Credit Building Tips

If you have a Discover card, you can access your FICO credit score for free without causing any damage to your credit. Is the FICO score checker on the Discover website accurate, though?

Furthermore, is this the same score that lenders will look at when assessing your creditworthiness?

Solution icon The short answer is that your Discover FICO score is an accurate representation of your credit score calculated using the FICO 8 model and your TransUnion credit report. However, this isn’t necessarily the same score that lenders will look at when deciding whether to extend your credit or a loan.

Let’s take a closer look at what you need to know about the free FICO 8 score you can receive as a Discover cardholder.

What Is a FICO Score?

A FICO score is a credit score that is used to assess an individual's creditworthiness. FICO stands for Fair Isaac Corporation, which is the company that developed and maintains the scoring model. This type of credit score is widely used by lenders, such as banks, credit card companies, and mortgage lenders, to evaluate how risky it is to lend money to a particular consumer.

discover fico score checker how accurate is it

The FICO score is based on information in your credit report, which includes details about your credit history, such as:

Your FICO score is a three-digit number that typically ranges from 300 to 850, with higher scores indicating better creditworthiness.

What Factors Impact Your FICO Score?

Your FICO score is calculated using a number of different pieces of credit data that are recorded in your credit report.

The factors that contribute to your FICO score are weighted as follows:

  1. Payment history: 35%
  2. Amounts owed (credit utilization): 30%
  3. Length of credit history: 15%
  4. Types of credit used: 10%
  5. New credit inquiries: 10%

A higher FICO score is generally seen as a positive indicator to lenders, as it suggests that you are more likely to repay your debts on time. This can result in better loan terms, lower interest rates, and access to a wider range of financial products and opportunities. On the other hand, a lower FICO score may lead to less favorable lending terms or even difficulty in borrowing money at all.

It's important to regularly monitor your FICO score and credit report to ensure that the information is accurate and up to date, as errors or inaccuracies in your credit report can negatively impact your credit score. You can obtain your FICO score from various credit reporting agencies.

You are entitled to one free credit report from each of the major credit bureaus annually through Until the end of 2023, you can actually get a free credit report from each bureau once a week from the same site.

How Accurate Is a FICO Score?

FICO scores are generally considered to be accurate and reliable indicators of an individual's creditworthiness. At the same time,  there are a few essential points to keep in mind when trying to understand the accuracy of your FICO score:

At the end of the day, credit scores are just one of the pieces of information lenders take into account when assessing your creditworthiness. When you apply for a mortgage, for example, they will usually consider factors including employment history, income, and debt-to-income ratio.

How Accurate is the FICO Score Checker on the Discover Website?

If you have a Discover credit card, you can access your FICO score for free through your online account.

discover site how accurate credit checker

It's important to note that consumer scores you receive from a credit card issuer are, ultimately, limited in their usefulness. At the same time, this doesn't mean it can be a valuable tool as you keep your finger on the pulse of your financial health.

Discover provides you with your FICO Score 8. This is one of the most widely used scoring models. In order. to calculate your score, they use data from your TransUnion credit report.

The score provided by Discover is generally considered to be accurate but with some caveats. This is a FICO 8 score calculated based on your TransUnion credit report and using information from one particular moment in time. Other credit scoring models or the same model using your credit report from a different credit bureau could return different results. Similarly, your credit score is dynamic, meaning that it can change quickly based on newly reported information.

Why Is My Discover FICO Score Always Changing?

When you take a look at your Discover credit score using their free FICO score checker, you are looking at a calculation that is based on your credit history at a specific moment in time. This means that there's a good chance your credit score will vary from month to month.

When you take a look at your score, it's a really good idea to always glance at the "as of" date.

Will It Hurt My Credit to Use the Discover FICO Score Checker?

One of the reasons that this type of free credit score service that credit cards so often offer is so valuable is that it won't hurt your credit score.

There are two different ways to check a credit score-- through a hard inquiry and a soft inquiry.

Soft inquiries, on the other hand, can only be viewed by you on your credit report. These don't impact your credit score. When you check your credit score through Discover's FICO score checker tool, it is a soft inquiry and not a hard inquiry into your credit.

Free Credit Scores From Credit Cards: Is There a Catch?

There are tons of things you can do to keep an eye on your financial health, one of which is frequently checking your credit score. There are a number of ways you can access your credit score, including some free and some paid methods.

What's important to know is that the credit score you receive in this way isn't necessarily going to be the same score that a lender will look at when you apply for a loan. For this reason, it can be a great way to keep your finger on the pulse of your credit, but it might not be enough if you're thoroughly auditing your financial situation before applying for a mortgage or a loan.

Why Do I Have Different Credit Scores?

When we talk about credit scores, we usually discuss them as if each individual has one score that's carved in stone. In reality, though, each of us usually has several different credit scores that change over time as our financial circumstances change.

It's common for individuals to have different credit scores because there are multiple credit scoring models and credit bureaus, and each may use slightly different criteria and algorithms to calculate your credit score.

The Main Reasons Most Consumers Have Multiple Credit Scores

Here are some key reasons why you might have different credit scores:

Understanding the Difference Between FICO Scores and VantageScores

FICO scores and VantageScores are both credit scoring models used by lenders and creditors to assess an individual's creditworthiness. At the same time, they are not identical processes, and both scoring models can return different results when an individual's credit score is calculated.

Let's take a look at some of the primary differences between these two scoring models.

Scoring Range

FICO scores typically range from 300 to 850, with higher scores indicating better creditworthiness. Most lenders use FICO scores, and they are well-recognized and established in the lending industry.

VantageScores, on the other hand, can have different scoring ranges depending on the version being used. VantageScore 3.0 and 4.0 have a range of 300 to 850, similar to FICO. However, VantageScore 1.0 and 2.0 had a range of 501 to 990. This variation can sometimes lead to confusion when interpreting the scores.

Scoring Factors

Several factors are taken into account when your FICO score is calculated, including payment history, credit utilization, length of credit history, types of credit used, and recent credit inquiries. Payment history and credit utilization are given significant weight in FICO scoring models.

VantageScores also consider payment history, credit utilization, length of credit history, types of credit, and recent inquiries, but some models can weigh certain factors differently. For some versions of the VantageScore, more emphasis is placed on recent credit behavior and trends in your credit history.

Scoring Model Development

How these two models were developed is also an important distinction between them. The Fair Isaac Corporation developed the FICO scoring model in 1989, which was the first broad-based consumer credit score. FICO has been around for several decades, and its scoring models are widely used by lenders across various industries, including mortgages, auto loans, and credit cards.

VantageScore, on the other hand, is much newer. Developed jointly by the three major credit reporting agencies-- Experian, Equifax, and TransUnion-- it was created as a competitor to FICO scores and has undergone several iterations over time.

Which Credit Score Do Lenders Look At?

Lenders typically use FICO scores when evaluating a borrower's creditworthiness. FICO scores are widely recognized and have been in use for many years, making them the preferred choice for most lenders in various industries, including mortgage lending, auto financing, credit cards, and personal loans.

It's important to understand that there are several versions of FICO scores, with FICO Score 8 being one of the most commonly used iterations. However, some industries and lenders may use different versions of FICO scores tailored to their specific needs. For example, mortgage lenders may use FICO Score 2, FICO Score 4, or FICO Score 5 for mortgage lending decisions.

While FICO scores are the primary credit scores used by lenders, some lenders may also consider other credit scores or factors in their decision-making process. For example, they may use their proprietary scoring models or take additional information into account, such as income and employment history.

Which Credit Score Do Mortgage Lenders Look At?

Mortgage lenders typically look at your FICO scores when assessing your creditworthiness for a home loan. The specific version of the FICO score that they use can vary, but for mortgage lending, lenders commonly rely on older versions of the FICO score, specifically FICO Score 2, FICO Score 4, or FICO Score 5. These versions are designed to evaluate a borrower's credit risk, specifically for mortgage-related decisions.

This means that the score you see when you look at the score provided by Discover– your FICO 8 score– could be quite different from what the mortgage lender looks at.

What’s the Difference Between FICO 8 and Older Models?

FICO Score 8 and older FICO scoring models differ in a few key ways, including how they assess and weigh various factors in your credit history.

Here are some of the main differences between FICO Score 8 and its predecessors:

Treatment of Collections Accounts

FICO Score 8 is more lenient in how it treats collections accounts. It doesn't penalize you for paid collections accounts, which means that if you've paid off a collection, it won't have as negative an impact on your score as it might with older FICO models.

Some older FICO models penalize your score for collections accounts regardless of whether they've been paid or not.

Authorized User Accounts

Authorized user accounts are incorporated into scoring when the FICO 8 model is used. This allows individuals to potentially benefit from the positive payment history of the primary account holder. Some older FICO models don't include authorized user accounts in the credit history used for scoring.

Impact of High Credit Card Balances

FICO Score 8 may be less punitive when it comes to high credit card balances. While it still considers your credit utilization (the amount of credit you're using relative to your credit limit), it may not penalize you as severely for high balances compared to some older FICO models.

Credit Report Information

Another important distinction is that FICO Score 8 incorporates updated information about the way that credit reporting agencies handle public records, such as tax liens, evictions, and civil judgments. It no longer factors in certain types of public records that may be less accurate or complete, potentially benefitting some consumers that have negative information on their credit reports.

Older FICO models might have different criteria for public records, which can impact your score.

Discover FICO Score Checker FAQs

Before I sign off, let’s look at some of the most common questions about the free score offered by Discover.

Which Scoring Model Does Discover Offer For Free?

When you use the credit score service available through your Discover account, you'll be looking at your FICO Score 8. As one of the most widely used scoring models according to FICO, this can be a great way to gauge your credit health generally.

Which Credit Bureau Does Discover Use For Credit Scores?

When you look at your Discover credit score, you're viewing a calculation that was made using data from your TransUnion credit report. It's important to understand that each of your credit reports can sometimes have different information on them, as not all creditors and lenders report to all three bureaus.

In some circumstances, this can mean that your credit scores calculated from different credit bureaus vary quite a bit. For example, if you defaulted on a credit card debt and this was only reported to Experian, your Experian score might be notably lower than those calculated using your Equifax and TransUnion reports.

Why Is the Discover FICO Credit Checker Tool Giving Me a Different Score Than Other Scores I’ve Seen?

There are a number of reasons why you might see some variability in your credit scores.

Here are some of the primary explanations for this:

Managing Your Credit Score For Greater Financial Opportunities

Tools like the one offered by Discover that allow you to check your credit score for free can be very useful as you keep an eye on your financial health. When your credit score indicates to lenders that you are a low-risk borrower, you’ll be much more likely to be approved for credit and loans as well as better able to snag lower rates.

At the same time, the credit score you see when you use this Discover tool is only one of your many potential credit scores. For this reason, it’s important to watch all three of your credit reports for errors, inaccuracies, or trouble spots that need to be addressed.

Are you working to improve your credit score? Make sure you check out our Credit Building Tips blog for more articles, how-tos, and guides.

There are few things more distressing than seeing a transaction you don’t recognize on your credit card statement. If it’s clear that someone used your credit card to buy gift cards, you’re probably wondering what steps you need to take next.

Beyond that, though, you might be curious why someone would buy gift cards rather than actual products or services once they got a hold of your credit card information.

Solution icon Purchasing gift cards is a common strategy by credit card thieves because it’s fairly easy and anonymous to turn gift cards into cash. If you’ve been the victim of this type of identity theft, there are a number of essential steps you’ll want to take right away to ensure you’re not liable for the unauthorized transaction while also protecting your account from further fraud.

If someone stole your credit card number and used it to buy gift cards, stick with us to learn what you need to do next.

Understanding Gift Card Scams and Credit Card Fraud

When someone steals your credit card information and uses it to purchase gift cards without your authorization, it is typically referred to as "credit card fraud.”

gift cards bought using stolen credit card

Credit card fraud and gift card scams are related but distinct types of financial scams, each involving different methods and objectives. Though you might assume that it is considered a gift card scam to use your credit card to buy gift cards, this falls under the credit card fraud category.

What Is Credit Card Fraud?

Credit card fraud involves the unauthorized use of someone's credit card or credit card information to make purchases or withdraw funds without the cardholder's consent. The goal is typically to obtain goods or services directly using the compromised credit card.

