5 Mortgage Myths That Won’t Die

Buying a home can be a big commitment — emotionally and financially. When picking a property, many of us hope that we will enjoy living there and comfortably afford it for years to come. For this reason, it’s a good idea to spend just as much time and energy finding the right mortgage as you do searching for the perfect house.

Crunching the numbers to find how much mortgage you can afford may seem like the boring part of home buying, but it is a very important step that can save you stress and money down the line. Before you even get started, it’s a good idea to understand the process you are about to begin — including commonly held misconceptions and misunderstanding about mortgages.

1. You Need a Big Down Payment

Many people will tell you that at least 20% of a property’s value is required to qualify for a mortgage. While this is a general benchmark to prove you are financially ready for investing in property and higher down payments do generally mean lower monthly payments, there are options for those of us who don’t have that much cash upfront.

Some government-sponsored loans require down payments as low as 3.5%, and you can work with lenders to figure out a program that works without a large down payment. It’s just important to balance the lower down payment with how it will affect your monthly mortgage payments and the other terms of your loan.

2. Owning Is Better Than Renting

Some sources may tell you it’s more expensive, others may tell you that it is a guaranteed investment. Even with interest and taxes included, buying a home can be cheaper than renting depending on where you live. Buying a property and investing so much in a single purchase is always a risk because no one knows what the future will bring. Homeownership can also provide safety, security and pride, which cannot be quantified. It’s a good idea to to determine whether renting or buying is right for you financially and in accordance with your lifestyle.

3. All Lenders & Mortgages Are the Same

It may seem like all banks offer mortgages around the same rates and you don’t need to do your research. In fact, there are many factors to determining the right mortgage for you and your situation. Certain lenders and mortgage programs can be better suited for you than others. It’s important to compare mortgages, reach out for recommendations and consider working with a lender to help you understand the fees.

4. Principal & Interest Are All That Matter

Those “many factors” I referred to? They seriously matter, so it’s a good idea to look beyond the principal and interest amount on your monthly payment statement. There are also taxes and insurance payments that can add a whole lot to your monthly costs, so do not forget to add these expenses as well. Also, it’s important to compare more than just the monthly rent payment to the monthly mortgage payment. There are upfront costs to homebuying that can impact how much you pay overall.

Before you apply for a home loan, it’s important to know where your credit score stands. The difference of just a few credit score points can mean better interest rates and a major savings over the life of your loan. You can get two of your credit scores for free on Credit.com, updated every month.

5. You Should Pay Your Mortgage Off Early

While making early and lump payments can make sense in some financial situations, this is not always the right move — even if you have the money. Since interest rates are low, you can invest the money you would have put toward your home loan for retirement or other investments with better returns over time. You also do not want to put all your funds in one place as soon as they become available in case something unexpected comes up. Plus, some mortgages have a prepayment penalty. It’s important to read the fine print before handing over a large sum of money.

Now that you know what isn’t always true, you can look over your finances, find some houses in your price range and work with a lender or financial adviser to discover what is true for your specific situation and goals.

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This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.

The 8 Most Misunderstood Refinancing Terms

If you are having trouble keeping to your budget or at least making your monthly mortgage payments, you may have thought about (or been told to think about) refinancing. Homeowners often refinance their mortgage to secure a lower interest rate, shrink their monthly payments or change the length of the loan. But before you start crunching numbers and contacting lenders, it’s important to understand how refinancing works. Check out the below glossary of frequently misunderstood refinancing terms to help you get started.

1. Mortgage Balance

Probably the first figure you should look at while in the decision process, the mortgage balance is the full amount owed at any specific time during the life of a mortgage. It is the sum of the remaining principal you have and any accrued interest.

2. Cash Out

To capitalize on the equity you’ve built in your home, you can take some for yourself as cash payment when you close on your refinance. You will increase your mortgage balance and likely even your monthly payment depending on the specifics of your mortgage but it can give you liquidity if you need it in an emergency.

3. LTV Limit

Loan-to-value or LTV limits are limitations lenders usually impose on your ability to refinance. This ratio compares the amount you still owe on your mortgage to the current estimated value of your home. These limits are generally set by government or government-sponsored agencies that buy mortgages.

