Through the years, ABLE Tech has worked with many people in acquiring assistive devices and, sometimes, it is very expensive AT. We've gathered 7 tips that help people manage and improve their financial situation.
Tip #7: Dealing with collections from a credit building perspective
Paying off debt and collections, while often necessary and important, is not a credit building strategy in and of itself. In fact, paying off collections can sometimes cause a score to drop as it can refresh the last payment date on a negative account. However, paying collections can be essential to financial stability and peace of mind. Here are a few tips on negotiating collections without derailing credit building goals:
- Prioritize collections based how much is owed, the interest amount, the age of the debt and how likely they may be to turn into a judgement.
- Get all agreements and receipts of payment in writing. Check your credit report in 30-60 days to make sure that the accounts that have been paid are being reported correctly. (Even when paid in full, negative collection accounts will continue to stay on your credit report for seven years from the date of original delinquency. Fortunately, however, the damage to your credit score will lessen over time).
Want to learn more on this topic? Visit www.creditbuildersalliance.org
Tip #6: 3 tips to help you make the most of your tax refund
If you’re having a hard time saving money, you’re not alone. About 34 percent of adults in the US—that’s about 72 million people—report having no emergency savings. Meanwhile, 47 percent of American adults say they wouldn’t have enough savings to last three months if they lost their source of income. Even if you find saving money is hard, an emergency fund can help cushion financial difficulties. Households facing an emergency without a savings cushion are more prone to long-term setbacks, such as food and housing insecurity.
For many people, making ends meet throughout the year is tough, and saving regularly may seem unrealistic. So if you’re getting a tax refund, why not consider saving some of it? You can use it to build an emergency fund or start a nest egg. Whatever your savings goal, now is a great time to start!
Tax season is short, so you should start thinking now about how you’ll prepare your taxes. Here are some tips to help you navigate the filing process and make the most of your refund.
- Direct deposit can help you save
Did you know that receiving your refund through direct deposit puts you in a better position to save? By setting up direct deposit when you file your return, the IRS will automatically send your refund to up to three separate accounts without you having to touch it. You can put some money in checking to take care of your immediate expenses and put the rest in savings. Check with the IRS for more information on direct deposit and splitting your refund.
- You can file your taxes for free
If your income is $54,000 or less, if you are 60 years old or older, or if you have a disability or speak limited English, you can generally get free tax preparation assistance at a Volunteer Income Tax Assistance (VITA) location near you. This IRS checklist can help you gather your information for tax year 2015.
If you decide to do it yourself:
- If your income is $62,000 or less, you can use any one of several major tax preparation software products, offered through the IRS Free File Alliance, to prepare and file your return for free. If your income is more than $62,000, you can still download free tax filing forms through the IRS.
- There are many easy-to-use tax preparation software products on the market that will help you walk through the tax filing process step-by-step. These are not free but they may be less expensive than paying someone to file your return for you.
Tip: Depending on your age, income, and filing status, you might not technically be required to file a return – but it might still be a good idea. You might receive a tax refund, or you might be eligible for tax credits.
- Be aware of potential tax fraud
Tax fraud is becoming more and more common. From 2011 through 2013, the IRS stopped 14.6 million suspicious returns. But, there are several steps you can take to protect yourself from fraud.
- Stay alert for scam phone calls. The IRS will not:
- Call or email you to ask for personal information.
- Demand immediate payment without first sending you a bill in the mail and giving you an opportunity to question or appeal the amount they say you owe.
- Require you use a specific payment method for taxes, like a prepaid debit card.
- Ask for credit card information over the phone.
- Threaten to have you arrested for not paying.
If any of these things happen to you, report it to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at treasury.gov/tigta.
- File electronically and request that your refund be deposited directly into your account.
- Use ID theft prevention measures. Don’t carry your social security card with you and don’t give it out just because a business or professional asks for it. Also, don’t carry your Medicare card unless you’re going to a doctor for the first time.
- Check your credit report. You can review your credit report for free every 12 months at AnnualCreditReport.com, or by calling 877-322-8228.
- If you suspect you’ve been a victim of identity theft and it involves your income tax return, the IRS has more information and help on suspected fraud.
Have questions about saving or other consumer financial products and services? Search for answers or ask your own question at http://www.consumerfinance.gov/askcfpb/.
Tip #5: What is calculated into the debt to income ratio?