Thieves may steal physical credit cards, clone cards, or obtain credit card details through data breaches, card skimming, or online hacking. They then use these cards or information to make unauthorized purchases– in some cases, the unauthorized purchase of gift cards.

Credit card fraudsters are usually motivated to commit this type of crime in order to acquire goods or services paid for with the victim’s credit card.

What Is a Gift Card Scam?

At the same time, you'll also hear about "gift card scams," which is a term that actually encompasses a different type of fraudulent activity than using stolen credit card info to buy gift cards.

apple gift card purchased with stolen credit card info

Gift card scams involve tricking individuals into purchasing gift cards and providing the scammer with the gift card information or codes. The primary objective is to obtain monetary value in the form of gift cards, which can be used, sold, or converted into cash.

Gift card scams include things like:

Other Types of Gift Card Scams

Fraudsters have figured out a lot of different ways to steal money using gift cards. Here are some other common types of gift card scams:

Why Do Credit Card Thieves Buy Gift Cards?

Credit card thieves might choose to purchase gift cards using stolen credit card info for a number of reasons, but the general gist is that gift cards provide a relatively easy and convenient way for them to convert stolen credit card information into usable assets while reducing the risk of getting caught.

Here are some of the most prominent reasons credit card thieves might use your card info to buy gift cards:

What to Do If Someone Used Your Credit Card to Buy Gift Cards

Discovering that someone has used your credit card to purchase gift cards without your authorization can be distressing, but taking prompt action can help mitigate the situation and protect your financial interests.

Let's take a look at the steps you should take if you suspect unauthorized gift card purchases on your credit card.

Contact Your Credit Card Issuer Immediately

Call the customer service number provided on the back of your credit card or on your credit card statement. Let them know about the unauthorized transactions and provide details of the charges, such as the merchant's name, transaction date, and transaction amount.

Request a Temporary Hold or Freeze

Another essential step when you realize someone has stolen your card info to buy gift cards (or anything else, for that matter,) is to ask the credit card issuer to place a temporary hold or freeze on your credit card to prevent further unauthorized transactions.

Contacting your card issuer and having them freeze your card can help take a huge weight off your shoulders. You don't have to worry that someone is out there racking up unauthorized charges on your card, giving you some breathing room to deal with the situation and get back on track.

Dispute the Charges

Now that you have placed a hold or a freeze on your card, you'll want to follow the credit card issuer's instructions for disputing the unauthorized charges. They may require you to complete a dispute form or provide additional documentation. Be sure to clearly explain that the transactions were unauthorized and that you did not make the purchases.

Ask Your Issuer for a New Card

If necessary, ask the credit card issuer to cancel your current card and issue a new one with a new card number. This will prevent the thief from making additional unauthorized charges. Furthermore, depending on how they accessed your card info, it helps ensure other people don't get their hands on your card number and details.

Review Your Credit Card Account

Even if you've only noticed one strange transaction on your account, the fact that someone has used your info to buy a gift card without your permission means it's possible other unauthorized transactions have been made.

Carefully review your credit card statements to identify any other suspicious or unauthorized transactions. Report any additional unauthorized charges to your credit card issuer promptly. If one person was able to access your card info, it's possible other transactions were made without your permission.

File a Police Report

If you believe your credit card information was stolen, consider filing a police report. This documentation can be helpful in resolving the situation and, in some cases, may be required by your credit card issuer.

Will the police catch the person who used your credit card? The answer is: that it depends. Most experts say you shouldn't hold your breath expecting that law enforcement will be able to track down credit card thieves and fraudsters.

At the same time, the nature of the crime will impact how likely it is for the police to seriously pursue it and even catch the perp. For example, if your physical card was stolen and you have evidence that points toward a suspect, it's a lot more likely anything will come of filing a police report than if your info was stolen online.

Keep Detailed Records

It's best to document all communication with your credit card issuer, including dates, times, and the names of customer service representatives you speak with. This way, you can easily reference instructions you were given by customer service reps when discussing the issue with your credit card company over time.

Monitor Your Credit

Your hard work isn't done yet-- make sure you keep a close eye on your credit reports for any unusual activity. You can obtain free credit reports from the three major credit bureaus (Equifax, Experian, and TransUnion) annually at For the rest of this year, you can actually get free weekly credit reports.

There are a number of different services you can sign up for to help in your efforts to monitor your credit, including CreditWise, Experian, and Credit Karma.

Take Steps to Protect Your Financial Information

The next thing you'll want to do is take steps to protect your personal and financial information. This may include updating passwords, enabling two-factor authentication, and being cautious about sharing sensitive information online or over the phone.

The good news is that federal laws protect consumers from liability for unauthorized credit card charges, so you should not be held responsible for fraudulent gift card purchases. However, it's essential to report unauthorized transactions promptly and work with your credit card issuer to resolve the issue as swiftly as possible.

Take Steps to Repair Your Credit

Depending on how quickly you realized that your credit card info was being used by fraudsters to buy gift cards, you might have a little work to do when it comes to cleaning up your credit report. Dealing with the fallout from identity theft can feel totally overwhelming, but the truth is it’s worth taking the necessary steps so you don’t suffer the consequences of bad credit down the road.

How to Ensure Your Credit Card Info Is Never Stolen Again

In our digital world, there is always some risk that our financial and personal information will end up in the hands of someone with bad intentions. At the same time, you can take several steps to significantly reduce the risk of theft and unauthorized use of your credit cards.

Use Strong and Unique Passwords

When we make passwords for our online accounts, it’s tempting to prioritize making them easy to remember. However, the easier they are for us to remember off the top of our heads, it usually means it’s easier for fraudsters to figure out what our passwords are. You’ll want to create strong, complex passwords for your online accounts, especially for banking and credit card websites.

It’s essential that you avoid using easily guessable information like your birthdate or common words in your passwords. You might consider using a reputable password manager to generate and store your passwords securely.

Enable Two-Factor Authentication

Many credit card companies will let you enable two-factor authentication, which is often abbreviated as “2FA”. Whenever possible, enable 2FA for your online accounts, including your credit card accounts. This adds an extra layer of security by requiring a second form of verification, such as a one-time code sent to your mobile device.

Regularly Monitor Your Accounts

We’re all busy, and it’s easy to simply use our credit cards and let our payments be automatically withdrawn month after month without ever taking a closer look at our account.

The truth is, though, it’s a good habit to regularly monitor your credit card accounts.

You can also set up account alerts to receive notifications of unusual activity on your credit card. Though credit card fraudsters continue to get more sophisticated over time, so do the security measures used by credit card issuers. By signing up for this type of service, you can catch strange and unusual activity right away.

Keep Your Physical Cards in a Safe Place

It’s easy to assume that the biggest threats to our credit card info and personal financial info all exist online. However, it’s just as important to protect your physical card.

Keep your physical credit cards in a secure location, such as a wallet or cardholder. Protect your card's PIN by not sharing it and covering the keypad when entering it at ATMs or point-of-sale terminals. It can be a good habit whenever you use your card to double-check that it’s back in its secure spot before leaving a retail store or restaurant.

Use Caution Online

One essential step to avoiding having your credit card info stolen to be used to buy gift cards is to only provide your credit card information on secure websites. Secure websites will have “https://” as a prefix rather than just “http://.” You should also notice an image of a padlock in the address bar when a website is secure.

You’ll also want to be cautious when sharing your card information over the phone; always make sure you verify the identity of the caller and the purpose of the call. If someone calls you claiming they’re from a company or institution you trust and are asking you for personal or financial information, it is good practice to hang up and call them back. Use the phone number you have on the back of your credit card or on the institution’s secure website, not from an email you received or a number you are given over the phone.

Regularly Update Software

Another step you can take to avoid credit card fraud is to keep your computer and mobile devices up to date with the latest security updates and patches. It’s also a good idea to use reputable antivirus and anti-malware software to protect against malware and keyloggers.

Avoid Public Wi-Fi for Sensitive Transactions

The ability to access the internet and take care of our important business anywhere is really convenient, but it’s honestly not a good idea to use Public Wi-Fi for online banking or credit card transactions. Avoid making online purchases or accessing sensitive accounts (including banking and credit card accounts) while using public Wi-Fi networks, as they may not be secure.

Shred Sensitive Documents

Fraudsters and identity thieves can sometimes get your information by going through your mail or trash. Make sure you shred or securely dispose of any documents containing your credit card information, such as credit card statements and credit card offers.

Set Up Transaction Alerts

Many credit card issuers offer customizable transaction alerts. You can customize these alerts so that you are informed about certain transaction amounts or types– ensuring you’re notified right away of any unusual activity.

Protecting Your Finances and Your Credit With Good Habits

If you’ve realized that someone stole your credit card (whether it was the physical card or your information) to buy gift cards, it’s natural to feel distraught and violated. How could someone do something like this? What if it keeps happening?

The truth is, there are people out there who are willing to steal in order to benefit themselves. This is an unfortunate reality, but what we can do is take steps to protect our financial information both IRL and online.

Furthermore, by keeping a close eye on our financial accounts and credit reports, we can catch strange and unusual activity quickly. The sooner we realize that an unauthorized transaction has been made, the sooner we can remedy the situation and protect our accounts from further theft.

Are you working to improve your credit after your identity was stolen? Are you motivated to set up a financial system for yourself that offers you the best possible protection from credit card fraud? If so, make sure you check out the rest of our Credit Building Tips blog for more resources, articles, and guides.

If you need fast access to cash, you might have found a number of online loan and line of credit providers that say you can have money deposited to your account the same day you're approved. One such company is CreditFresh, which advertises that they offer "a flexible way to borrow." So, is Credit Fresh legit, or is it a scam?

The answer to this question depends on what you mean by "scam."

Solution icon CreditFresh is a legitimate company that offers personal lines of credit to consumers. However, this is a particularly expensive way to borrow money. If you're not careful, you could end up spending a tremendous amount on interest.

While it might be useful in a bind when you have no other options, there are generally better, less expensive ways to borrow money. In this article, we'll take a look at everything you need to know about CreditFresh and borrowing money with less-than-ideal credit.

What Is Credit Fresh?

CreditFresh is a company that provides lines of credit through its partnership with a number of financial institutions.

creditfresh website legit company

They work with a number of different Bank Lending Partners, including:

When you submit a request for credit using CreditFresh, the line of credit could originate from one of the above-listed banks or another one of their partners.

CreditFresh offers lines of credit to consumers with low credit scores that need to get their hands on some cash fast. While this might seem like a lifesaver if you're in a bind, it's important to understand the costs of borrowing money in this way.

CreditFresh markets the line of credit they offer as straightforward and transparent. It's important to understand the potential costs of borrowing money in this way versus other options.

What Is the Interest Rate For a CreditFresh Line of Credit?

Any time you're borrowing money, there are a lot of important questions to ask. One key question is: what's the true cost?

creditfresh legit company cost of borrowing

In the fine print on CreditFresh's own website, they go so far as to state that borrowing from them is an incredibly costly way to gain access to some cash:

"A Line of Credit through CreditFresh is an expensive form of credit and should not be used as a long-term financial solution."

Though it's difficult to find information on CreditFresh's site about their interest rates, other sources state that the APR for a line of credit starts at 65%.

For the purposes of comparison, the average credit card interest rate as of September 2023 is 24.45%, which is historically quite high, according to Lending Tree.

Already, this should send up some red flags. 65% is an incredibly high interest rate, and that's just where rates start. According to one source, the interest rates are typically under 200% for a line of credit from CreditFresh, which is a recipe for spending an outrageous amount of money during the repayment of the loan.

Is CreditFresh Legit?

Is CreditFresh just a scam? Or is it a legitimate company?

CreditFresh is, in fact, a legitimate company that offers lines of credit to consumers through its partnership with various financial institutions.

Don't stop reading just yet, though. Just because CreditFresh isn't a complete scam doesn't mean taking out a line of credit from them is a good idea.

By targeting consumers with low credit scores who need access to cash fast, CreditFresh is taking on a lot of risk. The way that they justify this amount of risk is by charging incredibly high-interest rates for these credit lines.

A little later in the article, we'll talk about the pros and cons of taking out this type of line of credit as well as some alternative options on the table.

First, we'll take a closer look at a recent class action lawsuit that was proposed against CreditFresh regarding concerns surrounding a data breach that occurred in the spring of 2022. Even if the company is technically "legit," the type of activity outlined in the complaint might leave you to think twice about taking out a line of credit from this company.