4. Mortgage Insurance

Mortgage insurance can help provide peace of mind to your lender because you pay the premiums and they are the beneficiary. This coverage protects lenders against borrower defaults and if you are refinancing with a high LTV limit and you have a long way to go in the life of the loan, your lender may require it. Once you get back on track, you can work with your lender to drop the insurance premiums.

5. Origination Charge

This fee is the amount your lender charges for the administrative costs associated with a mortgage or refinance application and processing.

6. Points

Points are a form of prepaid interest premiums. One point is generally equivalent to 1% of the total loan amount. When you refinance, you can use this upfront payment to the lender and reduce the interest rate on the loan and therefore your monthly payment.


The Home Affordability Refinance Program (HARP) is a program sponsored by the Making Home Affordable Act that allows homeowners with Fannie Mae- or Freddie Mac-owned mortgages to refinance at favorable rates despite having little equity.

8. Mortgage Taxes

You may remember these from your first mortgage. These are taxes levied by state and or local governments on every new mortgage created. Since refinancing is basically the same as taking out a new mortgage, you will probably have to pay a mortgage tax again, just as when you acquired your original loan.

Now that you have a better understanding of the vocabulary, it’s a good idea to take the time to really learn about the process of refinancing — how it works, what changes it can cause and ultimately, if it is the right move for you. Keep in mind that a good credit score is important for any homeowner looking to refinance — it will help determine your interest rate and can save you thousands of dollars over the lifetime of the loan. You can check two of your credit scores for free on Credit.com to see where you stand.

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This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.

10 Graduation Gifts That Keep On Giving

This time of year envelopes containing graduation invitations and announcements start showing up in mailboxes — but ideas for what constitutes a good gift may not be so plentiful.

While every graduate — high school or college — would almost certainly welcome a gift of cash, the giver might prefer some assurance that the gift is being used to help the new grad get off on the right foot in the next phase of his or her life. And whether you’re spending a little or a lot, you can give a gift with the potential to make a difference.

1. Gift Cards

Particularly for high school students, a check could disappear quickly — and it might not fund what you intended, says consumer and money-saving expert Andrea Woroch. A better gift for the same price is a gift card to the campus bookstore or to a nearby used textbook store, to the grocery store or to the drugstore. (Be aware that some chains are regional, so if your new grad is going on to college, you’ll want to be sure the cards can be used near the college.) If you don’t like the idea of cards, you can give consumable products — a laundry basket filled with towels, detergent and bathroom cleaning essentials or a caddy with shampoo, body wash, lotion and other items that would otherwise have to be purchased by the recipient.

(Bonus idea: Buy the cards from a discounter. GiftCardGranny, for example, offers other people’s unwanted cards at a discount. You could get an odd amount, but that also gives you an opportunity to explain how to stretch dollars — something new grads would do well to learn. And learning to get more value for their money is a lesson that can save them money for a lifetime.)

2. Subscriptions

Another possibility is subscriptions to publications relating to money or personal finance. They may get only a cursory glance, but they begin to bring financial issues into consciousness. There are personal finance books geared toward the young and inexperienced, and those may be very useful (look for those with short chapters and simple explanations.) Three that Woroch recommends:

  • Get a Financial Life: Personal Finance In Your Twenties and Thirties by Beth Kobliner
  • The Broke and Beautiful Life by Stefanie O’Connell (perfect for anyone pursuing an artistic career like acting or dancing as the author chronicles her adventures of pursuing the dream on a budget while teaching meaningful personal finance tips)
  • Complete Guide to Personal Finance: For Teenagers (for high school grads heading off to college)

3. A Credit Card

If you are a parent, adding your new grad as an authorized user on a credit card (or establishing a new one for that purpose) can be valuable. One piece of advice, Woroch says, is to keep the credit limit low. That way, if the new grad stumbles on the path to becoming a creditworthy adult, the parent can limit the damage with a low limit. Learning to use a card responsibly now can save a young person from much costlier mistakes later. There are credit cards specifically for users who want to build credit. A secured card can also be a great place to start. Here are some of the best secured credit cards in America.

4. A Roth IRA

If the high school grad has income, he or she can have a Roth IRA. Help your grad set up the account. The contributions cannot exceed earned income for the year, but it is a good way to show the grad you believe that starting to save early is crucial — time is an asset. (And this gift can also work for college grads — you could make it a substantial sum if the student is income-qualified and several people want to give a joint gift.)

