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How The New Affirm Policy Change May Affect Your Credit

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If you’ve ever shopped online and seen the option to “buy now, pay later” with Affirm, you’re not alone. These flexible payment plans have exploded in popularity, making it easier than ever to split up big purchases. But recently, Affirm announced a major policy change that could have a real impact on your credit score and financial future. Whether you’re a seasoned Affirm user or just considering your first purchase, understanding how this new policy works is crucial. After all, your credit score isn’t just a number—it can affect everything from loan approvals to apartment rentals. Let’s break down what’s changing, why it matters, and how you can protect your credit in this new landscape.

1. Affirm’s New Policy: What’s Actually Changing?

Affirm’s new policy centers around how it reports your payment activity to the major credit bureaus. Previously, not all Affirm loans were reported, especially the shorter-term, interest-free ones. Now, Affirm will report more of its loans, including some of those smaller, short-term plans, to credit bureaus like Experian and TransUnion. This means your payment behavior with Affirm will show up on your credit report more often than before. For many, this is a big shift, as it brings “buy now, pay later” (BNPL) activity into the same spotlight as credit cards and traditional loans.

2. Your Credit Score Could Rise—Or Fall

With Affirm’s new policy, your credit score could see more movement. If you make all your payments on time, this new reporting could actually help your credit score by adding positive payment history. On the flip side, missed or late payments will now be visible to lenders and could drag your score down. This is especially important if you’re planning to apply for a mortgage, car loan, or even a new credit card in the near future. Lenders look closely at your payment history, and even one late payment can make a difference. So, if you’re using Affirm, it’s more important than ever to stay on top of your payment schedule.

3. More Transparency for Lenders—and for You

One upside to Affirm’s new policy is increased transparency. Lenders will have a clearer picture of your financial habits, which can work in your favor if you’re responsible with your payments. This transparency also helps you keep track of your own credit health. By seeing your Affirm activity on your credit report, you can better understand how your spending and repayment habits affect your overall credit profile.

4. Short-Term Loans Are No Longer “Invisible”

In the past, many people used short-term, interest-free Affirm loans, thinking they wouldn’t impact their credit at all. With the new policy, these loans may now be reported, making them visible to anyone who checks your credit. This means that even small purchases split into payments could influence your credit score. If you’re juggling multiple BNPL plans, it’s easy to lose track, so be sure to monitor your accounts closely. Treat every Affirm loan—no matter how small—as if it were a traditional loan, because now, it essentially is.

5. Practical Steps to Protect Your Credit

With these changes, it’s smart to take a few proactive steps. First, set up automatic payments or reminders so you never miss a due date. Next, keep your total number of active BNPL loans manageable; having too many open at once can make you look risky to lenders. Finally, regularly review your credit report to catch any errors or surprises. If you spot a late payment that you believe is incorrect, dispute it right away. Staying organized and vigilant is the best way to make sure Affirms new policy works for you, not against you.

6. The Bigger Picture: How BNPL Is Shaping Credit

Affirms policy change is part of a larger trend: buy now, pay later services are becoming a bigger part of the credit landscape. As more companies follow suit, your BNPL activity will play a larger role in your overall financial profile. This shift means that responsible use of these services can help you build credit, but careless use can hurt you just as quickly. The key is to treat every BNPL plan with the same seriousness as a credit card or loan. The days of “invisible” installment plans are over, and your credit score will reflect your choices.

Navigating the New Affirm Policy: Your Credit, Your Rules

The new Affirm policy change may feel like a curveball, but it’s also an opportunity. By understanding how Affirm now affects your credit, you can make smarter decisions and use these services to your advantage. Remember, your credit score is a tool—one that can open doors or create obstacles, depending on how you manage it. Stay informed, stay organized, and let Affirms new policy work for you, not against you.

How do you feel about Affirms new policy? Have you noticed any changes in your credit score since the update? Share your thoughts in the comments below!

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You Can Be Sued for Debt You Don’t Owe—Here’s How It Happens

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Have you ever received a letter or phone call about a debt you’re sure you don’t owe? If so, you’re not alone—and the consequences can be more serious than you think. Every year, thousands of Americans are shocked to discover they’re being sued for debts that aren’t theirs. This isn’t just a minor annoyance; it can threaten your credit, finances, and peace of mind. Understanding how this happens is crucial because anyone can become a target. Knowing your rights and how to respond can make all the difference, whether it’s a case of mistaken identity, a clerical error, or outright fraud. Let’s break down the surprising ways you can be sued for debt you don’t owe—and what you can do about it.