The Proposed Lawsuit Against CreditFresh

Another important piece of information you'll want to consider when you're thinking about working with CreditFresh is that a class action lawsuit was proposed against them not long ago due to a data breach.

The proposed class action lawsuit claims that the company didn't protect the personal information of consumers adequately from access by unauthorized parties. The defendant in the proposed suit is Propel Holdings, Inc., which uses the CreditFresh name to offer lines of credit through First Electronic Bank, CBW Bank, and other partners.

The data breach is said to have occurred in February or March 2022. Allegedly, the following information was exposed to both customers and prospective customers:

The lawsuit claims that CreditFresh could have taken reasonable steps to prevent the breach. Consumers who had their information exposed now "face years of constant surveillance of their financial and personal records, monitoring, and loss of rights," according to the complaint.

Alternative Borrowing Options

If you need quick access to cash, it's easy to start making compromises. You might tell yourself that borrowing money at an exorbitant interest rate isn't a big deal because you'll pay it back quickly, or maybe you don't even think about the interest rate because you're in such a desperate financial situation.

The truth is, though, it's ultimately best to steer clear of this type of borrowing option. There are other more affordable alternatives that could help you get the money you need now without threatening your future financial stability. This is true even if you have bad credit-- you just might need to shop around or get creative.

Online Loans

There are lots of online loan providers these days, some of whom will consider borrowers with poor credit scores. You might be able to increase the likelihood that you'll be approved by offering additional information, such as any outstanding debts you have and your employment status.

Joint or Co-Signed Loans

Another way to gain access to money with a bad credit score is to consider adding a co-applicant who has a stronger credit history.

Secured Loans

A secured loan is a way to borrow money for a lower interest rate by putting up an asset as collateral. These types of loans often have less strict credit requirements, but you run the risk of losing the asset if you miss too many payments.

A vehicle can often be used as collateral through online lenders. However, if you apply for a secured loan through a credit union or bank, the collateral usually needs to be an investment or savings account.

Loans From Friends or Family

Though it can be frustrating and embarrassing to ask your loved ones for a loan, it's possible that this will ultimately be the more financially wise choice if your only other option is a high APR line of credit.

It's important to understand how money can quickly complicate relationships with people, no matter how close you are. For this reason, it's important to hammer out the details of the loan on paper in the form of a contract. Make sure you record how much money you're borrowing, any terms of repayment, and the process through which you'll pay them back.

Credit Union Loans

Lots of credit unions will offer personal loans in small amounts. These loans typically start around $500. When you're working with a local credit union, there's often more leeway in terms of qualification than when you're trying to get a loan from a large, national financial institution.

For example, they might take other information into consideration beyond your credit score, such as your history with the credit union as a member. Personal loan rates are also capped at 18% under federal credit union cap rates.

Payment Plans

Are you trying to get access to a line of credit quickly because your bills are getting to be too much to handle? It's possible that setting up payment plans instead of borrowing money could offer the relief you need.

A number of utility companies and creditors will give you the option to fill out hardship forms in order to request an extension. At the end of the day, these entities just want to collect the money they're owed, and they are often more willing to work with you than you might initially expect.

Nonprofit Emergency Loan Providers

Another option is applying for a loan with a nonprofit lender. There are some organizations, such as the Capital Good Fund, that accept borrowers who have no credit history or thin credit profiles. This particular nonprofit offers emergency loans up to $1,500 and doesn't have a minimum credit score requirement.

The rates for this type of loan can be much more favorable than with for-profit lenders like CreditFresh. For example, the Capital Good Fund offers rates between 5% and 16%.

Payday Alternative Loans

Payday alternative loans are small loans that some federal credit unions offer. With longer repayment periods and much more reasonable rates than typical payday loans, this type of loan is much less likely to trap you in a cycle of debt.

The National Credit Union Administration created this type of loan program back in 2010. You don't necessarily have to have good credit in order to get a payday alternative loan-- the more important factors include your ability to repay the loan and your income.

Cash Advance Apps

If you just need a little extra money to cover your costs until your next paycheck, another option is a cash advance app.

There are a number of popular apps of this type, including:

These apps can be really useful when you're in a pinch, but the truth is they are also a very expensive way to borrow money. Though the associated fees-- whether fast-funding fees or subscription fees-- are very high when weighed against the amount of money you can receive in this manner.

For this reason, cash advance apps are best used in true emergency situations.

Another Option: Get Creative to Make Extra Cash Quickly

At the end of the day, it costs money to borrow money. If you keep finding yourself in a situation where you don't have enough cash to pay for the things you need, you might consider figuring out a way to earn some extra income.

There are lots of ways you can get your hands on cash quickly if you're willing to be a little creative. You probably have some stuff you don't use anymore that could be sold on Craigslist, Facebook Marketplace, or eBay, or maybe you could start a side gig as a rideshare driver. Whether you start hanging signs in your neighborhood offering lawn mowing services or pick up some extra cash babysitting for the neighbor, you don't have to be limited to the income you earn from your day job.

CreditFresh FAQs

Before I sign off, let's take a look at some commonly asked questions about CreditFresh and other ways to borrow money fast when you don't have great credit.

How Does CreditFresh Operate?

CreditFresh has been a company since 2019 and provides lines of credit to consumers in roughly half of the states in the U.S. This is a company that specializes in providing fast funding to people with low credit scores. While this might seem like a great deal when you're in a bind, the business model ultimately relies on charging extremely high interest rates in order to justify the risk of lending to consumers who aren't considered particularly creditworthy.

How Much Can I Borrow Through CreditFresh?

If you apply for a line of credit through CreditFresh and you're approved, your credit limit will range somewhere between $500 and $5000.

There are a number of different factors that are considered to determine your credit limit. You can potentially become eligible for increased credit limits or reduced billing cycle charges based on your payment history.

How Fast Will I Get My Money From CreditFresh?

One of the main selling points of a line of credit through CreditFresh is how quickly the funds can become available to you.

You will typically receive the funds the same day if you are approved and request a draw before 3:30 pm Eastern time during the business week.

If you're approved and request a draw at another time, the funds will show up the next business day.

It's important to remember that your own bank and bank's policies can impact when funds are made available to you.

How Much Does It Cost to Take Out a Line of Credit?

CreditFresh markets itself as a company that provides clear and transparent disclosures about the cost of borrowing. At the same time, they don't make it clear what interest rates they charge-- other sources state that the APR starts at 65% (which is incredibly high.)

If you have an outstanding principal balance with CreditFresh, you'll have to pay both the billing cycle charges and a mandatory principal contribution as a part of your minimum payment.

What Is the Difference Between a Line of Credit and an Installment Loan?

When you take out an installment loan or another type of personal loan, you receive a lump sum of money. You then begin repaying the loan over a period of time with additional interest and, potentially, fees. These payments are made in a scheduled manner, typically monthly.

Taking out a line of credit, on the other hand, offers you a credit limit which you can borrow against. This is a revolving line of credit rather than a lump sum loan, meaning that borrowers can draw on their credit line, repay what they owe, and continue to redraw, assuming they have credit available.

Who Qualifies For a Line of Credit Through FreshCredit?

There are a few requirements you'll have to meet in order to request a line of credit through CreditFresh.

In order to apply, you must:

As you can see, the bar is pretty low in terms of being able to request a line of credit. There is no minimum credit score disclosed by CreditFresh, but given the nature of the financial product, it is clear they are marketing to people with poor credit scores.

Is a CreditFresh Line of Credit Available in All 50 States?

No, you can get a CreditFresh line of credit if you live in certain U.S. states.

These are:

Does a CreditFresh Line of Credit Impact My Credit Score?

When you have a CreditFresh line of credit, your account status will be reported to TransUnion. TransUnion is one of the three major credit reporting bureaus in the United States. The information that is reported by CreditFresh to TransUnion can be incorporated into your credit score calculation and impact your credit score.

Repairing Your Credit to Expand Your Borrowing Options

While CreditFresh is a legitimate company, that doesn't necessarily mean opening a line of credit with them is going to be the best financial decision. Offering lines of credit to people with bad credit and charging exorbitant interest in order to deal with the risk, borrowing money from a company like this is quite expensive compared to other potential options on the table.

While there are a few things you can do to quickly boost your credit score, the truth is that it can take a while to improve an imperfect credit file. If you think you might need to take out a loan or get a new credit card down the road, it's a good idea to start thinking about cleaning up your credit report sooner rather than later.

Are you looking for resources to help you out as you work to improve your credit score? Make sure you check out our Credit Building Tips blog for more articles and guides.

Paying off your credit card can feel like a big weight off your shoulders. How long does it take for your payment to reflect in your available balance, though? Will you be able to use your credit card the same day you make a payment?

The answer is it depends.

Solution icon If you had available credit before your payment, there's no problem using your card on the same day you pay it off so long as you don't exceed your available credit. If your card was maxed out, it could take several days for the payment to process and for the credit to become available to you.

If your credit card and your bank account are from the same financial institution, it's possible that your available credit will be updated instantaneously. When money has to be transferred between banks, though, the process typically takes a few business days.

Can I Use My Credit Card the Same Day I Pay It Off?

If you've used almost all of your credit limit and you just made a payment toward your card, you might be wondering how quickly you'll be able to use your card for a transaction.

woman using credit card same day as payment

The answer to this question is going to depend on a number of different factors.

The first thing you'll want to know about is the Truth in Lending Act and how it dictates the way that card payments work. According to this Act, credit card issuers have to send you your statement at least 21 days before your payment due date. Furthermore, they must set a cutoff time when they need to receive your payment-- 5 p.m. or later. It's worth noting that if you plan on paying your credit card bill in person at a branch of the financial institution and that branch closes earlier than the cutoff time, the payment will only be considered on time if you pay before the branch closes.

If you paid your bill in a timely manner, you should probably see that your payment is credited on the same business day. If you didn't make the payment before the stated cutoff time, it will likely appear the next business day. At the same time, the fact that the payment is credited doesn't necessarily mean that your balance will be updated. Usually, the payment needs to be processed before it is reflected in your balance.

How Quickly Is Credit Available After Making a Card Payment?

When you go to make your credit card payment, it's easy to think that the funds should show up immediately once you click "pay."

man using credit card same day he made payment

Sometimes, though, your available credit limit won't change right away. On top of that, it might not show that the funds have been debited from your checking account immediately.

The fact that there's a time delay during the card payment process can be pretty stressful and frustrating. For example, you might be worried that your payment hasn't gone through and that you'll be subject to late fees. Beyond that, you might be waiting to free up some available credit so you can use your card for a purchase.

The truth is, that your credit card payment will likely process practically instantaneously if the bank account and credit card account are through the same bank. However, if you're paying between institutions, there's going to be a bit of lag between the two.

When you're dealing with two different institutions, you can typically expect the transaction to be completed up to three business days after you've made an online payment. If you sent your payment through the mail, it will probably take longer than that.

How Many Days Does It Take For Credit to Become Available After Payment?

How many days it will take for your available credit to be updated after payment depends on a number of factors. In most cases, though, you can expect that the credit will be available in one to three business days.

So, Can I Use My Card the Same Day I Make a Payment?

The answer is: that it depends.

If you have maxed out your credit card and are making a payment on the due date, you might have to wait a few days before you have more available credit.

However, if you still have available credit before you make your payment, there is no issue at all with using your card. The transactions you make will end up as a part of the next billing cycle, not as a part of the billing cycle you're currently paying a bill for.

Credited Vs. Processed: Understanding the Difference

In order for your credit card payment to be considered on time, it simply needs to be submitted by the due date. This means that it doesn't have to be fully processed by the due date-- you simply have to send the payment through.

Once your card issuer acknowledges that you've made the payment, your payment will be credited. Your payment should typically be credited the same business day if you make your payment by a certain time on a business day-- often 5 p.m.

For payments made after this cutoff time or on a non-business day will usually be credited the next business day.

For your credit card payment to fully process, it might take up to three days. However, your payment typically only needs to be submitted by the due date in order to be on time.

What exactly is the difference between a payment being credited and processed?

Why Is There No Available Credit After I Paid Off My Credit Card?

When you pay off your credit card, it's natural to expect that you should be able to start using it again right away. It can be disconcerting to say the least, to see that there isn't any credit available after you've initiated a large payment.

