Welcome to Bankd

This financial literacy site is for Generation X, Millennials, Gen Z aka Centennials and following generations yet to come. Many of us don't pay too much attention when it comes to understanding the basics of personal finance. Every year millions of high school and college students go through every day lives without knowing how checking account, credit card or FICO aka personal credit score works. Trust me this stuff is important when you rent apartment, buy car or look for insurance. There are many myths, assumptions and misconceptions. The cost of not knowing the fundamentals of personal finance amounts to billions of lost dollars every year.

I know all this because like many of you I had no idea about banking, finances, credit or 401-K when I was starting my "grown up" life. While in college I delivered pizzas and all I cared was PS2 (Play Station 2), how to get new Motorola Razr cell phone (antique phone before iPhone was invented) and buying a better used car. Then I graduated with business degree and without much thinking got into banking. I had to learn personal finance, investments, lending so I can share my expertise and knowledge with my clients. It's been over 15 years and I am still in banking giving my expert's advise to bank's customers. With this site I can reach millions of people and help them at no cost by teaching simple financial literacy.

Site's mission is:

■ Most importantly to have fun while trying to convey this boring stuff to you

■ Teach basic financial literacy

■ Share experts' opinions on various topics

■ Provide you with advice that can help you build wealth

Five ways to start building credit history: #1 Don't buy Yeezes

When you have no credit history starting to build your personal credit can be a very difficult task. When I was still in college and had my part time pizza delivery job I was perplexed when banks and other lenders would tell me: “We can’t extend credit to you because you don’t have any credit history”. This was mindboggling and canned industry answer to anybody without any credit history. In return I would ask: “So how would I build my credit when nobody is giving me credit for the reason stated above?”. It appeared like vicious circle with no way out. So how one gets started? Well, here are five ways you can start building your personal credit: <p>&#9632 You can do it the way I did. First and most important you have to have a job and income so you can show your creditors that you have monthly cash flow coming in therefore you have the ability to repay your debts. I had my part time pizza delivery job with probably $2,000 in monthly income. In addition you have to make sure you have nothing negative on your credit. Even if you have no credit you may still have negative record. I learnt that I had $87.56 unpaid electrical bill from my previous apartment which technically was the money owed to me by my ex-roommate. Since I was the one who signed up for utility it was my responsibility to clear this unpaid debt which I did. Then four or six months later I applied for Capital One $300 unsecured credit card. I happened to hear from somebody that Capital one was approving people with no credit history! When they approved me I felt like winning the lottery! Not many other banks in early 2000’s would take this bet on giving a whopping $300 credit limit to MBA student with part time pizza delivery job. To this day I am thankful to Capital One for my first card which I still have at that whopping $300 limit! These days I believe Capital One and quite few other banks would approve anyone whose situation is similar to mine. I recently saw Bank Of America approve my friend $500 unsecured credit card. He’s in early twenties, with no credit history but got a starting job with decent income and BofA approved him. Plus he had his checking account there which probably also helped. <p>&#9632 Apply for secured credit card. Most banks will give you first credit card if it’s cash secured. If you put up $300 as collateral bank will give you $300 credit card limit. If you fail to pay back bank will grab your $300. Keep in mind that under this scenario as in all others you have to have stable job (at least part time) and income. <p>&#9632 Another easier option is to have one of your parents (hopefully they have good credit) ask to be co-applicant on your first credit card. The only downside of this option is that your parents may be afraid that you will fail to pay therefore it will ruin your and their credit. I’ve know some parents who refuse to co-sign because they want to teach kids a valuable lesson. Personally I think those parents are mean. <p>&#9632 Again, presuming you have parents with good (above 700 score) credit score you can ask one of them to be co-applicant on your first car loan. Downside mentioned above applies to this option as well. <p>&#9632 Lastly lots of retailers these days will allow you to buy computers or furniture in credit. If find one that’s willing to do that for you should go for it even if it’s 24 month loan. This loan will help you to start building your credit. In summary it’s a process and it can be done as long as you are smart about this. And always remember when you get this first credit card don’t go crazy buying Yeezes* *I had no clue what Yeezy is until my 12 year old explained to me that it’s fantastic design $850 athletic shoe made by 2020 future presidential nominee Kanye West.