1. Mistaken Identity: When You’re the Wrong “John Smith”

It might sound like something out of a sitcom, but mistaken identity is a leading cause of debt lawsuits against innocent people. Debt collectors often rely on databases that match names, addresses, or even partial Social Security numbers. You’re at higher risk if you share a common name or have moved frequently. Imagine getting sued because someone with your name in another state defaulted on a loan. It happens more often than you’d think. If you’re served with a lawsuit for a debt you don’t recognize, don’t ignore it. Respond promptly and request documentation proving the debt is yours.

2. Old Debts Resurrected: Zombie Debt Lawsuits

“Zombie debt” refers to old, often expired debts that resurface years later, sometimes after the statute of limitations has passed. Debt buyers purchase these accounts for pennies on the dollar and may file lawsuits, hoping you won’t fight back. The problem? Sometimes these debts were already paid, discharged in bankruptcy, or never belonged to you in the first place. If you’re sued for a zombie debt, check your records and the statute of limitations in your state. Never admit to owing the debt before verifying it, as this could restart the clock on the statute of limitations.

3. Clerical Errors and Mixed Files

Believe it or not, a simple typo can land you in court. Creditors and debt collectors handle massive amounts of data, and mistakes happen. A transposed digit in a Social Security number or a misspelled name can link your file to someone else’s debt. Sometimes, credit bureaus mix up files entirely, especially for people with similar names or family members living at the same address. If you’re sued for a debt that isn’t yours, request a copy of your credit report and look for errors. Dispute any inaccuracies immediately with both the credit bureau and the creditor. Keeping detailed records and correspondence can help you clear your name faster.

4. Identity Theft: When Someone Borrows Your Good Name

Identity theft is a nightmare scenario that can lead to lawsuits for debts you never incurred. Thieves can open credit cards, take out loans, or rack up medical bills in your name. You might not find out until you’re served with a lawsuit or see a sudden drop in your credit score. If you suspect identity theft, act quickly: file a police report, place a fraud alert on your credit reports, and contact the creditor to dispute the debt. The FTC’s IdentityTheft.gov is a valuable resource for step-by-step recovery. Remember, the sooner you act, the better your chances of stopping the lawsuit and repairing your credit.

5. Aggressive or Unethical Debt Collectors

Some debt collectors file lawsuits without thoroughly verifying the debt or the debtor’s identity. They may hope you won’t appear in court, resulting in a default judgment against you. In some cases, collectors even sue for debts already paid or settled. If you’re sued, don’t ignore the summons—even if you know the debt isn’t yours. Show up in court, present your evidence, and demand proof that you owe the money. Under the Fair Debt Collection Practices Act (FDCPA), you have rights, and collectors must provide documentation if you request it. If they can’t, the case may be dismissed.

6. What to Do If You’re Sued for Debt You Don’t Owe

If you receive a lawsuit for a debt you don’t owe, don’t panic—but don’t ignore it, either. Respond to the court by the deadline listed in the summons. Gather all relevant documents, such as payment records, correspondence, and your credit report. Consider consulting a consumer attorney, especially if the amount is significant or you feel overwhelmed. Many states offer free or low-cost legal aid for debt collection cases. Keep detailed notes of every interaction with collectors and the court. By taking these steps, you can protect yourself from wrongful judgments and lasting financial harm.

Protecting Yourself: Stay Vigilant and Know Your Rights

Being sued for debt you don’t owe is stressful, but you’re not powerless. Regularly check your credit reports, respond promptly to any debt collection notices, and never assume a lawsuit will disappear. Understanding your rights and acting quickly can prevent a small mistake from becoming a significant financial setback. Remember, you have the right to demand proof and to dispute any debt that isn’t yours. Stay informed, stay organized, and don’t be afraid to seek help if you need it.

Have you ever been contacted about a debt you didn’t owe or faced a wrongful lawsuit? Share your story or advice in the comments below!

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The Most Misunderstood Part of Your Credit Report—Explained

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Your credit report impacts everything from loan approvals to insurance rates, yet most Americans misunderstand crucial elements of this financial document. While you might regularly check your credit score, the nuances within your report often remain mysterious. Understanding these hidden components can mean the difference between loan approval and rejection, or between standard and premium interest rates. Today, we’ll demystify the most confusing aspects of your credit report and show you how to use this knowledge to your financial advantage.

1. Credit Utilization: The Silent Score Killer

Credit utilization—the percentage of available credit you’re using—significantly impacts your credit score, yet many consumers overlook its importance. This ratio accounts for approximately 30% of your FICO score calculation, making it second only to payment history.