There are a number of different reasons this could occur. If you have only recently made the payment, the most likely reason is that the payment hasn't finished processing. It may take a few business days for your available credit to reflect the payment that you made.

It's also possible that the credit card issuer has put a hold on your account, which can happen for a number of different reasons. For example, a company might put a hold on the account if:

Delays in available credit can also occur if:

If it seems like there is no good reason for your available credit to still be zero after making a payment, contact your card issuer and ask for an explanation. They will likely be able to get you more information about why this is happening or let you know what steps to take if it does appear to be a mistake of some sort.

How to Make Sure Your Credit Card Payments Process Quickly

It's totally reasonable to want your payment to post quickly. On the one hand, you might want to make sure that there is enough money in your bank account to cover the cost and are therefore interested in the payment occurring sooner rather than later. On the other hand, you might be hoping to free up some available credit so you can continue to use your card.

However, there are a few things you can do to try and make the process go as fast as possible.

Credit Card Payment FAQs

Before I sign off, let's take a look at some of the most common questions I receive about making credit card payments.

When Is the Best Time to Pay My Credit Card Bill?

The best time to pay your credit card bill depends on your circumstances, your financial situation, and your goals.

For instance, if you don't usually use more than 30% of your credit limit and you always pay off the balance in full every month, the timing isn't particularly important so long as you make your payment by the due date.

One of the reasons why it can be beneficial to pay early is that credit card issuers will report to credit bureaus on different dates-- typically around the time of your statement closing date. If you want to make sure your credit score is as healthy as possible, paying before the reporting date can help ensure your credit utilization ratio is on the lower end.

Your credit utilization ratio is one of the main factors in your credit score. The lower your credit utilization, the better. This is a metric that compares the amount of credit available to you to the balance you are currently carrying.

What Day Do You Pay a Credit Card to Avoid Interest?

If you want to avoid paying any interest on your credit account, you'll want to pay your bill in full every month on or before the due date.

It's worth noting that you lose your grace period on new purchases if you are carrying a balance from month to month. This is true even for small balances. What this means is that all of your transactions will start accruing interest immediately until the full balance has been paid off.

Is It Better to Pay a Credit Card Early on the Due Date?

It's no secret that it's important to pay your credit card bill on time. However, some people say that it's worth going the extra mile and making your payment early. Is this really worth it, and, if so, what are the benefits?

There are a few reasons you might make your credit card payment early.

Whether it's better to pay your bill early or on the due date really has to do with your own financial situation and goals. The most important thing is to make sure the bill is paid by the due date. Otherwise, it can seriously damage your credit score while also leaving you paying a late fee and interest.

Should I Pay Off My Credit Card Bill In Full?

Whenever possible, it's a good idea to pay off your credit card balance in full.

When you have a credit card balance carried over from month to month, it can:

Of course, it isn't always possible to pay off your credit card in full every month. In general, though, it's best to put as much money towards it as you can every month. Any amount you can put toward the bill will help to reduce how much-compounded interest you are saddled with.

When you have a large amount of credit card debt you're trying to get a handle on, it's a good idea to trim your discretionary spending and create a strict budget. This will help you find extra money to put towards your bill every month, allowing you to get out of debt faster and reduce the total cost of borrowing.

It's worth noting that there are other ways to borrow money that can be much less expensive than credit cards, such as a personal loan.

Should I Close My Card After I Pay Off My Debt?

If you've been dealing with credit card debt and you've finally paid it off, you might be wondering whether you should just take a pair of scissors to that small plastic rectangle. The truth is, it's generally a good idea to keep your cards open after you've paid your debt unless they have a large annual fee. The reason for this is that closing your account could mean that your credit score goes down, as it can raise your credit utilization ratio.

Ultimately, one of the best things you can do once you've paid off your credit card debt is to start using the money you've been putting toward your card bill and building an emergency fund. According to a study from the Federal Reserve, 40% of Americans would struggle to find the money to pay for a $400 emergency expense. That's a pretty scary place to be, and building an emergency fund can help ensure you don't get caught in a financial pickle.

It's generally recommended that your emergency fund consists of at least three to six months of living expenses. Anything is better than nothing, though, and you might find it's a good goal to save $500 for an emergency fund to begin with.

When It Comes to Credit, Knowledge Is Power

Whether or not you can use your credit card on the same day you make a payment is going to depend. If you have plenty of available credit before you make your payment, using it on the same day won't be a problem at all so long as you don't try to spend more than what is available to you.

On the other hand, if your card is maxed out and you just made a payment, you might not be able to use it the same day. How quickly credit is made available to you depends on your bank and your credit card issuer. If your credit card and bank account are from the same financial institution, the payment might be processed instantaneously, and the credit will be made available right away.

Are you working to build a greater understanding of credit and credit cards to ensure you have as many financial opportunities as possible down the road? If so, you're in the right place!

Make sure you check out the rest of our Credit Building Tips blog for more resources, guides, and articles to help you improve your credit.

When a portion of your wages is being directly taken out of your paycheck to repay a debt, it's known as wage garnishment. Considering that this process can take a seriously negative toll on your finances, you probably have a lot of unanswered questions. One of the most common things people ask me about wage garnishment is "How long can a creditor garnish my wages?"

While statutes of limitations found under state law often limit how much time a creditor has to take legal action against you for an unpaid debt, these don't apply to how long wage garnishment can continue for.

Solution icon Wage garnishment will typically continue until the debt has been repaid. This means it can go on for ten years or even longer, depending on the amount you owe and how long it takes you to pay it in full.

At the same time, there are some options on the table if wage garnishment is causing you serious financial hardship. Your choices will depend on the type of debt and a number of other factors.

Can a Creditor Garnish My Wages?

Yes, a creditor can garnish your wages in some instances. For some types of debts, including child support and alimony, unpaid income taxes, and federal student loan debts, a court order is not necessary for money to start being taken from your paycheck.

how long can they garnish my wages calculator money and notepad

For most other types of debt, though, the creditor will need to:

  1. Sue you
  2. Get a money judgment
  3. Get a court order

Who Can Garnish My Wages?

There are a number of different types of debts that could result in wage garnishment through a court order.

Some examples of debts that creditors can pursue in this way include:

Does a Creditor Need to Sue Me to Garnish My Wages?

In order to begin garnishing wages, creditors typically have to sue you and receive a money judgment and court order in their favor. Creditors won't be able to immediately garnish your wages for most types of debt, such as medical bills and credit card bills.

That being said, some creditors don't have to go to court before they start taking money from your paycheck. There are special rules for three types of debt because they are viewed as important enough to ensure the debt can be collected.

These types of debt are:

  1. Child support and alimony
  2. Unpaid income taxes
  3. Student loans

Child Support and Alimony

There is automatically a wage withholding order included in child support orders. Your wages can, therefore, be garnished when you're ordered to pay child support without the court needing to take any additional action. If you fail to pay either child support or alimony obligations, a wage garnishment order against you can also be obtained.

It's worth noting that the wage garnishment limits for alimony and child support are significantly higher than for things like credit card debt or unpaid bills. The limits for wage garnishment for child support under federal law are:

If you've fallen behind on your payments by twelve weeks or more, the cap on your garnishment can be increased by another five percent.

Unpaid Income Taxes

The federal government can also start garnishing your wages without needing to get a court order if you owe back taxes. Your deduction amounts and the number of dependents you have will impact the percentage of your income the IRS can garnish.

money in wallet being garnished from wages

In addition to the federal government having this right, state and local governments can also collect unpaid taxes through wage garnishment. State law will dictate how much they can garnish from your paycheck.

Student Loans

Known as an "administrative garnishment," money can be taken directly from your paycheck if you fall behind on your federal student loan payments. The limit on this type of garnishment is 15% of whichever of the following is the lesser amount:

When Does a Wage Garnishment End?

There are a number of circumstances that will lead to the end of wage garnishment. If one of the following occurs, payments for your debt will no longer be taken directly out of your paycheck:

How Much of My Wages Can Be Garnished?

There are federal limits on how much money can be taken from your disposable income when your wages are being garnished.

A certain percentage of your disposable income can be garnished by creditors in some circumstances. Disposable income refers to any money that you have left over after necessary deductions like Social Security and taxes.

The limits for wage garnishment are based on the type of debt. It's worth noting that some states utilize the federal guidelines, while others impose their own. For this reason, it's a good idea to look at what the guidelines are in your state if you're interested in learning how much of your wages can be garnished.

Here are the federal limits on the percentage of disposable income that can be garnished by a creditor:

Can a Creditor Sue Me to Collect an Old Debt?

If you have an unpaid debt that is several years old, you might be wondering if the creditor can still try to get a wage garnishment order against you. Though debts typically only disappear until they're paid and generally don't expire, many states do have statutes of limitations on how long a creditor has to sue you in order to try and collect the debt.

Some debts don't have a statute of limitations, however, including federal student loans.

Understanding Wage Garnishment Laws

Federal law dictates that, for ordinary garnishments, a certain portion of your earnings are exempt from wage garnishment. The amount of your income that is exempt is whichever is greater of the two following options:

These rules apply to consumer debts and other ordinary garnishments but don't apply to taxes, familial support, or bankruptcy.

While there are some states that follow the guidelines outlined by the federal government, others have set larger limits to the amount of a person's income that can be garnished through this process. Some states have even prohibited consumer debt wage garnishment. In the following states, your wages can't be garnished for consumer debts:

How Long Can a Creditor Garnish My Wages?

If a creditor receives a court judgment against you that orders your wages to be garnished, they can continue to do so until the debt has been repaid. 

Wage garnishment typically continues until a debt has been fully paid off. This means that it will not automatically stop after a certain number of years.

When you fail to make payments on a student loan that has been funded by the U.S. Department of Education, you might receive a document known as a notice of wage garnishment. You have thirty days to challenge the garnishment or arrange for a repayment plan. If you don't do this, the garnishment will go into effect and will not end until the debt has been paid off.

Can a Creditor Garnish My Wages For Ten Years?

Yes, wage garnishment can continue for seven years, ten years, or longer. How long you continue to have wages garnished from your paychecks depends on how long it takes for you to pay off the debt in full.

There are a number of things you can do to try and end wage garnishment when you aren't able to settle or pay the debt. We will take a look at your options in the next section.

Wage Garnishment: What to Do When You Can't Pay

There are several options on the table if you are motivated to stop a creditor from garnishing your wages under federal law as well as under each state's law.

File a Claim of Exemption

You might be able to protect some of your wages under your state's laws in certain circumstances. To do this, you'll need to file a claim of exemption with the court in your state. This is a process that entails asking for the creditor's garnishment to completely or partially stop.

File for Bankruptcy

Most types of wage garnishments will be immediately stopped when you file for bankruptcy. The reason for this is that there is an "automatic stay order" that will go into place at the time that you file. However, depending on the outcome of the case, this might only be temporary.

Depending on whether you file for Chapter 7 or Chapter 13 bankruptcy, the way the debt will be dealt with varies.

Of course, filing for bankruptcy isn't a decision you want to take lightly. It's also important to understand that several types of debts can't be discharged through bankruptcy. Here are some of the ways that bankruptcy can negatively impact your finances and your life:

Tax and Student Loan Debt: Your Options

Creditors don't need to get a judgment against you before they start taking money directly from your paycheck for certain types of debt, including unpaid taxes and student loan debt. You typically cannot discharge this type of debt through bankruptcy.

If you want to stop the garnishment of your wages for tax debt, there is a process you can go through to negotiate your unpaid tax bill with the IRS.

For student loan wage garnishments, you can request a hearing to challenge the garnishment. There are a number of reasons you might choose to request a hearing, including:

Stopping Wage Garnishment By Paying Your Debt

If you are able to pay off the debt in part or in full, that might be the best option for stopping wage garnishment. There are two primary ways you can do this:

  1. Settling the debt with the creditor, or
  2. Paying the garnishment and fully paying the debt over time

Settling the Debt With the Creditor

Creditors are motivated to recoup the money they are owed, and often would rather receive less money now in a lump sum than the full amount in smaller payments over time.

What this means is that you could be in a good position to settle the debt. You might find that the creditor will be willing to accept a smaller amount of money than the full balance of your debt if you are able to pay it now.

