Category: Building Credit

The Worst Cities to Own a Car

by Phillip Warren

The Worst Cities to Own a Car

The number of Americans driving to work alone is on the rise, according to data from the U.S. Census Bureau. With the increase in drivers comes traffic, which means more time and money spent idling in cars. Some cities are better equipped to deal with the mass of drivers, managing to keep traffic delays and congestion to a minimum. Other cities are equipped with walkable streets and reliable mass transit options, making car ownership less necessary.

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We considered these and other factors to find the worst cities to own a car. Specifically, we looked at hours spent in traffic per year for the average driver, the annual cost of traffic for the average driver, the rate of motor vehicle theft, the number of repair shops and parking garages per driver, the commuter stress index and the non-driving options a resident has for getting around. To understand where we got our data and how we put it together to create our final ranking, see the data and methodology section below.

Key Findings
  • Cities on the coasts â€“ The entire top 10 is comprised of cities on or close to the coasts. This makes sense as many of the largest cities in the country are located on the coasts. Plus, on the East Coast in particular, these cities tend to be older which means they were not built to handle car traffic.
  • Grin and bear it – Traffic can get pretty bad. However, in some cities getting around by car is just about the only option you have if you want to leave your house. Thus some cities with really bad traffic like Los Angeles or Long Beach didn’t quite crack the top 10.

The Worst Cities to Own a Car

1. Newark, New Jersey

Brick City tops our ranking of the worst cities to own a car. What’s tough about being a car owner in Newark is the traffic. It’s part of the New York City metro area which has 19 million people, 5 million of whom drive to work. Newark is stuck right in the middle of this bumper-to-bumper traffic. Plus, if you’re a car owner in Newark, the risk of having your car stolen is much higher than it is in other cities. Newark ranks eighth in the country for motor vehicle thefts per 1,000 residents.

Related Article: The States With the Worst Drivers

2. San Francisco, California

The City in the Bay grabs the second spot for worst places to own a car. Being stuck in traffic costs the average commuter in San Francisco $1,600 per year. That cost includes both the value of the time spent in traffic and the cost of gas. SF is also one of the 10 worst cities for motor vehicle thefts per resident, another reason to forgo car ownership.

3. Washington, D.C.

The District and the surrounding metro area sees some of the worst traffic in the country. The average D.C. commuter spends 82 hours per year in traffic. Depending on how you slice it, that’s either two working weeks or almost three-and-a-half days of doing nothing but shaking your fist at your fellow drivers. That traffic is equal to an annual cost of $1,834 per commuter.

4. Oakland, California

One argument against car ownership in Oakland is the crime. There were almost 6,400 motor vehicle thefts in the city of Oakland or 15 auto thefts per 1,000 residents. That’s the highest rate in the country. The average Oakland driver can also expect to spend 78 hours per year in traffic. On the plus side, if something goes wrong with your wheels in Oakland, it shouldn’t be too difficult to get it fixed. There are more than six repair shops per 10,000 drivers in Oakland – the highest rate in the top 10.

5. Arlington, Virginia

As previously mentioned, the Washington, D.C. metro area has the worst traffic in the country. Unfortunately for the residents of Arlington, they are a part of that metro area. They face the same brutal 82 hours per year spent in traffic, on average. It costs Arlington residents $1,834 per year, on average, waiting in that traffic. For residents of Arlington, a car is more of a necessity than it is for people living in D.C., which is why it ranks lower in our study.

6. Portland, Oregon

Of all the cities in our top 10, Portland is the least onerous for the driving commuter. Commuters driving around the Portland metro area can be thankful that, on average, they spent only 52 hours per year in traffic. That traffic still costs each driver about $1,200. However, drivers in Portland looking for a parking garage may be out of luck. Portland has the second-lowest number of parking garages per driver in our study, and if you are looking to get your car fixed, Portland ranks in the bottom 13 for repair shops per capita.

7. Anaheim, California

Anaheim commuters are well-acquainted with traffic. Anaheim (and the rest of the Los Angeles metro area) ranks third in average hours per year spent in traffic, first for commuter stress index and fifth for annual cost of idling in traffic. Anaheim only ranks seventh because Walkability.com gives the city a 46 out of 100 for non-driving options. That’s the lowest score in our top 10 meaning, while owning a car here is a pain, not owning one makes getting around a true struggle.

8. New York, New York

New York is the rare American city where public transportation is usually your best bet for getting from point A to point B. All that accessibility makes car ownership unnecessary here. For New Yorkers who do drive, the traffic is not pleasant. New York drivers spend $1,700 per year, on average, waiting in traffic. That’s the third-highest cost in our study.

Not sure if you’re ready to buy in NYC? Check out our rent vs. buy calculator.