Financial experts typically recommend keeping utilization below 30% of your available credit. However, those with excellent credit scores often maintain ratios below 10%. Many don’t realize that utilization is calculated per card and across all accounts.

For example, maxing out one card while leaving others untouched can harm your score, even if your overall utilization remains low. Credit bureaus view high utilization on individual accounts as a potential sign of financial distress.

Another misconception is timing. Your utilization ratio is typically reported when your billing cycle closes, not when you make a payment. This means you could pay your balance in full each mont,h but still show high utilization if the bureau captures your information before your payment posts.

2. Inquiry Classifications: Not All Credit Checks Are Equal

When someone checks your credit, an inquiry appears on your report. However, many consumers don’t understand that inquiries fall into two categories: hard and soft pulls.

Hard inquiries occur when you actively apply for credit, such as loans, credit cards, or mortgages. These can temporarily lower your score by up to five points and remain on your report for two years. Multiple hard inquiries in a short period can signal financial distress to lenders.

Soft inquiries happen when you check your own credit, when companies send pre-approved offers, or during background checks. These don’t affect your score at all.

According to a Federal Reserve study, nearly 40% of Americans don’t realize that checking their own credit score won’t harm their credit rating. This misconception prevents many from regularly monitoring their credit health.

The credit scoring system also includes a special provision called “rate shopping.” Multiple inquiries for the same type of loan (mortgage, auto, student) within a 14-45 day window (depending on the scoring model) count as just one inquiry, allowing you to compare rates without multiple penalties.

3. The Mystery of Closed Accounts

Many consumers believe closing unused credit cards improves their credit score—this is often incorrect. Closed accounts with positive payment history remain on your credit report for up to 10 years, continuing to benefit your score.

Closing accounts can actually harm your credit in two ways. First, it reduces your total available credit, potentially increasing your utilization ratio. Second, it can shorten your credit history if you close older accounts, which impacts the “length of credit history” factor that comprises about 15% of your score.

What’s particularly misunderstood is that you don’t control whether closed accounts appear as “closed by consumer” or “closed by creditor.” This distinction doesn’t affect your score, though many believe otherwise.

The exception is closing cards with annual fees that no longer provide value. In this case, the financial benefit may outweigh the potential impact on your credit score, especially if you have several other open accounts with long histories.

4. Collections Accounts and the Debt Validation Process

Collections accounts can devastate your credit score, dropping it by 100+ points. Many don’t know that you have the right to request debt validation within 30 days of first contact from a collection agency.

Under the Fair Debt Collection Practices Act, collectors must prove the debt is valid and they have the right to collect it. If they can’t provide proper documentation, they may be required to remove the collection from your credit report.

Another misunderstood aspect is “pay for delete” negotiations. While not officially sanctioned by credit bureaus, some collection agencies will agree to remove the negative mark if you pay the debt. Get any such agreement in writing before making payment.

The newest FICO scoring models (FICO 9 and VantageScore 4.0) ignore paid collections accounts, but many lenders still use older models, in which paid collections continue to impact your score, though less severely than unpaid ones.

5. Authorized User Status: The Double-Edged Sword

Being added as an authorized user on someone else’s credit card can help build credit, particularly for those with limited credit history. The primary account holder’s payment history and utilization for that card will appear on your report.

What many don’t realize is that this relationship works both ways. If the primary user misses payments or maxes out the card, your credit can suffer, even if you never use the card yourself.

Additionally, some lenders and newer scoring models give less weight to authorized user accounts than to primary accounts when evaluating creditworthiness. This means the credit-building benefits may be more limited than many expect.

Before accepting authorized user status, verify that the card issuer reports authorized users to all three major credit bureaus, as policies vary by company.

The Credit Report Roadmap You Never Knew You Needed

Understanding your credit report isn’t just about knowing your score—it’s about recognizing how everyday financial decisions create ripple effects throughout your credit profile. You gain control over your financial narrative by mastering these commonly misunderstood elements. Regular monitoring, strategic account management, and knowledge of your consumer rights transform your credit report from a mysterious document into a powerful financial tool that works for, not against, your long-term goals.

Have you ever discovered something surprising in your credit report that affected your score unexpectedly? Share your experience in the comments below!

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Credit Score Killers: 7 Mistakes You’re Probably Guilty Of

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Your credit score plays a crucial role in your financial health, but small missteps can cause major damage. Many people unknowingly make credit mistakes that lower their scores and make it harder to get loans, mortgages, or even a good interest rate. The good news? Once you recognize these common pitfalls, you can take steps to correct them and boost your score. Here are seven credit mistakes you might be making—and how to fix them before they hurt your financial future.