If you are able to come up with the money to pay off the settled amount, you will no longer have to deal with your wages being garnished. Of course, make sure that you receive the deal in writing from the creditor before making the payment.

Paying the Garnishment

If you don't stop the debt in some other way or settle the debt, the creditor will likely continue to take money directly from your paycheck. Every time they garnish your wages, the total balance that you owe will be reduced.

That being said, it's important to note that you'll likely also have to pay interest for many types of debt. Depending on your state's laws, the amount of money you owe in interest could vary from 2% to 18% in addition to the principal you owe.

If there is a significant interest rate attached to your debt, this can make it take a lot longer to pay off in full.

Wage Garnishment FAQs

Before I sign off, let's take a look at some common questions I receive about wage garnishment.

How Common Is Wage Garnishment?

If you are feeling overwhelmed by the fact that your wages are being garnished, it can be useful to know whether or not you're finding yourself in a unique situation. The truth is, there are more people out there getting their wages garnished than you might initially think.

According to the ADP Research Institute, 7% of employees in their study (which looked at 12 million individuals) had their wages garnished in 2016. This percentage increased to 10.2% for employees between the ages of 35 and 44.

The most common types of debt that individuals are dealing with when they have their wages garnished are:

What Are the Two Types of Garnishments?

It's worth noting that there are actually two different types of garnishments to be aware of:

Wage garnishment is when your employer is legally required by a creditor to give them part of your earnings in order to repay what you owe.

Nonwage garnishments, on the other hand, occur when a credit gains access to your bank account. These are also known as bank levies.

What Rights Do I Have If My Wages Are Being Garnished?

As a part of the wage garnishment process, you do have some rights. In most states in the U.S., however, the responsibility to be aware of these rights and exercise them falls on you.

Here are some things you'll want to be aware of if your wages are being garnished or you believe you are in danger of having your wages garnished:

Cleaning Up Your Credit Report When Your Wages Have Been Garnished

When your wages are being garnished for an unpaid debt, this process will typically continue until the debt has been fully repaid. Though it is difficult to stop wage garnishment once the creditor receives a court order, it isn't impossible. There is often a fairly short window for challenging wage garnishment, so it's important to act quickly once you have received notice.

You also might be able to file an exemption claim depending on the type of debt and the state you're in. It's possible that you'll have to respond to an exemption challenge from your creditor or go to court to present your case.

It is typically best to find an experienced attorney or other expert legal guidance when trying to stop wage garnishment. The truth is, there's a lot of variation between states when it comes to wage garnishment regulations, and they're often quite complicated.

Wage garnishment can have a significant impact on your current and future finances. Not only are you dealing with a reduction of income that can make it even harder to make ends meet, but it can also have a negative effect on your credit scores. Though your wage garnishment won't necessarily show up on your credit report, the series of missed payments that led to the garnishment will.

Are you interested in cleaning up your credit report and setting yourself up for a better financial future? Are you searching for resources to help you on your journey to improve your credit? If so, make sure you check out the rest of our Credit Building Tips blog!

Your credit score doesn't just have an impact on your ability to get a new credit card or take out a loan. It can also make it harder to find an apartment. In this article, we'll tackle the topic of renting with bad credit but high income.

Having bad credit can make your apartment search more difficult, but you'll find it's easier to score the perfect place if your income is high and you have money saved in the bank.

Solution icon There are a number of tactics you can use to rent when you make good money but don't have great credit. These include looking for landlords that don't run credit checks, offering to pay several months' rent up front, and proving your income and savings to prospective landlords.

If you're stressed about finding an apartment with imperfect credit, don't worry. Through some combination of the following strategies, you should be able to sign a new lease in no time.

Why Landlords Look at Your Credit When You Rent an Apartment

It's common for potential landlords to take a look at your credit before signing a lease. If you have a high income and are capable of making rent payments but your credit has seen better days, this can be a pretty frustrating reality.

apartment being rented by person with bad credit and high income

The reason that landlords will commonly check the credit of applicants is that they want to know how likely it is that renters will pay their rent on time, every time.

Your credit history can, therefore, make a big difference in whether or not you score the apartment of your dreams. It's a good idea to check your own credit so you can get a sense of what potential landlords will see when you apply.

They will typically also scrutinize your:

There are a number of different ways that landlords will check your credit, and some will also run a background check. This means that they will probably also be searching for any criminal history or history of evictions.

How to Rent an Apartment With Bad Credit and a High Income

If your credit is bad but you bring in a healthy salary every month, you have some options. There are a number of strategies you can use to score the apartment of your dreams even when you don't have a pristine credit history.

Thinking about buying instead of renting? Check out our posts about the credit score you need to buy a mobile home, how your credit score impacts the size of your home loan, and whether it's bad to get a new credit card before buying a house.

1. Look For Apartments That Don't Require a Credit Check

Perhaps one of the easiest things you can do to rent an apartment with bad credit, regardless of your income, is to look for rentals that don't require a credit check.

apartment for rent person with high income bad credit

How easy it is to find a landlord who won't want to run a credit and background check is going to depend on your location. In some areas where most properties are owned by bigger landlords, for example, you might struggle to find any owners who won't want to look at your credit. In places where there isn't as big of a rental market and smaller landlords, though, you might have better luck.

In general, if you want to avoid a credit check during your apartment hunt, you should look for the following:

Typically, the following types of landlords or properties will require a credit check:

2. Work With a Real Estate Agent

Another thing you can do to find an apartment when your credit is poor is to work with a real estate agent. They'll know the ins and outs of your local market and likely have a good sense of which properties won't require a credit check.

In some markets, it's very common to work with a real estate agent to find a rental.

This typically comes at a cost-- you usually have to pay a finders fee once you sign a lease. This is commonly a percentage of the rent you'll pay for a year. Depending on the rental rate, this can be a substantial amount of money, so you'll want to make sure you understand the fees before signing on with a real estate agent.

3. Provide Evidence of Your High Income

When you have a low credit score, it is an indication that you have not practiced responsible borrowing habits. This can be a red flag to landlords who simply want to rent to people who will pay on time and not cause any trouble.

If you have a high income, though, you might be able to show this to a prospective landlord in a way that will help alleviate their doubts about your trustworthiness as a renter.

You might also show them that you have access to a large credit line to help give them a little more peace of mind.

4. Show Proof of Your Savings

If you have a substantial amount of money saved up, it can be useful to prove this to potential landlords in addition to your high income.

In the best-case scenario, you'll be able to show that your savings account has enough money to cover move-in costs plus three months of rent.

5. Be Honest About Your Credit

Sometimes, people have bad credit because they have been truly irresponsible as borrowers. In other cases, though, there is a totally understandable reason for a lower-than-ideal score.

If you want to rent an apartment that requires a credit check, it's a good idea to be upfront and honest with the landlord. Having bad credit doesn't mean you're a bad person or a bad tenant, and landlords know this. If you can explain what happened that led to your credit hiccup, they might be willing to work with you.

Depending on the rental market you're in, it might be appropriate to send a letter of explanation along with your application, or it might be better to talk to the landlord in person.

6. Show That You're Working to Improve Your Credit

You can also take the time to show your potential landlord that you are actively working to improve your credit. If you send a letter of explanation, you can discuss the concrete steps you're taking and prove that your credit score is already on the rise.

7. Consider Paying Several Months Rent Upfront

Perhaps one of the most effective strategies you can use to rent an apartment when you have a high income but bad credit is to offer to pay more than just the standard first month, last month, and security deposit.

One of the reasons landlords are skeptical of renting to people with bad credit is they're worried the tenants will miss rent payments. When this happens, landlords are still on the hook for mortgage and operating costs, which puts them in a financial bind. Beyond that, tenants who continuously miss rent payments might end up causing a legal nightmare if the landlord has to pursue an eviction.

If you offer to pay more up front, such as three months' rent on top of the standard first month/last month/security deposit, it will show the landlord that you are financially capable of paying the rent. It also lets them know that you're serious about renting the place and motivated to prove yourself as a good renter.

Beyond that, paying more upfront gives the landlord a bit more protection. They expect to generate a certain amount of income through rent, and knowing that you're paid through the first several months can make them more confident in your ability to pay on time.

8. Use a Co-signer

Another option on the table is to find a co-signer. Also sometimes called a guarantor, a co-signer is a person that is agreeing to foot the bill if you don't pay your rent on time.

Since this is a pretty big commitment on the part of the co-signer, this role is typically played by a parent or close family member. In order for a co-signer to be useful, they will need to have good credit and, ideally, very good credit. Additionally, they will need to hand over proof of income as a part of the application process.

Landlords will often want to see that co-signers have an income that is at least 80 times the monthly rent.

Before you start looking for a co-signer, it's important to consider the potentially negative implications of this type of partnership. Mixing family and money can be a tricky business, and if you fail to pay your rent and your co-signer is forced to take responsibility for it, there's a good chance it will cause tension and strife. You never want to take on a co-signer for something you can't reasonably afford, so this is something you'll want to consider seriously before going this route.

9. Consider Applying With a Roommate

Finally, another step you can take to score an apartment with bad credit but a high income is to consider renting with a co-tenant. Of course, it's essential that this co-tenant has good credit; otherwise, it won't help you prove your case as a responsible renter.

Not everyone is thrilled by the idea of living with a roommate, but this can be a good option if none of the others are working for you. You can save money by splitting your housing costs with another person while you work to build your credit. With attention and dedication, you'll eventually be able to rent a place of your own.

The Impact of Your Credit on Your Life

Credit scores and credit reports can feel pretty abstract a lot of the time, but the truth is that they can have a huge impact on the quality of your life. If you want to rent an apartment, for example, having bad credit can make the search much more difficult and limit your options.

That being said, having bad credit with a high income does give you some advantages compared to having bad credit with a low (or no) income. With some money coming in every month and money in the bank, you'll likely find there are some landlords out there who are willing to work with you.

If you're thinking about renting an apartment soon, but you're worried about your bad credit, it's a good idea to start working to build your credit now. For more resources about how to improve your credit and open up more financial opportunities for yourself in the future, make sure you check out our Credit Building Tips blog.

If your credit card account is paid off in full and you initiate a refund, how does it work? What happens if you get a refund on a credit card with a 0 balance?

Credit card refunds don't work in the same way as cash or debit card refunds because it's actually the card issuer that paid the merchant or vendor, not you. This means that you won't receive the refund in cash, but instead as a credit to your account.

Solution icon If you have paid off your balance in full before a refund is issued, you will have a negative balance on your account. The next time you make a purchase using your card, this credit will be used first. If the refund is for a substantial amount of money or you don't intend to use that credit card again, you might be able to ask for the money to be sent as a check.

Let's take a closer look at what you need to know about credit card refunds and what to expect when you have a negative balance on your account.

What Is a Credit Card Refund?

If you buy something using a credit card and then later return it, you won't be able to get your money back in cash. What will happen instead is that you'll receive a credit on your account. The credit that you'll receive will be equal to the amount of the original purchase.

person buying something they will return and get refund on credit card

Typically, the refund process will start once the merchant has agreed to accept your return and issue you a refund. However, if the person you bought the item or service from refuses to give you a refund or is unable to, it's possible you can utilize your return protection.

In order to determine whether or not your circumstance qualifies for return protection, you'll want to contact your credit card issuer. They will be able to help you understand the protection policy associated with your card.

How Credit Card Refunds Work

Understanding how credit card refunds work requires that you first understand the steps involved in processing a transaction.

When you buy something using your credit card, you aren't actually the one that is paying the merchant. Instead, the credit card company is.

getting refund on credit card with no balance

Once the purchase has been made, you'll see your available balance go down on your credit card account. When you make payments to pay down your credit card balance, you're paying the credit card company back for the money they lent you for purchases.

Also involved in the process are credit card networks. These are companies that act as a mediator between merchants and credit card issuers in order to process payments. Before you can receive a refund for your purchase, the merchant has to send the refund to the credit card company.

It is for this reason that you can't use another payment method to receive a refund for a credit card purchase (i.e., receiving the refund in cash or putting it on another card). Similarly, this is why it can often take a number of days to receive a credit card refund.

How Long It Takes to Get a Credit Card Refund

It will typically take several days in order to see the credit appear on your account after a refund. This is because the return has to go through a specific process via the credit card networks.

