will understand the feeling as well as anyone.

“I think employers are looking for candidates who made the best of their pandemic year,” says Kirkinis. “Not everyone was able to do this, and there’s no shame in needing to have taken time for yourself to heal, grieve, etc. Even if this was the worst year in your life — try to spin a positive story that relates to work. Perhaps you learned yoga which has helped you to focus for longer periods of time. Or, spending so much time with your partner made you an excellent communicator and you gained skills in conflict resolution.”

While these might sound like minor things, just the fact that you’re here — and gearing up for your next job is a huge accomplishment. Take the time you need to get prepared mentally for this next phase, but also remember to slow down and be kind to yourself. After all, having a good job is just one piece of the puzzle when it comes to financial independence and well-being.

Looking for more proactive ideas to improve your post-pandemic finances? We’ve got a few ideas. 

Contributor Larissa Runkle specializes in finance, real estate and lifestyle topics. She is a regular contributor to The Penny Hoarder. 

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Source: thepennyhoarder.com

Do Credit Scores Reward You for Having Debt?

Credit scoring has become ubiquitous in consumer lending, insurance underwriting, tenant screening, and utilities.

A solid credit score will help to open the door for inexpensive or interest free financing, cheaper auto and homeowner’s insurance and the waiving of deposit requirements.

Having a poor credit score means limited and expensive financing options, deposits, and difficultly finding inexpensive insurance.

Credit scores are, understandably, a lightening rod topic.

Aside from the incorrect information floating around the web (like credit scores are used by employers) credit scores do, in fact, have considerable influence on our access to and cost of credit and services.

This has lead to wide spread distrust and criticism of credit scoring systems.

One of the more common criticisms is that credit scores reward you for being in debt and thus act as an incentive for you to avoid being debt free.

And, the downside of being debt free is that you’ll have a “zero” credit score.

Thankfully neither of these statements is actually true.

The Truth

It is systemically impossible to have a “zero” numeric credit score when the common credit scoring scale is 300-850, a range that does not include the number zero.

The truth is credit scoring systems penalize you for being in debt, and especially so for being in credit card debt.

On the FICO scale your debt load counts for 30% of the points in your score. On the VantageScore scale your debt accounts for 31% of the points.

By anyone’s reasonable definition debt is considered a highly influential factor in your scores.

Being debt free means that you’ll earn most, if not all, of the points in the various debt related metrics.

Conversely, having debt means you will not earn all of the points in those categories. It’s pretty simple, yet being misrepresented.

Good Debt Vs. Bad Debt

Being in debt isn’t a bad thing. Being in a bad debt is a bad thing.

Would anyone really call borrowing money to buy your first home at 3% a “bad” debt? Would anyone really call borrowing money to buy a new car for the family at 0.9% a “bad” debt?

And while student loan debt is hugely problematic, it does in fact fund an education that should lead to a richer, more fulfilling and financially rewarding life.

The only truly bad debt is credit card debt and it’s not inherently bad on its face. It’s bad because it’s expensive.

The average interest rate on a credit card is right around 15% and that is likely the most expensive debt you’ll ever service unless you do business with pawn or title lenders.

Of course, of home loans, auto loans and credit cards the credit card is the only credit tool that allows you to use it without incurring any interest or fees.

That almost seems counterintuitive since most reasonable people would consider mortgage or responsible auto debt to be “good” debt and most would consider credit cards to be bad.

Voluntary Debt

Credit card debt is voluntary. I think sometimes we forget that.

Nobody from any bank, credit bureau or credit scoring company forced you to get into credit card debt.

That was your choice and that choice has consequences in the form of interest.

Further, it’s no secret that credit card debt incurs interest. That was clearly disclosed on the application you signed and on your statement each month.

In fact, your statement also includes a box that clearly discloses the cost of carrying your credit card debt and making only minimum payments.

If you choose to avoid using credit cards, that’s great. You’ll avoid credit card debt and credit card interest.

But, you’ll sacrifice efficiency when transacting in commerce.

You’ll have to carry cash, write checks, and/or depend on debit cards, which come with their own set of problems.

If you choose to use credit cards, that’s great too but only if you use them responsibly. By paying in full each month you’ll avoid credit card debt and interest.

You’ll also enjoy the efficiency and fraud protections offered by credit cards that simply don’t exist with cash or debit cards.

John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at Mint.com, CreditCardInsider.com and the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Twitter here.

 

The post Do Credit Scores Reward You for Having Debt? appeared first on MintLife Blog.

Source: mint.intuit.com

Can Deleted Items Be Reinserted On Your Credit Reports?

We recently received the following question from a Minter via Facebook.

It’s about the legality of reporting items to the credit bureaus after they had been removed.

Here’s the question:

“I recently had an item deleted from my credit report after I disputed it. About a week later I received a letter from the collection agency billing me for the supposed debt. If I do not pay it can it be put back on my credit report after it has already been deleted?”

The answer to her question is “it depends.”

It depends on why it was deleted from your credit report initially. There are only a small number of reasons why an item is deleted from your credit reports.

It’s Too Old To Report

Most derogatory items much be removed from your credit reports after 7 years has passed. There are some exceptions to that rule though.

Bankruptcies, liens and unpaid student loans can remain longer than 7 years. But, you asked about a collection and collections are capped at 7 years, and no more.