Missing Payments

Even one missed payment can significantly impact your credit score. Payment history makes up about 35% of your score, making it the most important factor. Late payments stay on your credit report for up to seven years, making lenders view you as a risky borrower. Setting up automatic payments or reminders can help you avoid this common mistake. The key is to always pay at least the minimum amount due on time to protect your score.

Maxing Out Your Credit Cards

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Using too much of your available credit can make you look financially overextended. Your credit utilization ratio—how much of your credit limit you use—should ideally stay below 30%. Maxing out your credit cards not only lowers your score but also increases the risk of accumulating high-interest debt. Paying down balances regularly and keeping your spending in check will help maintain a healthy credit score. If possible, spread your purchases across multiple cards to keep utilization low.

Closing Old Credit Accounts

It might seem like a good idea to close old credit cards you no longer use, but doing so can actually hurt your score. Length of credit history accounts for about 15% of your credit score, so older accounts add to your financial stability. When you close an account, it reduces your total available credit, increasing your utilization ratio. Instead of closing old accounts, consider keeping them open and using them occasionally to keep them active. Maintaining a long credit history shows lenders you’re a responsible borrower.

Applying for Too Many Loans at Once

Every time you apply for a new credit card or loan, the lender performs a hard inquiry on your credit report. Too many hard inquiries in a short period can signal financial distress and lower your score. While one or two inquiries won’t hurt much, multiple applications in a short time can be a red flag to creditors. To minimize the impact, only apply for new credit when necessary and research your options before submitting applications. Responsible credit use means spacing out inquiries and choosing the right financial products.

Ignoring Your Credit Report

Many people don’t check their credit reports regularly, leaving mistakes and fraud undetected. Errors such as incorrect account balances or unauthorized accounts can drag down your score. Federal law allows you to check your credit report for free once a year from each major credit bureau. Reviewing your report helps you spot inaccuracies and dispute them before they cause lasting damage. Staying proactive about your credit history can prevent unnecessary drops in your score.

Only Paying the Minimum Balance

Paying only the minimum amount due may keep your account in good standing, but it can still hurt your credit. High-interest charges accumulate, making it harder to pay off your balance in full. A high balance increases your credit utilization ratio, which can lower your score over time. Aim to pay more than the minimum whenever possible, focusing on reducing high-interest debt first. Keeping balances low and making larger payments will improve your financial standing.

Co-Signing Without Understanding the Risks

Co-signing a loan means you’re equally responsible for the debt, even if you’re not the one using the funds. If the primary borrower misses payments or defaults, your credit score takes a hit. Many people co-sign without fully considering the financial risks, leading to unexpected credit damage. Before agreeing to co-sign, make sure you trust the borrower and understand the long-term consequences. If possible, have a repayment plan in place to avoid credit issues.

Take Control of Your Credit Today!

Avoiding these common credit mistakes can protect your financial future and keep your score in good shape. Review your credit habits, make adjustments where needed, and stay proactive about maintaining good credit. The stronger your credit score, the easier it will be to achieve financial goals like buying a home or securing low-interest loans.

Which of these mistakes have you been guilty of? Share this article to help others improve their credit too!

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Here Is What To Do If You Have Debt In Arrears

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This article is a response to a reader’s question about paying off debt on an irregular income. They write:

Can you advise me how to manage to settle my absa loan & credit card because they are in arrears

At my work I earn with commission , sometimes I didn’t earn.

Here is my answer:

Being in debt is a challenge. It takes away money you could use for more productive things. It’s even more difficult when you’ve missed payments and your debt is now in collections. If that’s you, here are some tips to help you settle your debt that’s in arrears.

Pay down debt

Utilize some debt repayment strategies.

Debt snowball – pay your smallest balance first while making minimum payments to your other debts. When you pay off your smallest balance, move on to the next smallest balance. As you get rid of debts, you’ll be able to make larger payments to the following debt.

Debt avalanche – pay your highest interest rate first. Similar strategy as the “snowball”. Once your highest interest rate debt is eliminated, pay as much as you can towards the debt with the next highest interest rate.

Use retirement funds to pay off your debt. You’ll likely, depending on your age, pay a 10% tax penalty, however (if you’re under 59 1/2). Do you have any cash accumulated in a whole life insurance policy? Use that cash value to pay off your debts

Negotiate

How much, in terms of dollars, can you pay to your creditors as a settlement? Figure out what that number is before you start contacting creditors.

It may take a couple of phone calls, so don’t get discouraged. If you don’t like what you’re hearing from the representative you’re talking to, try and get a hold of a different one. Remember the dollar amount you can pay and don’t go over that amount. If you can pay 50% of what you owe, start with an offer to pay 30%. The creditor will counteroffer and hopefully, the agreed amount is 50% or lower.