How to make your credit score great again

Good credit score is one of the foundation stones when it comes to building your financial wellness. It doesn’t matter if you end up working for a corporation or running your own business you will need to have good credit in order to grow and advance in life. These days many employers will pull your credit and it’s one of the determining factors when making hiring decision. Or if you start your own small business your personal credit score will determine your business credit worthiness in the initial years. Lots of unforeseen things can make your credit go sideways – huge medical bills that go into collections or job loss can leave blemishes on your credit report. Is there a fix for that? Can it be done quickly? Let me walk you through several basic steps on how to fix your credit. One thing to emphasize is that credit rebuilding process is not fast. It takes time, commitment and discipline: <p>&#9632 Never hire one of those “Credit Repair” companies. They will take your money, lots of it and eventually won’t do anything different than you could have done it yourself. It’s your personal credit and there is really no quick, third party fix available in the market. <p>&#9632 First of all you have to have a job or other income source because this is the very basis of repaying any debts. Without income or cash flow you won’t have the ability to repay those debts therefore your credit will suffer or best case scenario you won’t have any credit. In our next post I will cover tricks and tips on how to prepare yourself for an interview which ultimately will lead you to a job. <p>&#9632 Once you have cash flow coming in on a monthly basis you need to clean up whatever negative stuff you have on your credit report. If it’s bankruptcy, repossession or foreclosure it will take 5 to 7 years for it to drop off your credit report. In those three cases only time will fix your credit. If it’s unpaid medical, alimony, child support, utility bills, unpaid taxes, charge offs, other bad debts or judgments you need to pay those. Based on the amount you can negotiate repayment plan with each creditor a payment plan and then you need to stick to it. <p>&#9632 When you took care of that negative stuff on your report now you need to continue to pay all bills on time. Of course you need to maintain your job or keep your business afloat so you have that cash flow coming in because cash flow is the king. <p>&#9632 Keep your oldest credit cards open even if you don't use them. It helps to maintain established length of you credit history. <p>&#9632 If you are shopping for new credit car, car loan or mortgage don't submit 10 + applications since it will have negative affect on your credit score. Submit two or three applications. <p>&#9632 If there are errors and wrong reporting in your credit report you have a right to dispute those. You will have to do that by contacting each one of three main credit bureaus - Equifax, Experian and TransUnion. It's very important to keep and eye on your credit score and check it at least ones a year and not when you are about to borrow money. You can always request one free annual credit report from each credit bureau by visiting https://www.annualcreditreport.com <p>&#9632 Lastly never overextend yourself or push yourself to maximum borrowing limits. Either it’s personal loan, car loan or a mortgage try to stay within normal lending guidelines. For example FHA has set up mortgage lending limits at 31% debt to income on mortgage alone and 43% for total obligations to income. Some lenders will allow you to go above those limits. In real world try to stay below those limits even that new fancy BMW or nice hose on the lake look so appealing. Always remember one thing if your job or business goes through recession or some other hiccup and your cash flow has negative impact a lender won’t care about that. Bank will only care about that timely monthly payment on the loan which in return will keep you credit score positive.

7 things to know about credit score aka FICO

According to Wikipedia a credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of the person. Well one can read this and say: "What the heck does this mean?". Allow me to explain how personal credit score works and why it's important. <p>&#9632 Credit score can range from 300 to 850. Ideally you want to have your score at least above 700. Over 800 is excellent and below 650 pretty much means you will get 23% interest rate car loan. On $15K five year car loan you will pay $10,371.42 in interest alone vs $1,574.87 if you had let's say 750 score and received 4% rate.</p> <p>&#9632 There are three main credit bureaus in U.S. that can provide your score - Expedia, Experian and TransUnion. Each bureau can have slightly different score. Banks, landlords, insurance providers and employers usually get another different version of your credit score from one of those three credit bureaus. Fore example you may see on your end Experian reporting 720 score and bank will tell you that same Experian is reporting to them 705 or 735 score. The reason for it is slightly different score calculation formula. Why they use different one I have no idea.</p> <p>&#9632 Paying your rent, utility or cell phone bill doesn't build your score. Of course if you miss to pay one of those then your utility or cell phone company will report it to credit bureau and it will have negative effect on your score. You score only gets built when you repay any debt - car loan, computer loan, personal loan or home mortgage.</p> <p>&#9632 How to get your credit report? You can visit Experian, TransUnion or Equifax directly but you have to pay them to get the report. Once per year you can request your free credit report from Annual Credit Report at www.annualcreditreport.com . Also if you were declined a loan lender will send you a letter explaining how to obtain free credit report. In addition most of bigger banks or credit card providers these days offer credit reports and scores for small fee.</p> <p>&#9632 Yes, your credit score will go down if you fill out multiple applications within few weeks. If you are shopping for a credit card, car loan or mortgage try to keep it to two to three applications. If you submit dozens of applications then your credit score can be dinged 20, 40 or even up to 100 points.</p> <p>&#9632 Even if you have great credit score you still need to have income to qualify for any loan or credit card. In other words you have to be able demonstrate to the bank ability to repay the debt. 800 credit score alone with no job and no income wouldn't cut it.</p> <p>&#9632 If you have bad credit score and want to fix it don't hire anybody or pay for it. There are plenty of shady credit repair businesses that promise to fix your credit in 90 days. You don't need them, trust me. All you need to do just pay any debts, judgement or bills that show up on your credit and then make sure you don't miss your monthly payments for any outstanding obligations. The best advise I could give never get too excited about credit and borrowing. Buying house or car you most likely need a loan but to buy a computer or this nice new iPhone 7 you don't need to borrow $800 to pay for it. Save it and then buy it.</p>