Gifts for College Grads

If the graduate is walking off the stage with a college degree, the money gifts can be geared toward helping to prepare for professional life or to help to avoid unnecessary spending. Examples include:

1. A Budgeting Course

Most new grads need it, but don’t count on them to buy it for themselves. “One of the biggest hurdles any college grad will face upon entering the ‘real world’ is managing living expenses with social activities and savings,” Woroch says. “Learning how to create a budget that fits your needs and goals is crucial and something that people don’t do until well into their 30s if even then. There are lots of budgeting courses you can register your college grad for.”

2. Small Appliances, Cookware & Cookbooks

It’s time to learn to prepare at least some meals at home. A fast-food habit can be bad for both a budget and health. But it can be a real temptation if you think cooking is too hard, too time-consuming, and you aren’t even sure what you should be buying at the grocery store. There are cookbooks for absolute beginners as well as simple menu ideas for one or two.

3. A Tool Kit

The new grad can look online to learn how to make any number of simple household repairs — but tools are typically required. A very basic tool kit can come in handy — and save a phone call to a repair service.

4. A Smartphone

If the new grad is going to to be exiting the family cellphone plan or has no smartphone, a prepaid smartphone is a great gift. You could, for example, buy six months of service, says Woroch. That phone will function as a navigator to get the grad to job interviews, and it keeps grads connected via LinkedIn, which can be critical to landing a job. Woroch said it might also eliminate the need to pay for Internet service.

5. Help Presenting a Professional Image

Whether the grad needs some wardrobe basics, some time with a “branding” expert or a professional photo for LinkedIn, you can give a gift designed to give grads a boost into reaching their professional goals.

6. An Online Brokerage Account

“Start your college grad off with a few stocks that he or she can manage at eTrade, Sharebuilder or one of the many other online brokerages,” suggests Woroch, adding that coupon codes online can reduce the cost of setting up a new account. You or the new grad can also go online to find discounts on trades and find free online courses  on how to manage those accounts.

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This article originally appeared on Credit.com.

This article by Gerri Detweiler was distributed by the Personal Finance Syndication Network.

How Important Is Your Down Payment on a Home?

When buying a home, most people take on a mortgage. There are many things to consider when taking on a mortgage loan, including interest rate, closing costs and the down payment. Once you calculate how much house you can realistically afford, you can start looking at properties and considering how you will afford the house.

There are several ways to fund what will likely be the biggest purchase of your life. Before you start signing with lenders and sellers, it’s a good idea to consider how much down payment you should be making and how that will affect you both immediately and in the long run.

The Basics

In case you are really new to this, a down payment is the chunk of cash you pay upfront when buying a home. This money shows the lender that you are capable of saving and are so serious about this investment that you are willing to put that savings toward making the home yours.

The Magic Number

You may hear that the typical down payment amount is around 20% of the total property value. While some people (like veterans) can qualify for homebuying assistance, most people will have to put 20% down to secure their mortgage without paying private mortgage insurance or taking out a second loan. When you are thinking about what type of house you want and what exactly you can afford, it’s important to keep in mind you will likely want to have 20% of the property’s value in savings dedicated for just this purpose before purchasing a home.

Paying More

If you have more than 20% of the home price socked away in savings, there are some reasons for using it as a down payment. The more you put down, the better position you are in for negotiating a lower interest rate with your lender. You will also have to borrow less if you put more down, meaning you will pay less in interest payments over the life of your mortgage.

Before you jump into this option though, it’s a good idea to be sure you can comfortably afford this house without putting your regular costs at risk, consider what other debts you may have and whether you think the savings could do more for you if used elsewhere. For example, it’s important to maintain an emergency fund so that you have cash set aside if (and when) the unexpected happens.

Paying Less

While the financial crisis left many homeowners defaulting on their little-to-no-money-down mortgages, the tide has turned again, and now the minimum amount needed for a mortgage is only 3.5% (there are some zero-down mortgage programs, but certain restrictions apply). In order to pay less than the normal 20%, you have several options.

You can secure a second loan to make up the difference between what you can afford and the 20% mark. You can also take out private mortgage insurance (PMI) to give your lender peace of mind. In case you get into trouble making payments down the line, this policy would pay the lender. You can check if you qualify for a loan backed by the Federal Housing Administration (FHA). You can also look for state and region-specific down payment assistant opportunities through your local government. If you are buying a house with less than the typical down payment needed, it’s important to know that you are taking on more risk.

