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Most people know that having good credit is important. Your credit impacts your ability to qualify for a mortgage or car loan, as well as the interest rate you’ll receive from lenders. The consequences of poor credit, however, can be less obvious — and a lot more insidious — than just having one less card in your wallet. Credit regulations vary by state, but here are some ways credit damage might cost you that you might not even realize.

Losing out on an apartment or car lease. When you apply for a rental, your landlord might run a credit check. If you have poor credit, you may not be able to get that apartment. Or, if you’re approved, you could be on the hook for a higher security deposit or an additional month’s advance on rent. The same is true of leasing a car. You might need a co-signer on the lease if you have bad credit.

Missed job opportunities. Some employers may pull a special version of your credit report as part of a background check for a job. If there are red flags on your report, you might not get the offer.

Unfavorable credit card rates. When you get a credit card, your credit score greatly influences your interest rate. If you carry a hefty balance, a higher credit score could cost you hundreds of dollars a year in additional interest payments.

Pricier car insurance. Depending on the state, you might end up paying a higher premium based on your credit score. Only seven states currently restrict the use of credit scores when determining insurance rates, so you could end up saving money on your premiums if you boost your credit score.

More expensive utility deposits. You may have to fork over a larger deposit when you set up utilities and other home services. Poor credit could mean coming up with more money up front — money you might not be able to spare.

Worse loan terms. Like credit cards, you can also end up with less-competitive rates on auto and home loans. Companies may also charge higher fees because of poor credit. Before you apply for a loan, it’s a smart move to improve your credit.

First Things First

Even if you’re not in the market for a house or credit card, it’s important to protect your credit — and improve it if need be. The first step is to check your credit from the three major credit reporting agencies by visiting AnnualCreditReport.com to get a free credit report. If you have additional questions about your credit, contact your WellCents financial professional for advice.

Sources

https://www.experian.com/blogs/ask-experian/which-states-prohibit-or-restrict-the-use-of-credit-based-insurance-scores/

https://www.experian.com/blogs/ask-experian/how-to-get-apartment-with-bad-credit/#s1

https://www.experian.com/blogs/ask-experian/credit-education/life-events/employment/

It’s not always a smooth ride when it comes to managing personal finances. Bumps in the road can derail your plans if you don’t take steps to protect yourself and stay on top of the situation. Here are some strategies that can help.

Financial Challenges

There are a number of difficulties you can face on the journey through life. Some events that can negatively impact your personal finances include:

●     Layoff or furlough

●     Illness or disability

●     Lawsuits

●     Divorce

●     Death of a spouse

●     Investment losses

●     Fire or theft

●     Pay cut or reduced hours

●     Major repairs (including home or auto)

Plan, Prepare and Protect Yourself

You can prepare financially for most of these situations. Combining approaches to create multiple layers of protection is even better.

●     Insurance. A good home or auto insurance policy can help lower expenses related to an insured event such as a theft, fire or accident. Health and disability insurance can cover some costs related to illness or injury. And life insurance can assist your family in the event the unthinkable occurs.

●     Umbrella policy. If you’re worried about major accidents and lawsuits that target your assets, an umbrella policy can protect you in a way that a regular insurance policy might not. An umbrella policy’s coverage generally picks up where home and auto policies leave off.

●     Emergency fund. Set aside money in an emergency fund to cover expenses without having to rely on credit cards. This dedicated account can also help you withstand investment losses as you wait for a recovery or adjust your strategy.

●     Maintain good credit.  Should you need a loan to help with certain setbacks, having good credit can go a long way toward ensuring access to lower rates and more affordable terms.

With the right planning in place, you have a better chance of weathering financial storms. Take action before you’re in the middle of a crisis if at all possible.

Additional Tips for Managing Financial Setbacks

●     Don’t panic. Take a moment to stop and breathe. It can be difficult to make decisions at this time, but it will be harder to think clearly if you’re panicked.

●     Look for community and state resources. If you can access a food pantry, apply for unemployment benefits or connect with other programs, it can free up necessary cash to deal with a crisis. Remember that these services are meant for times of distress. Consider returning the favor for others when you get through this setback.

●     Take care of yourself. Do your best to eat healthy, get adequate sleep and exercise. You’ll make better decisions and have greater resiliency when you practice self-care.

●     Do some research. There’s a plethora of articles and advice online, but seek out only reputable sources of financial information — not chat rooms or social media.

●     Seek social support. Get emotional support from friends and family who won’t judge you. Find people who can serve as a sounding board as you work through financial challenges.

The Bottom Line

Seek information and advice from reliable sources as you navigate financial setbacks. Your WellCents financial professional can be a value resource to help you plan and pivot to adjust your financial strategy to help weather whatever storm blows through.

An important part of a financial plan is keeping it up to date. Life can throw you a lot of curveballs, and your financial plan will need occasional tweaks to adjust for them — whether they’re the kind of changes you wanted or not.
The Times They Are A-Changin’

Major life events often require adjustments to budgets and expenses. There could also be significant tax implications to consider. Here are some changes that should alert you to the need for a financial reevaluation — especially when it comes to their potential impact on your retirement plan.

Marriage or divorce. Depending on the situation, marriage can add new debts and obligations. If you’re combining expenses and incomes while merging households, you might see your situation improve. On the other hand, divorce can be financially devastating. For women over 50, the termination of a marriage can lead to a 45% reduction in standard of living. Planning for this contingency is important as you approach retirement.

Birth or adoption of a child. Parents can expect to spend more than $233,000 when raising a child from birth to age 18. And that doesn’t include the cost of college. Adjust your financial plan after a birth or adoption to make sure you remain on target to achieve all your dreams — for you and your growing family.

Empty nest. You might be able to set aside more for retirement or shift focus to other goals once your last child leaves home. After you send off your first care package, start reviewing your financial plan to see where you might reallocate financial resources.

Buying a home or moving. A new living situation can come with higher — or lower — expenses as taxes, changes in insurance and maintenance costs as well as renovations can significantly impact your budget. Ideally, speak with a financial professional ahead of any move.

Illness or serious diagnosis. The average cost of healthcare in the United States is about $11,000 per person each year. And this number can skyrocket with a major illness or disability. If you have a chronic condition or significant healthcare crisis, it can be helpful to involve a financial professional early on to help you navigate.

Other Finance-altering Life Events:

●     Job loss or change

●     Pay raise

●     Inheritance

●     Fire, theft or accident

●     Lawsuit

●     Death of a spouse

●     Starting (or selling) a business

Don’t Go It Alone

All these events can alter your financial trajectory. Reviewing your financial plan periodically is prudent as you navigate life’s twists and turns. You may need to increase retirement account contributions or end up being able to retire sooner than planned. But no matter what’s next, contact your WellCents financial professional for expert advice to help keep your retirement plan on track.

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