9. Seattle, Washington

Seattle has pretty bad traffic. Commuters here probably aren’t surprised to hear the average driver spends 63 hours per year in traffic. And coupled with the traffic is the high number of motor vehicle thefts. Seattle has the fourth-highest rate of motor vehicle thefts per 1,000 residents in the country.

10. Boston, Massachusetts

Boston ranked well in our study on the most livable cities in the U.S. partially based on how easy it is to get around without a car. After New York and San Francisco, Boston is the most walkable city in the country, making the cost of having a car one expense which Bostonians can possibly go without. Although occasionally maligned, the Massachusetts Bay Transit Authority is a great option for commuters who want to avoid the 64 hours per year Boston drivers spend in traffic.

The Worst Cities to Own a Car

Data and Methodology

In order to rank the worst cities to own a car, we looked at data on the 100 largest cities in the country. Specifically we looked at these seven factors:

  • Average total hours commuters spend in traffic per year. Data comes from the Texas A&M Transportation Institute 2014 Mobility Score Card.
  • Cost of time spent in traffic per person. This measures the value of extra travel time and the extra fuel consumed by vehicles in traffic. Travel time is calculated at a value of $17.67 per hour per person. Fuel cost per gallon is the average price for each state. Data comes from the Texas A&M Transportation Institute 2014 Mobility Score Card.
  • Commuter stress index. This metric is developed by the Texas A&M Transportation Institute 2014 Mobility Score Card. It measures the difference in travel time during peak congestion and during no congestion. A higher ratio equals a larger difference.
  • Non-driving options. This metric measures the necessity of owning a car in each city by considering the city’s walk score, bike score and transit score. We found the average of those three scores for each city. Higher scores mean residents are less reliant on cars. Data comes from Walkability.com.
  • Motor vehicle thefts per 1,000 residents. Data on population and motor vehicle thefts comes from the FBI’s 2015 Uniform Crime Reporting Program and from local police department and city websites. We used the most up to date data available for cities where 2015 data was not available.
  • Number of repair shops per 10,000 drivers. Data on drivers comes from Texas A&M Transportation Institute 2014 Mobility Score Card. Data on repair shops comes from the U.S. Census Bureau’s 2014 Business Patterns Survey.
  • Parking garages per 10,000 drivers. Data on drivers comes from Texas A&M Transportation Institute 2014 Mobility Score Card. Data on parking garages comes from the U.S. Census Bureau’s 2014 Business Patterns Survey.

We ranked each city across each factor, giving double weight to non-driving options and half weight to motor vehicle thefts per driver, repair shops per driver and parking garages per driver. All other factors received single weight. We then found the average ranking across each city. Finally we gave each city a score based on their average ranking. The city with the highest average received a score of 100 and the city with the lowest average received a score of 0.

Questions about our study? Contact us at press@smartasset.com.

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What’s the Fastest Way to Boost My Credit?

by Phillip Warren

boost-my-credit

Article originally published September 1st, 2016. Updated October 29th, 2018. 

It’s a common question around these parts: how do I fix my credit? And, while credit scores do have a lot of nuances, the answer is actually pretty straightforward: pay all your bills by their due dates, keep your debt levels low, add a mix of accounts as you can afford it and voila! — your credit score should rise steadily over time.

Still, for people plagued with bad credit or someone looking to get the absolute best rates on a new loan, waiting it out can seem like an unattractive option — and so the question gets a little more pointed: how do I fix my credit fast?

Truth be told, there are no guarantees when it comes to getting a quick credit boost. Exact point increases will vary depending on your full credit profile and, even if you’re teetering toward top-tier credit, your score’s beholden to a lender’s schedule when it comes to reporting new information to the major credit bureaus.

Most creditors provide updates to the big three bureaus every month — meaning, yes, you can boost your credit in 30 days, but any shorter timeframe is admittedly a long shot.

Still, there are few steps you can take to try to raise your credit score in the short-term. Here’s a breakdown of ten of your best options.

1. Pay Down Your Credit Card Balances

Credit utilization ratio— how much debt you’re carrying vs. your total available credit — is a huge part of credit scores, second only to payment history. But while you can’t just erase a missed payment from your credit file (most negative information takes seven years to age off of your credit reports), you can pretty readily boost your utilization rate by wiping out big credit card debts.

Experts generally recommend keeping the amount of debt you owe collectively and on individual cards below at least 30% and ideally 10% of your credit limit(s).

So, if you’re close to maxing out one card and/or you’re carrying big balances on all of them, paying those debts down can result in a fast boost. Just be sure to pay charges off by your statement’s billing date as opposed to their actual due date because that’s when most creditors will update account information with the credit bureaus.

And, of course, refrain from making any new purchases once the debt’s been eradicated.