If the item was removed because it is 7 years old then it cannot be reinserted on your credit reports.

That’s called re-aging and it’s illegal. Under NO circumstance can a collection be reported for more than 7 years, legally.

The Item Was Not Verified in a Timely Manner

This is likely what happened in your case.

If you dispute an item from your credit report the credit bureaus have 30 days to complete their investigation pursuant to your dispute.

If you send supplemental information during the first 30 days then you’ve just given them an additional 15 days, but most people don’t do that, so 30 days is it.

If the item cannot be verified within 30 days the credit bureaus must remove it because they are not allowed to maintain information that is unverifiable.

However, and this is the answer to your initial question, if the item is verified on day 31 or any day afterwards, the credit bureau can reinsert the item in your credit reports, legally.

If the item is reinserted then the credit bureaus have to provide you with a notice.

The notice has to be in writing and it must be sent to you within 5 business days after the item has been reinserted.

So, if an item was removed and you never received a notice of reinsertion, then it is not back on your credit reports.

It’s Incorrect

Yes, the credit bureaus and their data furnishers (normally a bank or a collection agency) can make mistakes.

Those mistakes can result in incorrect information on your credit reports.

If you dispute an item, and the lender or collector confirms that it’s not yours, then the credit bureaus will remove it.

So, in your scenario it appears the item can be reinserted on your credit reports. And, it can be reinserted whether you pay it or not.

Reinsertion isn’t contingent on a payment being made or missed.

If you owe the debt, meaning it’s actually yours, then I’d strongly suggest that you talk to the collection agency and make an offer to settle the obligation.

Don’t pay them the full amount because they likely purchased the original defaulted debt for a small fraction of the amount.

Even if you are able to settle the debt for 50%, or less, they’re still going to make a killing so settlements are very attractive to them.

This way you stop the calls and letters and you can move on with your life.

John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at Mint.com, CreditCardInsider.com and the National Foundation for Credit CounselingHe is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Google+ or Twitter here.

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Do Credit Scores Reward You for Having Debt?

Credit scoring has become ubiquitous in consumer lending, insurance underwriting, tenant screening, and utilities.

A solid credit score will help to open the door for inexpensive or interest free financing, cheaper auto and homeowner’s insurance and the waiving of deposit requirements.

Having a poor credit score means limited and expensive financing options, deposits, and difficultly finding inexpensive insurance.

Credit scores are, understandably, a lightening rod topic.

Aside from the incorrect information floating around the web (like credit scores are used by employers) credit scores do, in fact, have considerable influence on our access to and cost of credit and services.

This has lead to wide spread distrust and criticism of credit scoring systems.

One of the more common criticisms is that credit scores reward you for being in debt and thus act as an incentive for you to avoid being debt free.

And, the downside of being debt free is that you’ll have a “zero” credit score.

Thankfully neither of these statements is actually true.

The Truth

It is systemically impossible to have a “zero” numeric credit score when the common credit scoring scale is 300-850, a range that does not include the number zero.

The truth is credit scoring systems penalize you for being in debt, and especially so for being in credit card debt.

On the FICO scale your debt load counts for 30% of the points in your score. On the VantageScore scale your debt accounts for 31% of the points.

By anyone’s reasonable definition debt is considered a highly influential factor in your scores.

Being debt free means that you’ll earn most, if not all, of the points in the various debt related metrics.

Conversely, having debt means you will not earn all of the points in those categories. It’s pretty simple, yet being misrepresented.

Good Debt Vs. Bad Debt

Being in debt isn’t a bad thing. Being in a bad debt is a bad thing.

Would anyone really call borrowing money to buy your first home at 3% a “bad” debt? Would anyone really call borrowing money to buy a new car for the family at 0.9% a “bad” debt?

And while student loan debt is hugely problematic, it does in fact fund an education that should lead to a richer, more fulfilling and financially rewarding life.

The only truly bad debt is credit card debt and it’s not inherently bad on its face. It’s bad because it’s expensive.

The average interest rate on a credit card is right around 15% and that is likely the most expensive debt you’ll ever service unless you do business with pawn or title lenders.

Of course, of home loans, auto loans and credit cards the credit card is the only credit tool that allows you to use it without incurring any interest or fees.

That almost seems counterintuitive since most reasonable people would consider mortgage or responsible auto debt to be “good” debt and most would consider credit cards to be bad.

Voluntary Debt

Credit card debt is voluntary. I think sometimes we forget that.

Nobody from any bank, credit bureau or credit scoring company forced you to get into credit card debt.

That was your choice and that choice has consequences in the form of interest.

Further, it’s no secret that credit card debt incurs interest. That was clearly disclosed on the application you signed and on your statement each month.

In fact, your statement also includes a box that clearly discloses the cost of carrying your credit card debt and making only minimum payments.

If you choose to avoid using credit cards, that’s great. You’ll avoid credit card debt and credit card interest.

But, you’ll sacrifice efficiency when transacting in commerce.

You’ll have to carry cash, write checks, and/or depend on debit cards, which come with their own set of problems.

If you choose to use credit cards, that’s great too but only if you use them responsibly. By paying in full each month you’ll avoid credit card debt and interest.

You’ll also enjoy the efficiency and fraud protections offered by credit cards that simply don’t exist with cash or debit cards.

John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at Mint.com, CreditCardInsider.com and the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Twitter here.

 

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