- Financial literacy instruction was asked to identify the lessons that surprised them the most.
- Many individuals are surprised to learn that delayed college loans might help build credit.
- Before putting money into a 401(k) or IRA, understand what you’re getting into.
What individuals think and do about money varies tremendously based on their lives. To learn how to become financially secure, you may have just observed your parents. If you come from a low-income background, it’s more probable that your financial journey will be one of survival than one of building wealth for the future.
So we asked six financial literacy teachers what their pupils were most surprised to learn about money in light of this. This is exactly what they said.
Finding work might be challenging if you have a poor credit history
They found out that having a terrible credit history may prevent them from getting a job at one of the historically Black schools and institutions where Theodore R. Daniels taught financial literacy.
Many companies use your credit history to see whether you can manage large sums of money. The Differences Between options for bad credit is a red flag for specific organizations, but it does not influence the hiring process for others.
How Does Bankruptcy Affect My Credit Score?
If you declare bankruptcy the credit scores could be impacted negatively immediately. Some even think that bankruptcy is the one with the most detrimental effect on your credit scores when compared to foreclosure or other debt-collecting actions. However, no one is sure the extent of damage that certain actions such as the foreclosure process, bankruptcy short sale, or decree in lieu of foreclosure can affect your credit. This uncertainty is caused by various factors, including:
- The credit scoring systems evolve with time.
- Credit scoring agencies don’t release their formulas available so your score may depend on your past and future credit practices as well as those of those with whom you’re with.
- Creditors employ different criteria when the evaluation of consumers’ credit as well as these alter in time.
If you have generally good credit scores but file bankruptcy, then your score is likely to suffer the most. This is because the higher your scores prior to bankruptcy greater the decrease in your scores when you declare bankruptcy. However, in the event that you already have a poor credit score, bankruptcy shouldn’t harm your scores as much. According to FICO the person with a credit score of 680 prior bankruptcy will lose between 130 and 150 points when they go through a foreclosure. However, a person with a credit score that is 780 prior to filing a bankruptcy will lose 220 to 240 points. If you have low credit scores and are filing bankruptcy, it may possibly be simpler to boost your credit scores after bankruptcy.
How Filing for Bankruptcy Can Help Your Credit Scores
Even if you have good credit scores however, if you’re in a situation where you need to file bankruptcy it’s likely that your credit scores may not be so important as the motives for needing to declare bankruptcy. The need for a credit card or a new credit card isn’t as urgent as, for example, an upcoming wage garnishment or foreclosure on your mortgage. However, once you have an exemption from the bankruptcy process, you may realize that the bankruptcy may actually benefit your credit although the bankruptcy may be in the credit record for as long as 10 years.
If at all possible, avoid making purchases using a shop credit card
According to MoneyZen’s CFA and MBA Manisha Thakor, “10 percent off your purchase in the checkout line appears like a good financial move, but the devil is in the details.”
Late payment penalties are “extremely punitive,” and interest rates are substantially higher than traditional credit cards. If you don’t pay your bills on time, you’ll lose a lot of money in the long term.
There’s less danger involved in investing in the stock market than you may have thought
Many students are surprised to learn that the media overstates stock market volatility, says Blain Pearson, a professor of financial education and behavior at Kansas State University.
Pearson believes that “the market generally recovers no matter what happens.” If you’re investing for the long term or monitoring the returns on your retirement savings, don’t become too alarmed when the market goes up and down. According to Pearson, because prices will eventually level down, investing in the market does not have to be as stressful as it now is.
Deferred student loans may still be used to improve your credit score
Jimena Huaco is the InSight program for financial health director at Champlain College in Burlington, Vermont. Student loans may help you enhance your credit, which often surprises them when they find out.
According to Huaco, even if a student is in deferment and not making payments on their federal loans, their credit history is still being established. Making regular student loan payments might help you improve your credit score without taking on more debt. The average age of your credit may be improved even if you just have a single active credit account (the older, the better).
When it comes to your retirement savings and investments, you have more control
To assist Black women interested in the stock market in achieving financial independence, Tiffany James founded an organization called Modern Blk Girl.
According to James, her students are surprised to learn that they may get a second opinion from a financial adviser on how to maximize the return on their investment accounts best.
James has some advice for you. Let’s get rid of the notion that your managers know what’s best for your financial well-being. ” They’re not, in fact. Invest some time in learning about your 401(k) and other retirement savings choices.
In order to avoid wasting time and losing out on significant chances, conduct your own research before accepting anything that’s provided to you. Hundreds of thousands of dollars might be at risk.”
One of the most common reasons for filing for bankruptcy is the inability to cover one’s medical bills
The company’s vice president of customer service. Many of DirectPath’s clients are surprised by exactly how crushing medical debt can be when it comes to negotiating insurance benefits and repaying their debt.
Medical debt is the most common reason given for filing for bankruptcy.
According to recent research by DirectPath, more than half of Americans with employer-sponsored health insurance don’t understand what the phrases “copay,” “deductible,” and “in-network” mean. You may be compelled to make ill-informed judgments in the heat of battle because you don’t have enough time to acquire all the facts.
The sooner you start learning about your advantages, the better. In a medical emergency, enrolling in and using state healthcare services is the most excellent approach to prevent medical debt.