2. Ask for a Credit Limit Increase

Essentially, a different solution to the same problem — you may be able to improve your utilization rate by getting an issuer to give you a higher limit on one of your existing cards. Just be sure not to use up that extra credit. Otherwise, this move can have the opposite effect.

And be prepared to see an initial ding to your score — creditors sometimes pull your credit when you ask for a limit increase, and that could generate a hard inquiry on your credit reports and cost you a few points.

You might easily make up those points and then some, however, if the credit limit increase is large enough.

3. Get an Error Removed

Errors on credit reports are more common than you may think, so it’s important not to simply take a bad score at face value — particularly because getting an error removed can be one of the faster ways to fix your credit.

The Fair Credit Reporting Act requires that the bureaus investigate and remove items deemed to be errors within 30 days of a dispute being filed.

That’s why it’s a good idea to pull your credit reports — you can do so for free each year at AnnualCreditReport.com — and routinely review them for any inaccuracies that may be unduly weighing your credit down.

4. Clean up and Polish Your Credit Report

Once you receive a copy of your credit reports from the three major credit bureaus- Experian, Equifax, and Transunion, you can take a closer look at each item that is on there.

You have already read about getting an error removed, and this is a good step to take, but don’t stop there. Look for accounts you have on your credit profile that show late or missing payments and verify the accuracy of each item. If you see something that is wrong, send your dispute so that the problem can be investigated.

5. Attempt to Pay Twice Monthly

Yes, you may be paying your balances each month, and you are paying them on time, but you need to keep in mind that your creditors are reporting your balances to the credit bureaus only once per month.

If you have a credit card, for example, that you are constantly maxing out and reaching your limit on throughout the month, the statement you receive will show the balance. You make the payment, but since it was reported only once that month, it is basically showing that you are using 100% of the available balance on that credit card.

If you send in payments twice a month, however, you are essentially breaking up your payments, and you are effectively keeping your overall credit card balances much lower than if you continue to only pay once per month.

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6. Open a New Credit Account

If you want a nice boost to your credit and you want to help improve your credit utilization ratio, you can consider opening a new credit account. This is especially helpful if you find that your current credit utilization ratio is much too high.

Opening the new account adds to the available credit you have and will show that with the new balance, you are using less. However, this is not a good option if you are already juggling multiple accounts. You may end up hurting your credit instead of helping it if you try to stretch your credit too thin.

7. Open up Negotiations

Have you taken a closer look at the current debt you owe? Have you considered negotiating the debt you have in collections to rebuild your credit? Many collection agencies will be willing to negotiate because they really won’t be losing any money on the debt if you are able to settle for less because they most likely bought the debt account for a minimal price.

It never hurts to open a negotiation to try and settle the debt you have for a smaller and more manageable amount on your credit accounts. If you find that you are unsure about this process, or if you don’t know if it is something you should do, you can always seek the help of a credit counselor to help educate you on the process and offer suggestions as to what you can do otherwise.

8. Become an Authorized User

Another fast way to boost your credit could be to become an authorized user on someone else’s credit account. For this to be a viable and recommended option, you will need to find someone you trust, such as a close friend or relative, that is financially responsible and is willing to do this for you to help improve your credit rating.

As an authorized user on someone else’s account, their account will still show up on your credit report, and their payment history, credit utilization ratio, and credit card balances will become part of your credit history and may award you with a good credit score.  Not all credit card companies report authorized users however, so you will want to make sure that if you do become an authorized user, that the account information will show up on your credit reports.

9. Make On Time Monthly Payments

In addition to paying on your accounts twice a month, you should also make sure to make your payments on time every month. Your payment history makes up approximately 35% of your FICO score.

If you find it hard to remember your due dates, consider placing your accounts on auto pay with reminders so it reminds you that the payment is coming due and it will then automatically make the payment for you.

10. Mix Up Your Credit Choices

Finally, make sure you are mixing up your credit choices instead of focusing on using just your credit cards, for example. Using different types of credit can boost your score fast – even though it wouldn’t be a significant boost.

If you need an appliance, instead of using your credit card, you should consider a small personal loan instead. It shows that you can effectively and responsibly utilize different types of credit.

Fastest Way to Boost Credit After a Bankruptcy

One of the biggest hits to your credit is a bankruptcy and people are often anxious and ready to begin boosting their credit following their bankruptcy. In theory, someone looking for credit after a bankruptcy may actually appear to be less of a risk because they are not able to qualify for Chapter 7 for another eight years.

Following your bankruptcy, it is recommended that you make all your payments on time, learn how to manage your money efficiently, and find ways to reestablish your credit without trying to borrow money too soon and this could prove to be the fastest way to build credit.

You should also keep a very close eye on your credit reports and credit scores from the major credit bureaus and look for any errors or inaccuracies including any mistakes with your address, employment, or personal contact information.

The best way to start improving credit following a bankruptcy is to open a secured credit card account and make your first deposit into the account.