Make sure you’re clearly communicating the financial hardship you’re experiencing that put you behind on your debts. Getting sympathy from a representative could help you! Get any settlement or repayment plan in writing as soon as possible.

Make sure you’re speaking to your creditors, not collections agencies. Collections agencies will take a settlement amount and sell whatever is left to another agency. Before you’ll know it, they’ll be after you again. Speak to the creditor you initially owed. Also, be prepared to pay taxes on the forgiven amount.

Bankruptcy

Nobody likes to think about it and it would be a very difficult decision, but it might be one to strongly consider if you want to settle your debt.

If you don’t have luck with negotiations, you might have to consider bankruptcy. There are generally two options – Chapter 7 and Chapter 13. Chapter 7 clears all of your debts. Chapter 13 is more of a reorganization.

Check credit reports

Clarify with the credit reporting agencies how things were settled. Clean up the report and it could help your score a little. Late payments and charge-offs stay on your credit report for 7 years. Debts in collections stay on your credit report for 180 days.

Debt settlement is about commitment. There are penalties if you miss ONE payment of your agreed-upon settlement, so don’t miss!

One more thing. Know your rights. There are several things collectors can’t do:

  • They can’t threaten you
  • They can’t shame you
  • They can’t force you to repay your debt
  • They can’t falsify their identity to trick you
  • They can’t harass you

It’s a tough road, but getting out of debt is paramount for your psyche and your financial success. Utilize strategies to pay down debt. Speak with your creditors about negotiating. If negotiation doesn’t work, consider bankruptcy. Once you settle your debt, review your credit report and dispute errors.

Related reading:

What you need to know about bankruptcy

Diving deep into debt

How to improve your finances on a low income

What to do about debt collectors

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

How Long Does Bankruptcy Stay on Credit Report?

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Filing for bankruptcy is a tough decision to make. It can provide relief when you’re drowning in debt, but it does have consequences when it comes to your credit. How long does bankruptcy stay on your credit report?

We’re going to explore the answer to that question, as well as a few other items, in this article.

What is bankruptcy?

It’s a legal proceeding when an individual or an entity is relieved from some or all of their debts. Whether it’s all or some, and how that process takes place depends on the type of bankruptcy that’s filed.

  • Chapter 7 – Liquidable assets are sold in order to pay off debts. When those assets are exhausted, the remaining debt is discharged.
  • Chapter 11 – The most expensive option, which is usually used by companies (General Motors and J.C. Penny, for example). This is a reorganization plan that enables companies to remain open while getting their financial obligations situated.
  • Chapter 13 – Only available to individuals. The person filing implements a payment plan and is typically able to keep their assets (house, car, etc.). The debt must be paid off in 3 to 5 years.

Federal student loans are often excluded from being discharged, so you’ll be on the hook for that.

Let’s take a look at how bankruptcy affects your credit report.

How it affects credit

I’ll state the obvious by telling you that bankruptcy negatively affects your credit. Typically, you can expect your score to drop by 20-25%. This also depends on your current credit score and credit strength.

Discharges on more accounts and/or accounts with higher balances will affect your score more than discharges on a small number of accounts and/or low balances.

Delinquency usually proceeds bankruptcy and those stay on your report for 7 years. Chapter 7 bankruptcy stays on your credit report for 10 years, while chapter 13 stays on for 7 years.

What to do after

Inspect your credit report with a fine-toothed comb. Make sure that the debts discharged were actually discharged. If you find errors, go through the proper channels to get those corrected.

Once you’ve filed, you can immediately start building your credit back up. The first step is to ALWAYS pay your bills on time. I’ve stated before that on-time payment history is the number one factor when calculating your credit score.

The next step is to open a credit account. This should be something small and manageable. I often suggest a secured credit card. With this type of account, you make a deposit and that deposit acts as your credit limit.

Establish a positive payment history and keep your utilization well below 30%.

Bankruptcy on your report

You don’t have to do anything to remove the bankruptcy from your credit report. It will fall off on its own.

Review your credit report once the 7 or 10 year period ends. At that point, depending which type you filed, the bankruptcy should come off.

Give it a few months as your credit report often lags a little after the activity actually took place.

Stay diligent. Bankruptcy is not a death sentence, it’s a fresh start. Pay on time, keep your utilization low, and keep your spending in check.

Related reading:

How to Answer a Civil Summons for a Credit Card

What You Need to Know About Bankruptcy

What Affects Your Credit Score