There are three key methods that will determine precisely when you can expect your refund to show up, which are:

  1. The credit card issuer
  2. The merchant
  3. The return method

For example, you might find that you receive credit for your refund more quickly if you are returning the item in person. In general, though, it will take between five and fourteen business days to see the credit show up on your account.

If you want to have access to the refund money as quickly as possible and you expect to make another purchase from the same merchant, one alternative is to ask for store credit. However, it's important to understand you will still owe the credit card issuer the money you have used for the original transaction.

What Happens If You Get a Refund on a Credit Card With 0 Balance?

Let's say you made a purchase on your credit card, and you have since paid down the account balance to $0. If you then go to return that item, what will happen to the balance on your account?

Usually, this will result in having a negative balance on your account. Basically, the credit card issuer will owe you money rather than the other way around. The next time you make a purchase, this negative balance will be used first.

For example, let's say you have a $0 balance, and you return an item with an original purchase price of $50. Once the refund is credited to your account, you will have a balance of negative fifty dollars.

If you were then to purchase something else for $50 using that same card, your balance would return to $0, and you wouldn't owe the credit card issuer any money. If you were to purchase something else for $100 using the same card, your balance would be $50 after applying the negative balance.

While this usually isn't a problem so long as you regularly use this particular credit card, you might be wondering what you can do to have access to your funds if you don't plan on using the card anytime soon. For a particularly large negative balance or a card you rarely use, you can ask the issuer to send you a check in the amount of the negative balance.

What Is a Negative Credit Card Balance?

The word 'negative' in the term 'negative credit card balance' makes it sound like it's a bad thing. In actuality, having a negative credit card balance means that you owe less than nothing to the credit card company-- they actually owe you money.

This can occur for a few different reasons, the most common of which are:

  1. You overpaid your outstanding balance
  2. You initiated a return that refunded your account
  3. You earned a statement credit through rewards
  4. You had fees canceled or waived
  5. You had a fraudulent charge removed after already paying for the transaction

There's nothing wrong with having a negative balance on your card. The next time you use your card, this credit will go toward the purchase price before you owe the credit card company any more money.

However, you can request a deposit if you don't want the credit sitting in your account unused. Usually, a credit card issuer will be willing to send you the money through direct deposit to your bank account, a check, or a money order.

Credit Card Refund FAQ

Before I sign off, let's take a look at some of the most commonly asked questions about credit card refunds.

What Is Return Protection on a Credit Card?

Some credit card issuers offer credit card return protection. This is a perk that allows cardholders to make a return even when the merchant won't allow it. Even if the retailer does allow returns, having a card with return protection can extend the period of time you are eligible to return an item.

This is, unfortunately, a perk that is less and less common. Many issuers have recently been phasing out this type of benefit. For that reason, you don't want to assume that your card has return protection and instead should look closely at the details of your card agreement and benefits.

What's the Difference Between a Refund and a Chargeback?

Money can be returned to a cardholder through both refunds and chargebacks. However, these two processes occur for different reasons and aren't exactly the same in their process.

If you want to return something and receive credit on your account, you will have to go through the merchant. There are typically parameters you have to follow in order to return an item for a full refund, and these are set by the merchant themselves.

If you want to get a credit card chargeback, you will go through your credit card issuer. To do so, you'll have to dispute the particular transaction with your credit card company. They will then initiate a chargeback with the bank of the merchant, and the merchant will have to prove that they provided the described product or service to you. If this evidence can't be provided, you will usually be granted the chargeback and see the disputed amount show up as a credit on your account.

When Should I Use the Chargeback Process?

When you initiate a chargeback, you are disputing a purchase that has already been charged to your credit card account. Rather than being paid directly from the vendor or the merchant, a chargeback is processed by your bank or credit card issuer.

There are a number of different reasons you can choose to use the chargeback process. These include:

Going through the chargeback process can actually be pretty time-consuming. The merchant can end up owing the credit card company if the dispute is ruled in the cardholders favor. For this reason, many merchants prefer to simply have generous return policies rather than facing the chargeback process while also potentially alienating a customer.

Are There Any Downsides to Credit Card Refunds?

Being refunded after you return an item or are displeased with a service is a fairly straightforward process. For most people, receiving a credit on their credit card balance is just as good a method of receiving their refund as any other.

That being said, there are a few disadvantages to be aware of when initiating a refund for a purchase made with a credit card.

You'll Most Likely Lose the Rewards You Earned

Do you use your credit card rather than other payment methods in order to benefit from the points or perks you earn? If so, you'll want to know that you'll likely lose the points that were earned on the particular purchase if you initiate a return.

As the cardholder, you'll be expected to return any reward points that are associated with the money used for the purchase. This doesn't just have to do with cash back or travel miles, either-- it also applies to sign-up bonuses and other spending-based incentives.

For example, let's say that you have to spend $2000 in the first four months of opening your account in order to receive a promotional sign-on bonus. If you make a $500 purchase toward the end of this period so that you qualify for the bonus, you'll want to understand that you'll lose the bonus if you were to return the same $500 purchase.

You Probably Won't Get Reimbursed For Foreign Transaction Fees

If you are returning a foreign purchase, it's worth understanding that you'll probably get stuck with any foreign transaction fee. The reason for this is that it costs your credit card issuer money when you make an international purchase.

Credit card companies need to process international purchases through currency market purchases. In order to allow you to buy the item or service originally, they took on additional costs.

The specific terms, however, will ultimately vary depending on your credit card issuer and the card itself. It never hurts to ask, at the end of the day, as it's possible your issuer will be willing to send you a refund for foreign transaction fees via statement credit. You will generally have an easier time of this if currency values haven't fluctuated significantly since the time of purchase and if you swiftly made the return after purchase.

What Do I Do If a Merchant Won't Issue a Refund?

When you purchase a product or service that you want to return, the first step is to contact the company that sold it to you. Ask them if they will reverse the charge. Depending on the circumstance, they might ask that you return the product to them.

If the merchant's response isn't satisfying to you, it's possible you will be able to dispute the charge. To dispute a charge, you'll want to contact the credit card company associated with the account you used to make the purchase.

This process is known as a chargeback. Card issuers will sometimes offer protections if you received a defective item or if you otherwise didn't receive the goods or services you purchased.

It's also possible that you may be granted the right not to pay the remaining balance on a purchase if you only paid part of a bill for a product or service that you purchased with the card. In order to be considered for this type of chargeback, you will typically need to meet the following criteria:

Does a Credit Card Refund Count as a Payment?

Another important question to answer is whether credit card refunds count as a payment. After all, if you have a minimum payment of $50 and you received a statement credit for $50 due to a refund, you're probably wondering whether you're still on the hook for your minimum payment this month.

Usually, getting a refund to your credit card counts as an account credit doesn't count toward your minimum payment. Though it would be nice if it was viewed as a payment by the issuer, this is not the case.

This means that you'll still be responsible for making your minimum monthly payment even if you receive a refund equal to or larger than that amount. Otherwise, you could get hit with a late payment fee and even a mark on your credit report if you don't quickly remedy the issue.

Will a Credit Card Return Impact My Credit Score?

When you receive a credit card refund, it will usually help to reduce your total outstanding balance. This means that a refund is generally a positive thing for your credit score. There are a number of factors that impact your credit score, but one of the most significant factors is "amounts owed." When either your FICO score or VantageScore is calculated, 30% of your score results from this category.

For example, let's say that you have a credit limit of $2,000 and the balance on your card is $600. This would mean you have a credit utilization ratio of 30%, which is just about as high as experts suggest you let your credit utilization get.

What happens, though, if you make a return and receive a $200 refund? This would mean that your balance goes down to $400, reducing your credit utilization to 20%. When it comes to credit utilization, lower is always better, and keeping your balances low in relation to your credit limit is a great way to maintain a healthy credit score.

Credit Card Refunds: Final Thoughts

If you initiate a return for a purchase you made with a credit card, the merchant will first have to agree to send a refund. Since it was actually the credit card company that paid the merchant on your behalf, the money will be sent to your credit card issuer, not directly to you. This means that you will end up with a credit on your account.

If you have already paid off your account balance in full, this will result in a negative balance. The next time you go to make a purchase, this credit will be used first before you start racking up a positive balance.

For some refunds, the dollar amount might be large enough that it isn't ideal for it to be sitting as a credit in your account. In these cases, you might be able to ask the credit card company to send you a check in the amount of the refund.

Similarly, if you don't plan to use that credit card in the near future, the issuer might be willing to send you the funds in cash. If they go unused for a certain amount of time, it's possible they will send you the check unsolicited.

Are you on a mission to improve your credit and increase the financial opportunities available to you? If so, make sure you check out our Credit Building Tips blog for more resources, guides, and helpful tips.

Credit card application questions will ask you a series of questions when you apply online. What if you accidentally put the wrong income on your credit card application? Are there any potential repercussions?

The truth is that credit card companies do not typically verify the income of every applicant. This would simply be too costly and time-consuming, given how many applications they receive on a daily basis.

Solution icon At the same time, it's important to understand that a credit card application is considered a legal document. This means that you are exposing yourself to a number of potential consequences when you misrepresent your income.

For this reason, it's a good idea to provide accurate information on your application. If you accidentally entered the wrong income, the safest bet is to change your income using your online account or call your card issuer to explain what occurred.

Is It Fraud to Lie on a Credit Card Application?

Lying about your income when applying for a credit card is considered fraud-- specifically known as loan application fraud. This is a crime that can come with some pretty substantial penalties, including fines and even time in jail.

applying for credit card online entering wrong income

You are signing a legal document when you apply for a credit card. For this reason, it's important to make sure you are reporting your income accurately.

Even though this sounds pretty scary, the truth is that it's pretty unlikely to be convicted for loan application fraud for misreporting your income on a credit card application. This is particularly the case if you only made a small error when it comes to reporting your income.

At the same time, people will occasionally be prosecuted for loan application fraud. For example, a particularly egregious case involved a Minnesota man who committed loan application fraud to the tune of nearly half a million dollars, immediately filing for bankruptcy right after he collected his last payment. For his crimes, he was ordered to pay more than $700,000 in restitution and spend 57 months in federal prison.

Do Credit Card Companies Verify Income?

Major credit card issuers are likely receiving tens if not hundreds of thousands of applications on a daily basis. Despite their sizeable workforce, this makes it impractical to analyze each application closely.

Typically, it isn't worth expending the required resources for a credit card company to verify your income. Financial institutions will, however, ask for proof of income when the stakes are much higher, such as taking out a mortgage or another large loan.

Not quite sure what counts as income when applying for a credit card? Check out our guide to properly reporting income on credit card applications.

Can Credit Card Companies Access My Bank Account?

In some cases, credit card companies might ask you to submit pay stubs or bank statements in order to verify your income. However, they aren't going to be able to look at your bank account information without you giving them permission. How much money is in your bank account also won't appear on your credit report.

What credit card issuers will be able to see when they do a hard pull of your credit is your credit history. This will help them understand how risky you are as a borrower, which basically means how likely you are to pay back debt on time.

You can get free copies of your credit reports from By checking your credit reports, you can see what potential creditors will be able to see when they do a hard inquiry into your credit.

Even though credit card companies won't have easy access to your income or how much money you have in your bank accounts, you still don't want to overstate your income on your application. Issuers can sometimes ask applicants for proof of income randomly, and you could end up having your application rejected if your reported income doesn't match the proof you provide.

You will also draw more attention to yourself if you start falling behind on your payments. Financial institutions might investigate why you are being offered a credit limit you don't seem to be able to keep up with. For instance, American Express is known for watching out for red flags that can lead to an audit and a locked account. When this happens, borrowers won't be able to use their credit anymore until income verification or other data is provided.

I Accidentally Put the Wrong Income on My Credit Card Application. Now What?

Applying for a credit card these days is a very simple process. They'll typically ask you for personal and financial information, including your:

As you might imagine, having a higher income can help improve your chances of being approved. Beyond that, this can also lead you to receive a higher credit limit.

applying for credit card online and accidentally entering wrong income

At the same time, it's really best to avoid overstating your income on a credit card application. Though there might not be any repercussions, particularly if you practice responsible repayment habits, the potential consequences are severe enough that it really isn't worth the risk.

What to Do If You Put the Wrong Income on a Credit Card Application

What you should do if you accidentally put the wrong income on your credit card application is going to depend on a number of factors.