A debt-to-income ratio is the percentage of a consumer’s monthly gross income that goes toward paying obligated debt. What does this obligated debt include? Mortgage (or rent), credit cards, car loan payments, student loan payments, child support payments, legal judgments, consumer loans, etc. On average, most banks require a debt-to-income ratio be no more than 28-36%.
|Obligated debt on a monthly basis:|
|Credit card payment||$100|
|Monthly gross income||$3750|
Monthly debt ÷ monthly income = debt-to-income ratio
$1200 ÷ $3750 = 32%
For assistive technology loans, ABLE Tech works in partnership with BancFirst of Stillwater and Oklahoma Assistive Technology Foundation (OkAT) and has special qualifying factors for individuals with a disability to allow consideration of a debt-to-income ratio for as much as 50%. A number of factors are determined in qualifying for a financial loan, but the debt-to-income ratio is particularly important to look at to determine if an individual can afford the monthly loan payment.
Tip #4: What does your debt look like?
This is especially important if you are a person with a disability, or caring for a person with a disability. It is important to not be caught off guard if you need to make a necessary purchase related to assistive technology, such as a new hearing aid, speech communication device, new modified vehicle, or even a copay on a piece of durable medical equipment. With limited income, and sometimes greater regular expenses, it’s easy to be at risk financially. Here is an easy way to look at monthly debt percentage: Divide the total monthly debt by the total monthly income. This score provides a percentage of one’s debt, referred to as Debt-to-Income Ratio.
|What does that percentage mean?|
|15% or less||equals a GREAT income to debt ratio score|
|16% - 23%||Good|
|51% or more||Dangerous|
Most financial institutions will not loan money to someone who is in the high or dangerous category. The ABLE Tech financial loan for AT has systems in place to help individuals get the financial resources needed to make appropriate assistive technology and work-related equipment purchases.
Tip #3: What is a good credit score?
A good credit score is crucial for financial success. A credit score is a three digit number calculated from an individual’s data-rich credit report and is one factor used by lenders to determine creditworthiness for a mortgage, loan or credit card. This score can affect whether or not an individual is approved as well as what interest rate is charged. A good credit score is generally considered to be 720 or higher. Lenders, however, can each have different standards for what they consider to be a good credit score, so it‘s important to keep building a credit score to receive the most favorable interest rates and highest rates of credit approval.
Poor Credit: 501-600
Fair Credit: 604-660
Good Credit: 661-780
Excellent Credit: 784-850
Tip #2: How your credit score affects you and how you affect your credit
According to Credit Builders Alliance, it is important to know what that credit report and credit score show prior to making a loan. Experts recommend pulling reports and scores at least 6 months before seeking to achieve a personal financial goal – this allows time to build credit and correct and update information. Lenders use different scores designed to measure risk for different types of lending – including mortgage, auto, and personal finance loans. Non-lenders may also use credit scores calculated for other purposes, too. For example:
- Insurance companies may use credit scores not only to predict the likelihood of payment, but also to assess a consumer’s risk of being in an accident or filing a complaint;
- A hospital may use scores to assess capacity to pay medical expenses and debt;
- Phone companies may review scores to determine whether or not to require a consumer to make a down payment;
- Landlords may use scores to determine whether or not a consumer qualifies for rental housing.
The best way to impact your credit score? Make sure all bills are paid on time. Timely payment history is the most influential piece to a credit score.
Recent important changes to Fair, Isaac and Company (FICO) credit scoring may be helpful to individuals with disabilities. Beginning in late 2014, FICO 9 will no longer weigh unpaid medical debts as heavily, and it will exclude paid collections. What does this mean to the consumer? Some consumers can expect to see credit scores rise as much as 25 points! Consumers who experience a score increase may qualify for better interest rates when applying for credit.
Tip #1: Knowing your credit score
There is no question about it: Living with a disability is expensive. Federal and state budget cuts, changes in insurance coverage, continued difficulties in finding quality jobs, and rising costs of living have contributed to making people with disabilities some of the poorest in the United States. That is why learning the financial skills that can empower you to make smart money decisions is one of the best investments you can make in yourself. Learning how to manage your money, rather than letting your money manage you, will help you now and for the rest of your life. You’ll be better able to access the assistive technologies and services you need to live independently, and you’ll help ensure a financially secure future.*
Oklahoma ABLE Tech is continuously assisting individuals applying for the low interest financial loan for assistive technology. One of the most common challenges seen with applicants is not being aware of what is on their credit report. Many times, agencies will send an unpaid balance to collections without you knowing it. Or, there may be incorrect items on your credit report all together. There are three credit reporting agencies: Experian, Trans Union, and Equifax, and it is recommended to check all three credit reports annually. You can check all three by clicking here, or call 877-322-8228.