Conclusion

Although these ten strategies are a good start to finding the fastest way to boost your credit, you need to remember that it still may take several months for the credit reporting agencies to report the improvements on your credit report.

While they may be “fast” methods, they are certainly not miracle credit cures, so you need to have a fair amount of patience when it comes to seeing the positive effects on your credit report.

Be sure to dispute any errors you find with the credit bureau in question (you go here to learn how). You can also view two of your credit scores for free each month on Credit.com as you monitor your progress toward building better credit.

The post What’s the Fastest Way to Boost My Credit? appeared first on Credit.com.


Source: credit.com

All About Car Loan Amortization

by Phillip Warren

All About Auto Loan Amortization

These days, it can take a long time to pay off a car loan. On average, car loans come with terms lasting for more than five years. Paying down a car loan isn’t that different from paying down a mortgage. In both cases, a large percentage of your initial payments go toward paying interest. If you don’t understand why, you might need a crash course on a concept called amortization.

Find out now: How much house can I afford?

Car Loan Amortization: The Basics

Amortization is just a fancy way of saying that you’re in the process of paying back the money you borrowed from your lender. In order to do that, you’re required to make a payment every month by a certain due date. With each payment, your money is split between paying off interest and paying off your principal balance (or the amount that your lender agreed to lend you).

What you’ll soon discover is that your car payments – at least in the beginning – cover quite a bit of interest. That’s how amortization works. Over time, your lender will use a greater share of your car payments to reduce your principal loan balance (and a smaller percentage to pay for interest) until you’ve completely paid off the vehicle you purchased.

Not all loans amortize. For example, applying for a credit card is akin to applying for a loan. While your credit card statement will include a minimum payment amount, there’s no date set in advance for when that credit card debt has to be paid off.

With amortizing loans – like car loans and home loans – you’re expected to make payments on a regular basis according to something called an amortization schedule. Your lender determines in advance when your loan must be paid off, whether that’s in five years or 30 years.

The Interest on Your Car Loan

All About Auto Loan Amortization

Now let’s talk about interest. You’re not going to be able to borrow money to finance a car purchase without paying a fee (interest). But there’s a key difference between simple interest and compound interest.

When it comes to taking out a loan, simple interest is the amount of money that’s charged on top of your principal. Compound interest, however, accounts for the fee that accrues on top of your principal balance and on any unpaid interest.

Related Article: How to Make Your First Car Purchase Happen

As of April 2016, 60-month new car loans have rates that are just above 3%, on average. Rates for used cars with 36-month terms are closer to 4%.

The majority of car loans have simple interest rates. As a borrower, that’s good news. If your interest doesn’t compound, you won’t have to turn as much money over to your lender. And the sooner you pay off your car loan, the less interest you’ll pay overall. You can also speed up the process of eliminating your debt by making extra car payments (if that’s affordable) and refinancing to a shorter loan term.

Car Loan Amortization Schedules 

An amortization schedule is a table that specifies just how much of each loan payment will cover the interest owed and how much will cover the principal balance. If you agreed to pay back the money you borrowed to buy a car in five years, your auto loan amortization schedule will include all 60 payments that you’ll need to make. Beside each payment, you’ll likely see the total amount of paid interest and what’s left of your car loan’s principal balance.

While the ratio of what’s applied towards interest versus the principal will change as your final payment deadline draws nearer, your car payments will probably stay the same from month to month. To view your amortization schedule, you can use an online calculator that’ll do the math for you. But if you’re feeling ambitious, you can easily make an auto loan amortization schedule by creating an Excel spreadsheet.

To determine the percentage of your initial car payment that’ll pay for your interest, just multiply the principal balance by the periodic interest rate (your annual interest rate divided by 12). Then you’ll calculate what’s going toward the principal by subtracting the interest amount from the total payment amount.

For example, if you have a $25,000 five-year car loan with an annual interest rate of 3%, your first payment might be $449. Out of that payment, you’ll pay $62.50 in interest and reduce your principal balance by $386.50 ($449 – $62.50). Now you only have a remaining balance of $24,613.50 to pay off, and you can continue your calculations until you get to the point where you don’t owe your lender anything.

Related Article: The Best Cities for Electric Cars

Final Word

All About Auto Loan Amortization

Auto loan amortization isn’t nearly as complicated as it might sound. It requires car owners to make regular payments until their loans are paid off. Since lenders aren’t required to hand out auto amortization schedules, it might be a good idea to ask for one or use a calculator before taking out a loan. That way, you’ll know how your lender will break down your payments.

Update: Have more financial questions? SmartAsset can help. So many people reached out to us looking for tax and long-term financial planning help, we started our own matching service to help you find a financial advisor. The SmartAdvisor matching tool can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to three fiduciaries who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.

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