There also might be the ability to change your income through your online account. If you are worried about having improperly listed your income on your application and you were approved for the card, consider changing your income using the online interface.

The Potential Consequences of Reporting the Wrong Income on a Credit Card Application

If you lie on a credit card application, it is possible you could face some very unappealing consequences. Both the intent of the misinformation and the severity can impact how you are affected.

Denying Your Credit Card Application

One thing that might happen if you lie about your income, even if accidentally, is that your credit card application could be denied. While credit card companies don't always verify income, it's possible that they could catch you in the act after some red flags are raised.

It is considered fraudulent to lie on a credit card application. For this reason, if fraud is suspected, your application will likely be rejected immediately.

Closing Your Account

If you were approved for a new credit card despite the fact that you misstated your income on the application, it doesn't necessarily mean you're in the clear.

If a credit card issuer becomes aware of a discrepancy between your reported income and your actual income, they could close your account. This is particularly true if it becomes clear that your income was intentionally misrepresented.

Receiving Too Much Credit

Telling the credit card company that you make more money than you actually do can mean you have access to a higher credit limit. While this might seem like a good thing-- after all, you can borrow more money, and it can help your credit utilization ratio-- there are some risks involved.

When you enter your income on a credit card application, the issuer will use this information (among other pieces of information) to calculate how much money they can extend to you.

If you are using more credit than you are able to actually pay back, this can have a negative impact on your credit score and leave you with spiraling debt. Some people are able to resist the urge to spend more than they can afford, but others are easily tempted to max out cards regardless of their ability to repay what they owe.

Facing Legal Consequences

It is possible that there could be legal repercussions that result from providing false information. This is particularly the case if it appears you did so intentionally. While accidentally entering slightly incorrect income information might never come back to bite you, intentionally misrepresenting your financial circumstances could leave you facing legal action.

Credit Card Applications and Income FAQ

Before I sign off, let's take a closer look at some of the most common questions I'm asked about reporting income on credit card applications.

What Happens If I Declare Bankruptcy After Lying on a Credit Card Application?

If you find yourself in a situation where you have to declare bankruptcy, there are a number of types of debt that can be wiped from your record. If you file for Chapter 7 bankruptcy, the following debts can typically be discharged:

However, your ability to use bankruptcy as a tool to escape credit card debt is going to be compromised if you misrepresent your income on a credit card application. If the financial institution believes that you lied on your application, they can ask that the debt you owe isn't discharged. By misstating your income, it can be argued that you never actually planned to repay the debt and instead had schemed to use the bankruptcy process to intentionally borrow money and have the debt discharged.

What Are the Risks of Taking on More Credit Than I Can Handle?

If you tell the credit card companies your income is higher than it actually is, whether intentionally or not, it can mean you are extended more credit than you can reasonably repay.

There are a number of potential risks of taking on more credit than you can handle. These include:

Additional Risks of Having Too High of a Credit Limit

What else can happen if your credit limit is higher than you can afford? Here are some other things to watch out for.

What Factors Do Credit Card Companies Use to Determine Credit Limits?

Income is only one of the factors a credit card company will use to determine whether your application will be accepted and, if so, what your credit limit will be.

To calculate your credit limit, the information they'll use includes:

Beyond the particulars of your circumstances, other factors can influence the credit limit you are offered. For example, the state of the economy can have an impact on the underwriting standards of a credit card company. If the larger economy is in a bad spot, for example, you might not receive as high a credit limit as you would if the economy is robust.

How Can I Get a Credit Card With a Low Income?

If you're tempted to lie on your application because you have low or no income, you might be interested to learn about the best options for low-income individuals.

Here are some things you can look for when shopping around for a credit card for low-income earners:

How Can I Get a Credit Card With No Job?

If you want to apply for a credit card but aren't employed, you'll want to consider whether you have any income you can report on your application.

Here are some things you could include, if applicable:

If you simply don't have a consistent source of income that will help you qualify for a credit card, here are some options:

Reporting Income on Card Applications: Final Thoughts

If you have only made a small error when it comes to your income on a credit card application, the chance that anything bad will end up happening is pretty small. At the same time, credit card applications are considered legal documents, and lying on these documents is considered fraud.

A large discrepancy between your stated income and your actual income could end up causing you trouble, on the other hand. The credit card company could ask you to verify your income and could deny your application or close your account if they find that you misrepresented how much money you make. Furthermore, credit card issuers could also use this as a reason to ask that your credit card debt not be discharged in the event that you file for bankruptcy.

In general, it's best just to be honest when you're applying for a credit card. If you made an honest mistake when filling out your income and your application was accepted, you can change your income in your online account. Depending on the difference between your stated and actual income, it's possible this could cause a change in your credit limit.

Are you on a mission to improve your financial literacy? If you're working to build credit, incorporate good personal finance habits into your life, and generally work towards your financial goals, make sure you check out the rest of our Credit Building Tips blog.

When you realize that someone has been using your card without your permission, it's natural to want to track down the criminal and see that they face consequences for their actions. How often do credit card frauds get caught, though? Is there a good chance that the thief who stole your information will be brought in by law enforcement?

The answer is fairly complex, as there are a number of factors that can influence whether credit card thieves are ever caught. These include how sophisticated the criminals are, the type of fraud that was committed, and more.

Solution icon Some experts say that less than 1% of credit card fraudsters are actually caught. While this is disturbing news, it doesn't necessarily mean you're on the hook for unauthorized transactions made by these criminals. Thanks to the Fair Credit Billing Act, the most you can be liable for when your credit card is used fraudulently is $50.

Let's take a closer look at what you need to know about credit card fraud and how this type of crime is investigated.

What Is Credit Card Fraud?

When an unauthorized individual gains access to your credit card information and makes purchases with that information, they are committing credit card fraud.

person fraudulently using credit card getting caught

There are a number of different ways that fraudsters can get a hold of your personal financial info, including:

Whether someone physically has your credit card or has virtually accessed your credit card information, being a victim of credit card fraud can mean you incur unauthorized charges and damage your credit score.

Understanding the Types of Credit Card Fraud

In our increasingly digital world, there are a number of different ways that criminals can gain access to your credit card information. By learning about the different ways that your credit card can be used by crooks, you can help protect yourself from credit card fraud.

Card Not Present Fraud

A fraudster doesn't need to have your actual credit card in hand in order to do damage. When an individual or entity uses your card information without actually having access to your card, it's known as card-not-present fraud.

This type of fraud can be carried out through the mail, over the phone, or online. In 2022, more than $5 billion in losses occurred in the U.S. due to card-not-present fraud alone.


Another method used to gain access to your credit card information is card skimming. Criminals will place devices on unattended card readers, such as gas pumps, ATMs, or point-of-sale terminals. These devices, known as "skimmers," steal the information on a credit card and give thieves what they need to create fraudulent copies of your card.

It is estimated that more than $1 billion every year is lost due to credit card skimming.

Skimmers are designed to be difficult to spot, so you'll want to take extra precautions when you are using an unattended payment terminal or card reader.

Here are some of the ways you can identify card skimmers before you put your card in the slot:

Identity Theft

When someone commits fraud or other crimes using your personal information, it's known as identity theft. There were almost 1.4 reports of identity theft in the U.S. in 2021, according to the Federal Trade Commission.

Have you been the victim of identity theft? Check out my guide to repairing your credit after identity theft and fraud.


Phishing occurs when someone steals your personal information, such as account numbers or passwords, by tricking you into thinking they are contacting you from a reputable organization. This can occur through email or other messages.

Once they gain access to your private info, they might gain access to your accounts themselves or sell your account information to other criminals.

Stolen or Lost Credit Cards

Even though there are a number of ways a fraudster can gain access to your credit card account without ever physically possessing your card, you also need to be concerned about your credit card being stolen or lost.

If your credit card is missing or you think it might have been stolen, you'll want to call the card issuer right away. The quicker you act, the less likely someone else will have the opportunity to use your card to make unauthorized purchases.

Are you trying to boost your financial literacy when it comes to being a responsible cardholder? Check out my articles about whether opening a new card increases your credit score, guaranteed approval credit cards, and getting a credit card before buying a house.

Account Takeover

Another type of credit card fraud is known as an account takeover attack. This is when a criminal gains access to your online accounts with the intent to generate fraudulent transactions or otherwise seek to profit.

man with credit card worried about catching fraudster

Criminals who are involved in account takeover fraud will often purchase private information on the dark web. This information can come from a number of different places, but a prime source is data breaches. In 2020 alone, more than 300 million individuals were impacted by publicly reported data breaches.

Fraudsters will also sometimes use malware, phishing, or other methods in order to get a hold of your info. Once they have one set of usernames and passwords, they might try to log in to other accounts using the same information.

Account takeovers don't put your credit card accounts at risk. Here are just a few of the things that criminals can do with access to different types of accounts you may have:

How Do They Catch Credit Card Fraudsters?

In order to minimize the damage that criminals can do with your credit card information, early detection is essential. If you aren't diligently checking your accounts and credit report, it's possible for fraud to go undetected for a long period of time.

Once you let your credit card issuer know that there have been unauthorized transactions made using your account, they will typically close the card and issue you a new one. At the same time, they will begin a fraud investigation.

There are a number of things that this type of investigation can consist of, including:

Are you wondering whether a small unauthorized transaction will actually be pursued by the cops? Take a look at my guide to whether credit card theft under $500 is investigated by law inforcement.

How Often Do Credit Card Frauds Get Caught?

If you've been the victim of credit card fraud, it's natural to wonder what the chances are that the criminal wreaking havoc on your finances will be caught.

Unfortunately, the truth is that credit card fraudsters are not often caught. According to some estimates, law enforcement agencies only solve less than 1% of all credit card fraud cases.

Though this is fairly disturbing information, the truth is how likely it is for a fraudster to get caught will depend on the type of fraud that was committed. For example, if someone physically stole your card and you believe you know who is responsible, the chances of the thief being caught are much greater than if an unknown actor accessed your information virtually.

Similarly, if a criminal uses a stolen credit card in a brick-and-mortar store, a clerk might notice something suspicious and call the cops. At the end of the day, though, if you don't know the person who committed the crime, you may not ever find out who they are, and they may never face legal repercussions.

Factors That Influence the Likelihood of Catching a Credit Card Fraudster

There are a number of different factors that influence whether or not a fraudster is caught for their criminal activity, including:

Why Is It So Hard to Catch Credit Card Fraudsters?

The truth is that criminals stealing credit cards and other personal information can be quite sophisticated. Through the use of advanced technology and anonymous services, it can be very difficult to pinpoint exactly who is committing the crime.

Another reason that credit card thieves aren't often caught is that consumers don't always bother to file a police report. Instead, they contact their credit card issuer or financial institution. Even though an investigation will be launched by the issuer, if the transaction amount isn't high enough they might not file a police report. These types of financial institutions typically have insurance that helps them to cover the loss.

Finally, even if you do report the case to law enforcement, they might not have any success catching the criminal. Smaller fraud cases might sit on the sidelines due to higher-priority cases and limited resources. If there aren't any strong leads in a case, the truth is that police might not dig very deep to try and find the thief.

How Is Fraud Investigated By Credit Card Companies?

Credit card companies will investigate fraud when you report that there has been suspicious activity or unauthorized transactions on your account. In some cases, the issuers will alert you when activity occurs on the account that seems unusual.

The credit card company will typically look at the following when trying to determine whether or not fraud took place:

Credit card issuers might decide to contact law enforcement if they find there is a fraudulent charge or several fraudulent transactions. However, this is more likely if the loss resulting from the fraud that was committed was substantial. If they believe the fraud to be a part of a larger pattern, such as a part of a national fraud ring, they will be more likely to report it to the Federal Bureau of Investigation.

How Long Does It Usually Take to Catch a Credit Card Thief?

There is no simple answer to this question. The unfortunate reality is that many credit card thieves are never caught. However, in a situation where you believe you know who is responsible or there is a trail of evidence leading to the criminal, your chances are much greater that they will face the consequences of their actions.

Are you wondering what types of consequences a credit card fraudster will face if they are caught? Check out our post about whether credit card fraud is a felony and what the punishment is for the crime.

The Numbers on Credit Card Fraud

Credit card fraud is one of the most common types of fraud in the United States. According to the Federal Trade Commission, there were almost 390,000 credit card fraud reports in the year 2021.