Before you apply for a home loan, it’s important to know where your credit score stands. The difference of just a few credit score points can mean better interest rates and a major savings over the life of your loan. You can get two of your credit scores for free on Credit.com, updated every month.

Your down payment amount makes a big difference both now and down the road, but it’s a good idea to leave yourself enough money to afford your next few monthly payments as well as closing costs and other immediate expenses the house may incur. Remember, this is just the beginning.

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This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.

Using Coupons at CVS

I have noticed many people are under the impression that to coupon with substantial savings has to be difficult and takes hours of work. I admit when I started couponing, I was overwhelmed with the available information. Much of it seemed to be as helpful to me as NASA rocket launch instructions. I decided to take it down a notch and focus on one store at a time. CVS seems to be a place many people see as over-priced being that it’s considered a drug store. I have found CVS to be easy to coupon at and save loads of money. Unlike places like Walmart or my local grocery store, I seem to never have an end to the deals I can find. Many of my friends have wondered how I do it and have thought I was one of those crazy coupon ladies. Well, if I am, that is fine with me!

CVS, unlike many other stores, offers money back on many of your purchases to spend in store with CVS Bucks. They also accept manufacturer coupons, many of which can easily be found at places like Coupons.com. Normally you can print two of the same coupon per computer. If you have a household with multiple computers, this will benefit you. I also found that CVS offers many in-store coupons that are available via email or the in-store kiosk.

What you need to start saving:

  • CVS loyalty card
  • a coupon source (i.e. Coupons.com or your Sunday paper)

Here’s how:

  • Check your email! (Be sure to download the CVS app or go to CVS.com to create a user and link your card to the account to receive emailed offers.)
  • ALWAYS scan your card at the kiosk to print any in-store coupons you might have waiting for you. (I rarely see people do this, and it will often cost you at checkout.)
  • Check sites like IHeartCVS.com. These sites will match coupons to the current sales flyer for you. They will even tell you where to find the coupons needed.
  • Use manufacturer coupons with your in-store coupons and CVS Bucks!

Here’s an example of my last savings at CVS. CVS had a sale on Huggies® Pull-Ups®. At my location, they are normally $13.48 each, but they were on sale for $8.99 a pack with the bonus of receiving $5 in CVS Bucks if I purchased at least $20 of qualifying baby items. So I stacked my coupons!

  • 3 packs of Huggies® Pull-Ups® at $8.99 each = $26.97
  • 3 manufacturer coupons (from Coupons.com) all for $2 off 1 pack of Huggies® Pull-Ups® = $6
  • An in-store coupon for $3 off a purchase of baby items $20 or more
  • $5 CVS Bucks I had from a previous purchase

My total before tax came to $12.97! Plus, I got back an additional $5 CVS Bucks to spend later. It was as if I was spending $7.97 for three packs of Pull-Ups®. Without the combination, my purchase would have been over $40. All three packs cost me less than the cost of one at regular price. Remember to check your match ups online to have them do the work for you! Start saving and quit misplacing your money. Put it to better use and quit over-paying!

Visit TheDollarStretcher.com for 3 ways to guarantee a smart buy and additional coupon strategies that work.

This article by Dawn Summerson first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.

Financial Planning for Seniors

You’re officially a senior. Many of life’s challenges like raising a family and earning a living are in the past. Yet, that doesn’t mean that you can put your finances on autopilot. There’s still a need for financial planning as a senior.

To help us explore the subject we contacted Kenneth D. Barringer. He’s the author of Making Healthy Choices for Senior Living, a book that provides readers guidance for creating a long and fulfilling retirement.

Q: Aren’t senior through building up their retirement fund? Why would they need financial planning services?

Mr. Barringer: Why should seniors need financial planners? They need skilled counseling about important financial decisions: savings, investment planning, spending habits, and estate planning. These issues can enhance your retirement if handled well, or devastate your financial stability if you plan poorly.

Q: It’s generally assumed that outliving your money is the biggest financial risk seniors face. Is there a way to eliminate or minimize that risk?

Mr. Barringer: We need to avoid outliving our financial resources by: (1) Keeping better financial records; (2) Maintaining control of spending; (3) Developing an investment program that causes our income and financial resources to grow, not diminish; and (4) Keeping good policies about income tax obligations and about other financial commitments we need to meet.

