Wisconsin residents can learn from a recent study that covered a year of people's spending habits, and it shows that men and women both have bad credit behavior. Men, for example, are more likely to take cash advances, while women will carry balances on their cards. Such trends in credit debt can be damaging to the all-important FICO score.
Wisconsin residents who negotiated short sales with their mortgage lenders may be unknowingly suffering a greater negative impact to their credit profile than they initially anticipated. A recent inquiry has revealed that the current credit rating system is unable to distinguish between short sale and foreclosure. Because the system does not include a distinct code for short sales, short sales are often coded as foreclosures.
Those in Wisconsin experiencing economic difficulties may, at some point, consider filing for bankruptcy. Although people often hope for a fast, streamlined process, Chapter 13 bankruptcy can sometimes take up to five years; but, unlike Chapter 7, allows them to save their assets when filing. Of the approximately 1.175 million bankruptcies that were filed in the United States in 2012, 30 percent of the filings were Chapter 13 while the remainder were Chapter 7. Those who file Chapter 13 repay most, if not all, of their debts through a manageable budget plan that is tightly controlled and overseen by a court-appointed trustee.
When a bankruptcy is completed, a consumer's credit report should be updated to show that the person is no longer responsible for paying debts that were discharged. For a long time, the major credit bureaus were not as careful about updating reports as they should have been. However, the bureaus have recently been more consistent about updating credit reports, which means that this may be a good time for Wisconsin residents struggling with debt to seek the relief that bankruptcy can afford.
Many young Wisconsin residents may find themselves facing large balances on student loans upon graduation from college. With regard to student loans, those graduating now are a part of one of the most debt-ridden generations. The Federal Reserve Bank of New York reports that people under 40 currently hold nearly two-thirds of outstanding student loan debt. As a result, many of those who are struggling with debt are unable to take advantage of low interest rates to buy a home. To make matters worse, some student loans have interest rates as high as 12 percent. These loans typically cannot be refinanced to get lower rates, the way a mortgage or other loan can sometimes be changed. New federal loans are currently set at 3.4 percent, but that rate is set to increase to 6.8 percent this summer. Last year, Congress chose to extend the lower rate, but it is not clear whether that will happen again.