If you believe you've been the victim of credit card fraud, you can follow this link to report it to the Federal Trade Commission.

A forecast released by the Nilson Report in the winter of 2022 found that card fraud will likely lead to more than $165 billion dollars in losses over the next decade. In 2022 alone, more than $5 billion was lost to just one type of credit card fraud-- card-not-present fraud.

Behind fraud involving government documents or benefits, credit card fraud was the second most common kind of identity theft in 2021 in the U.S.

Reports of credit card fraud and debit card fraud have been on the rise for years. It's estimated that global fraud losses that are related to either debit or credit cards will reach a whopping $47.22 billion by the year 2031.

How to Avoid Credit Card Fraud

When you look at the numbers on credit card fraud in the U.S., it's easy to start feeling pretty nervous about your physical card or your card information being used by bad actors.

Luckily, there are a number of things you can do to protect yourself from credit card fraud. Here are some of the steps you can take to keep yourself safe from financial harm due to credit card fraud and identity theft:

Additional Prevention Tips

Going the extra mile when it comes to protecting yourself from credit card fraud could mean you avoid dealing with the headaches of being an identity theft victim. Here are a few more things you can do to keep yourself safe from credit card fraud:

Prevention Is the Best Cure For Credit Card Fraud

If someone used your card information fraudulently, it can be pretty disturbing to realize that these criminals aren't often caught. However, the likelihood that the thief will actually be tracked down by law enforcement goes up quite a bit if you know who they are or if they left a trail of evidence during their crimes.

When it comes to credit card fraud, the good news is that you can seriously limit the damage it causes you by monitoring your credit reports and accounts regularly. Beyond that, by taking steps to protect your credit card information, there are a number of things you can do to prevent credit card fraud from ever occurring.

Finally, even if you do end up becoming a fraud victim despite your efforts, early detection, and swift action can ensure you aren't the one footing the bill for unauthorized transactions made by criminals.

Are you on a journey to build credit and clean up your credit report? Make sure you check out our Credit Building Tips blog for more guides, articles, and resources to help you along the way.

There are many benefits of having a credit card, including the ability to finance purchases, build credit, and earn rewards. Managing a credit card account can be a bit confusing, though, and understanding when you'll owe the money you spend can feel like a mystery. In this post, we're going to talk about what happens if you use your credit card on the due date.

If you make a purchase on the due date, will the transaction be included in the bill that is due the same day? Is it somehow a problem to use your card on the due date?

Solution icon If you use your credit card on the due date, you won't owe the issuer the money you've spent on the same day. Instead, it will be included as a part of the next billing cycle.

Let's take a closer look at everything you need to know about your credit card account's closing date and due date.

How to Find Your Credit Card Payment Due Date

In order to learn precisely when your credit card bill is due, there are three things you can do to find out your payment due date:

Using one of these methods, you can figure out what day of the month your credit card payment is due. It can generally be helpful to write your due dates on a calendar to help you remember to make your payments on time if you don't use an automatic payment system. When you miss a payment, it can mean you end up with a late payment mark on your credit report.

What Happens If You Use Your Credit Card on the Due Date?

If you're worried that making a purchase on your due date is going to mean you owe the money on the same day, I've got good news for you.


paying with a credit card on the payment due date

The credit that you use on your due date will be a part of a new billing cycle, as the closing date of the cycle you have a bill for has already passed.

Any purchases you make on the day your payment is due will be included in the next bill you receive. This is because the closing date on your account occurs before your payment due date. Any transactions made after the closing date are automatically a part of a new billing cycle.

For most credit card accounts, your billing cycle will end before the date that your payment is due. This means that any purchases you make on the due date will end up on the current billing cycle, not the one that you owe a payment on.

Can I Use My Credit Card in the Period Between the Closing Date and the Due Date?

You can use your card at any time (assuming you have available credit,) even between the closing date and the due date. After the closing date, any purchases will simply be included in the next billing statement.

Is it time for you to clean up your credit report? Check out our guides to getting rid of derogatory marks, credit repair hacks, removing collections from your report, and removing charge offs from your credit report.

The Difference Between Statement Closing Date and Payment Due Date

Two of the most important dates you'll want to understand as a credit card owner are the closing date and the due date.

Credit Card Statement Closing Date

The closing date is the final day of your billing cycle. Any charges made on this day will appear on your upcoming billing statement. Any charges that are made after this day will be included in the following month's billing statement.

Credit card accounts typically operate on a monthly billing cycle. Your statement closing date is the last day in a billing cycle. When a billing cycle ends, a bill is issued that is due on the payment due date and a new cycle begins.

In most cases, the day that your billing cycle closes will be the same every single month. This is generally the case even when the date falls on a bank holiday, federal holiday, or weekend.

Credit Card Payment Due Date

The payment due date, on the other hand, is the day that you will need to pay at least the minimum amount required in order to avoid late fees, additional interest charges, potential penalties, and possibly a hit to your credit score.

person buying something with a card on the credit card due date

Usually, your payment due date will be the same date every month. This isn't just a suggestion-- it's a firm deadline for making your payment. Beyond sending your payment on the date listed, there is often also a specific time of day when you have to initiate the payment for it to be considered on time.

Many card issuers require that you pay at least your minimum balance by a specific time on the due date. This time will vary depending on the company, but you should be able to find the details of the payment requirements in your cardmember agreement.

It's also worth noting that the time your payment is due on the due date typically uses the time zone where the payment will be processed by the card issuer. This means that the time it's due is based on a time zone other than the one where you are. Make sure you check whether it's EST, CST, MST, or PST so your payment isn't initiated after the required time in the proper time zone.

If your payment is received after the due date and time, it will most likely be credited to the following business day. This can mean you end up with a late payment, which can leave you with additional fees and other penalties. If you do miss a payment, make sure you pay at least the minimum right away to try and avoid the late payment showing up on your credit report. Many card issuers will also waive late fees for customers that have never before missed a payment, so it's worth calling them and asking them if they'll forgive the fee.

Understanding Credit Card Grace Periods

Using credit cards is by no means the cheapest way to borrow money. Interest rates for credit cards are remarkably high compared to other types of loan products, such as mortgages, auto loans, and even personal loans. However, if you pay the full balance of your card every month, you won't have to worry about ever paying interest.

A credit card grace period is a period of time when you might not accrue interest on your purchases. Typically, grace periods only apply to new purchases and not to transactions like balance transfers or cash advances.

The reason you can use credit cards without ever paying interest is because of the credit card grace period. You aren't charged any interest on your purchases during the grace period, which starts on the day your bill is generated, and the day the bill is due.

How Billing Cycles Determine Grace Periods

When you have a credit card, your account operates on a monthly billing cycle. The statement closing date and the payment due date are the two most important dates involved in your billing cycle.

In addition to noting these two crucial dates, your billing statement will show you two  key figures:

Using this information, we can gain a deeper understanding of how to use credit card grace periods to our advantage. If you pay the full statement balance listed on your bill by the payment due date, it will initiate a grace period for the next billing cycle. Once this new grace period begins, new purchases you make won't accrue any interest until the due date for that billing cycle.

This is something you can do over and over again, allowing you to completely avoid paying interest on your credit card debt. When you can pay off your balance in full every month on time, you can essentially borrow money for free from the credit card issuer for roughly 21 days.

Credit Card Payment Due Date FAQ

If you have more questions about how credit card payment due dates and statement closing dates work, you're in luck. Let's take a look at some of the most common questions we receive about these topics.

Are you worried that you've been the victim of credit card fraud? Take a look at our posts about whether you can track someone that used your card online, if credit card fraud is a felony, and how police deal with card theft.

Can I Change My Payment Due Date?

Every month, your credit card due date will fall on the same date. For instance, if your payment was due on the 2nd of this month, it will be due on the 2nd of every month to come.

Sometimes, though, the date you are assigned as a due date isn't a great financial fit. You might find that you are always a bit short of being able to pay the full statement balance by the due date because of other bills and the payroll schedule at your place of employment.

The good news is that most credit card companies give consumers the option to pick their own due date. If you think it could be beneficial to your personal finances to move your date, take a look at your typical paydays as well as the other bills you regularly have due throughout the month. Choose a day that would work better for you and give the credit card company a call to see if they would be willing to move your due date.

It's worth noting that a change to your due date won't take effect immediately. Instead, it typically takes one billing cycle. Make sure you check your next billing statement to see which date the payment is due to ensure there isn't any confusion.

What Do I Do If the Due Date Falls on a Weekend or Holiday?

Since your payment due date is the same date each month, you might be wondering what happens if it's a weekend or a holiday. Many banks and businesses aren't open on weekends or holidays, which could leave you curious about when your payment is actually due.

If your payment due date falls on a weekend or a holiday, you won't have to shuffle things around to pay early. Credit card companies are required by federal law to accept payments without charging you a penalty if your due date falls on a weekend or holiday.

In fact, credit card issuers technically cannot penalize you so long as the payment is received by 5 pm the following business day. Though this might lead you to believe you have a little extra time to pay your bill this month, the catch is that this rule only applies if the credit card issuer isn't accepting payments at all on that particular day. The reality is that credit card companies are always accepting payments, so you can pretty much assume that your payment is due on the date listed on your billing statement, even if it's a weekend or holiday.

What If I Miss a Payment?

Missing a credit card payment can feel incredibly frustrating, particularly if you simply forgot and let the payment due date slip by.

If you miss a payment, it's a good idea to pay at least the minimum amount as soon as possible. Though you will still probably get hit with a late fee, interest on the balance, and potentially even a penalty APR, paying before thirty days have passed can help keep the missed payment off your credit report.

You'll also want to call your credit card company and explain that missing the due date was an innocent mistake. If you've been a good borrower and this is the first time you missed a payment, they might refund your late fee. It's also possible that they will refund the interest that was charged if you pay off the entire balance.

To help you avoid missing payments in the future, you might consider setting up autopay or at least notifications to help you remember the due date. If you do set up autopay, it's imperative that you are certain there is enough money in the linked account on the payment date so your payment doesn't bounce.

How Does My Statement Closing Date Impact My Credit Score?

Your credit score is calculated based on a complex group of factors. One big factor is your credit utilization ratio, which is a number that represents the amount of credit you are using compared to the amount of credit you have available.

If you paid off your card in full, you might be disturbed to see that your credit score isn't reflecting your low balance. When you look at your credit report, you might see that the balance is still reported as larger than your actual current balance.

The reason for this has to do with when your credit card company reports your information to the credit bureaus. The higher your balances are in relation to your available credit, the higher your credit utilization ratio will be. This can drop your credit score, particularly if your credit utilization is more than 30%.

Credit card issuers commonly report to the credit bureaus at the end of each billing cycle. This means that they tend to report before your payment due date. If you want to keep your credit score as high as possible, it can be worth making payments before the end of the billing cycle rather than on the actual payment due date.

Should I Pay Off My Card in Full Before the Closing Date?

In general, paying off your entire statement balance on the due date is a great habit because it helps you avoid paying interest on the money you borrow. However, this doesn't necessarily mean that your credit score will reflect your good habits. This is because credit card companies often report to the credit bureaus at the end of each billing cycle, at the time of each payment due date.

If you are concerned with keeping your credit score as high as possible, it's a good idea to pay your entire balance before the closing date. This can help ensure that your zero balance will be reported to the credit bureaus. In turn, it should reflect in your credit utilization ratio and credit score.

Knowledge Is Power in Managing Credit

If you're worried that it's somehow a problem to use your credit card on the payment due date, you can rest easy. When you make a purchase on the same day your bill is due, it will simply be included on the next bill you receive. The reason for this is that your current bill is for the previous billing cycle, which pretty much always closes before the payment due date.

Having a credit card can be beneficial in a number of ways, but it can also wreak havoc on your financial life if you don't know how best to manage it. Missing credit card payments, letting accounts go into default, and having debts sent to collections can destroy your credit. Your credit score and report are important for a number of reasons, including helping you borrow money, rent an apartment, get a job, and much more.

Though the world of credit can feel overwhelming at first glance, it's worth taking the time to understand how you can best manage your credit. Through knowledge, you are empowered to shape your future financial opportunities in the way that best supports you.

Are you searching for more resources to help you build credit? Make sure you check out our Credit Building Tips blog for articles, how-tos, guides, and more.