Q: Is it important for seniors to have some growth in their investments?

Mr. Barringer: Seniors need a plan, and professional help, to keep their investment growing over the years.

Q: Keeping track of records can be more challenging for seniors. Is there any way to make the job easier?

Mr. Barringer: There are good record keeping tools for financial investments that are obtainable through bookkeeping companies, tax consultants, investment firms, and office supply stores. Check them out to find the one form that fits your personal needs the best and start using it.

Q: Is there a way for seniors to know that it’s time to have a younger family member help them with their finances?

Mr. Barringer: There may be a time when seniors need financial help by a younger family member when you cannot manage your funds well and feel a fear of bankruptcy. It is important, however, to feel close to that younger family member and to trust his or her capability. Discuss some kind of formal agreement you put in print, as well, and do not leave the provisions to memory.

If you’re a senior don’t assume that you can ignore your finances. Your need to plan for your financial future is just as important now as it was when you were in your twenties!

Kenneth D. Barringer holds four college degrees. He has a diverse work history with a successful record working with a livestock, farm management business, as well as being a clergyman, college professor, and a practicing clinical psychologist. He has also worked as a volunteer leader for a respected mental health coalition.

Gary Foreman is a former financial planner and purchasing manager who founded TheDollarStretcher.com website and newsletters in 1996. Visit TheDollarStretcher.com today for more on changing financial behaviors in retirement and what you should know about using credit cards in retirement.

This article by Gary Foreman first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.

How MLB is Ripping Off Dads on Father’s Day

Screen shot 2015-05-14 at 9.16.18 AMMajor League Baseball likes to play up the father-son storyline on Father’s Day, telling warm, fuzzy stories of how MLB players learned the game from their dads, and how they want to pass it on to their sons.

At MLB games on Father’s Day, the league promotes awareness of prostate cancer, and teams try to make dads and their children feel more welcome with events such as allowing kids to run around the bases or play catch on the field after the game. I’m happy that A’s closer Sean Doolittle fondly remembers going to A’s games with his dad.

But MLB is ripping dads off on Father’s Day, charging them $50 to play catch with their child. For 15 minutes. That works out to $200 an hour, or what plumbers and prostitutes make (I assume).

Yes, you read that right. MLB is offering dads a chance to play catch with their child on a baseball field for $50. Plus, you have to pay to get into the game. Click on the video below to see how much MLB promotes Father’s Day:

While the bond between father and child is played up pretty well on MLB’s website, it’s more of a scam in Oakland, home of the A’s baseball team.

In a promotion called “A’s Father’s Day Catch” on June 21, 2015, the team offers fans “the opportunity to play catch on the outfield grass” after the afternoon game against the Angels  for 15 minutes. (Emphasis is mine.)

Game tickets are sold separately from the Father’s Day Catch on the Field tickets. A minimum of two Father’s Day Catch tickets must be bought if you want to play catch with your child on the field, and anyone participating must have a ticket, regardless of age. Check out the A’s photo gallery to see how fun it was last year.

If the rest of your family wants to watch you play catch, but doesn’t want to buy catch session tickets, they get to wait in one area of the stands near the field.

The costs

As with any online purchase through MLB, there are fees attached. Two Father’s Day Catch tickets add up to $58.25. That includes a $2 per ticket convenience fee and a $4.25 handling fee.

Then you have to buy tickets. The A’s have dynamic ticket prices, meaning prices change as market conditions change. If rain is forecast, for example, the price will drop, and you’ll likely find a lower cost if you buy tickets earlier in the season.

The cheapest ticket the A’s offer for the June 21 Father’s Day game is $18. You and your son or daughter will need to bring binoculars, because for that price you’ll either be sitting above the outfield bleachers or in the third deck behind home plate.

A second-deck ticket ranges from $22 to $40, a first-deck ticket ranges from $40 to $66, and if you’re a real big spender, you can go with $110 or $250 seats at field level.

For sake of argument, let’s say you’re frugal and willing to pay $18 for the cheapest ticket. The $36 you’d expect to pay for two tickets quickly rises to $47.75 when a $7.50 convenience fee and $4.25 handling fee is added.

Add $47.75 for two seats and $58.25 for both of you to play catch on the field after the game, and it adds up to $106.

In an irony on top of another irony, it costs more to play catch for 15 minutes than it does to watch the game.

$200 per hour on Father’s Day

For 15 minutes on the field, the $50 Father’s Day Catch tickets equate to $200 an hour.

That’s about double what anesthesiologists, data architects, auto mechanics and successful entrepreneurs earn.

It’s not worth discussing what MLB players earn, though I’m sure they could afford $106 to take their kid to a game and play catch with them on the field.

And the costs of food, drink, souvenirs, parking and anything else you want at the game? Probably a lot more.

No thanks, MLB. My daughter and I won’t be playing catch on the A’s field after the Father’s Day game. Not for an extra $58.

Creating fans is important to MLB, but this isn’t the way to do it.

This article by Aaron Crowe first appeared on CashSmarter.com and was distributed by the Personal Finance Syndication Network.

FTC Launches New Resource for Identity Theft Victims

IdentityTheft.gov Helps People Report and Recover from Identity Theft

The Federal Trade Commission has launched IdentityTheft.gov, a new resource that makes it easier for identity theft victims to report and recover from identity theft. A Spanish version of the site is also available at RobodeIdentidad.gov.

The new website provides an interactive checklist that walks people through the recovery process and helps them understand which recovery steps should be taken upon learning their identity has been stolen. It also provides sample letters and other helpful resources.

In addition, the site offers specialized tips for specific forms of identity theft, including tax-related and medical identity theft. The site also has advice for people who have been notified that their personal information was exposed in a data breach.

Identity theft has been the top consumer complaint reported to the FTC for the past 15 years, and in 2014, the Commission received more than 330,000 complaints from consumers who were victims of identity theft.        

This article by the Federal Trade Commission was distributed by the Personal Finance Syndication Network.

Will Student Loan Forgiveness Hurt My Credit?

Last month, we heard from a reader who has been approved for student loan forgiveness but fears accepting it would damage the good credit he has worked hard to attain. He had tried to get answers but felt frustrated that he couldn’t seem to find out exactly how student loan forgiveness would be reported to the credit bureaus.

Here’s what he said:

I have just received my letter saying I am authorized for a Total & Permanently Disabled student loan discharge. I have 60 days to return the letter to decide. I spent time researching after I first sent the request and it seems many people with excellent credit scores are feeling a huge hit by getting their student loan forgiven. Is this true? Apparently there’s going to be left a lot of derogatory remarks on your loans and how they were paid off. I’m not sure what the exact remarks or “status” of the loans become once handed off to the discharge people, but it’s been enough to hurt a few people I’ve been in contact with.

Because Nelnet is now handling the accounts, I wanted to check with you to see exactly what would be reported to the credit bureaus. Can you help?

Once we began researching the question, we discovered that student loan forgiveness can be reported differently on consumers’ credit reports.

First, we hard from Rod Griffin, director of public relations for Experian. He told us by email:

The final reporting really depends on the status of the account when the consumer applies for Total and Permanent Disability. The account will be updated to show as paid in full by the data furnisher and the final status will show paid —and whatever payment history was reported up to that point. For example, if the loan was current — no missed or delinquent payments — then they would report the loan as paid in full as agreed. If the loan was in default and reported as a collection account, then once the TPD is approved, the furnisher would report this as a paid in full collection account.

Griffin said this is standard reporting procedure, not just Experian’s policy.

The Consumer Data Industry Association, which developed the Metro 2 guidelines that creditors use when reporting information to credit reporting agencies, said it may depend on how the lender reports the forgiveness. Norm Magnuson, vice president of public affairs, said in an email that “some lenders report the data in such a way that it results in an adverse entry. Others report it so that it doesn’t.” He added that guidelines were being updated and would be available soon.

And so we went to Matt’s student loan servicer Nelnet. Following is Nelnet’s response:

Every creditor is bound by the Fair Credit Reporting Act (FCRA) to report accurate and fair information. That information is then used by the credit reporting agencies to determine an individual’s credit score. Information in conjunction with a Total and Permanent Disability (TPD) discharge process is no different.

Here’s how Nelnet reports when servicing a TPD loan account. Both student loan lenders and servicers must record every loan on an individual’s credit bureau report. When a borrower accepts a TPD discharge, the lender or servicer will update the individual loan on that report based on the loan’s standing at the time the discharge is accepted. This update is made using one of two codes: one indicates that the loan was in default, and the other indicates that the loan was in good standing. Although we cannot speak as to how each creditor interprets and applies these codes, it is safe to say that having a loan in good standing is better than having a loan in default. Typically, loan forgiveness in itself isn’t something that would have a negative impact on a person’s credit score.

Based on the key players’ responses, student loan forgiveness can impact your credit differently, depending on the servicer and the status of your loans before you enter into a forgiveness program. If you want to see how your student loans are impacting your credit score, you can check your free credit report summary on Credit.com.

One more thing consumers who are considering applying for student loan forgiveness should note: The loan forgiveness comes with a tax bill for the amount forgiven. Matt said he is more than happy to pay that in exchange for the loan forgiveness.

While we wish there were a one-size-fits-all answer; there isn’t. There are several companies that service student loans and how student loan forgiveness after a disability discharge will be reported for all of them isn’t crystal clear. But Matt was wise to look at possible consequences that come with the debt relief. As of this writing, he is still unsure about moving forward and risking possible credit damage.

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This article originally appeared on Credit.com.

This article by Gerri Detweiler was distributed by the Personal Finance Syndication Network.

5 Ways to Get a Higher Credit Card Limit

Do you need more spending power from your credit cards? For some credit card users, a larger line of credit can be necessary to finance their purchases. And even if you avoid interest by paying off your entire statement balance, your credit limit may be insufficient for your monthly spending needs.

Here are five of the best ways to get the credit limit that you need.

1. Lower Your Balances

As the old adage goes, banks only like to lend money to those who don’t need it. While this isn’t technically true, having a low level of debt will help you to qualify for a credit line increase. From the bank’s perspective, it can be too risky to offer additional credit to someone who has already used up most of their credit line.

In addition, having high levels of debt will negatively impact your credit score, further reducing your chances of a credit line increase. (You can see how your debt levels are affecting your credit scores for free on Credit.com.) So, if possible, you should pay off as much of your outstanding balance as you can, even if it means making a payment early, or fully paying off purchases made since your statement was issued. And if you have outstanding balances with other banks, try pay them off as well, and then wait for your statement to close so that the lower balances are updated on your credit reports. Once you have as few outstanding balances as possible, you will have the best chance of receiving the maximum credit line increase.

2. Ask

Once you have reduced or eliminated as many credit card balances as possible, your next step will be to contact your card issuer and request a credit line increase. While some issuers will allow these requests to be made online, you always have the option of calling and speaking with a representative. At that time, you can let the card issuer know if your household income has risen, or your monthly housing expenses have decreased, which will both be factors in your favor. And remember, the Consumer Financial Protection Bureau amended the Credit CARD Act to allow banks to consider any household income you have access to, which is an important consideration for at-home spouses.

Keep in mind that requesting a credit line increase could create a hard inquiry on your credit report. A hard inquiry can leave a small and temporary ding on your credit score, and not all creditors will make a hard inquiry when you request a limit increase, so it’s important to ask your issuer if it will impact your credit.

3. Transfer

Some card issuers allow you to transfer your line of credit from one card to another, increasing your spending power on the product you prefer to use. While this step, by itself, will not increase your total credit limit, it can be helpful if you have a particularly good rewards credit card that you favor (here are some of the best rewards credit cards in America) over another that you are unable to fully utilize due to a low credit limit. For example, those who travel for business may want to have the ability to make all their travel purchases from their favorite airline credit card, to earn the most miles and to utilize all of its travel benefits.

4. Apply for New Cards

If your current credit card issuers are unwilling to increase the credit limit on your cards, then you might try opening an account with a different card issuer. The new account will offer an additional line of credit, and you may also receive a valuable sign-up bonus, promotional financing offer or both. But just like those who ask for an increased line of credit on their existing accounts, you will want to pay down as many outstanding balances as possible, and wait for each statement cycle to close, before making an application for new credit.

5. Consider a Charge Card

Unlike credit cards, charge cards do not have a preset spending limit. So as long as your creditworthiness remains high, you can be granted increasing lines of credit as necessary, without having to request an increase each time. But unlike credit cards, you will have to pay each month’s statement balance in full.

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This article originally appeared on Credit.com.

This article by Jason Steele was distributed by the Personal Finance Syndication Network.