Ladies! The Startling Justification for Your Need to Request a Raise This Year

Women no longer need to rely on a husband or partner to manage the household finances.

According to Cary Carbonaro, author of “The Money Queen’s Guide” and Certified Financial Planner at United Capital, “99% of women will at some point be living on their own, whether straight out of college, through divorce or through death because women live longer,” and they must learn to manage their own finances and credit.

So, it was with a heavy heart that I read the findings of the most recent Credit Sesame internal data, which indicated that women made less money and had lower credit scores than men. This data was obtained from a subgroup of our 7 million users.

Definitely, women’s credit ratings are lower than men’s.

According to Credit Sesame data, by the end of 2015, men had an average credit score of 630 while women had an average credit score of 621. It may seem unimportant that there is a 9-point difference in credit scores.

According to Carbonaro, “the way credit works, the rich become richer and the poor get poorer.” “The wealthy, who are more likely to have good credit, pay less for a loan, but if you have financial difficulties and a poor credit score, you’re going to pay much more because of the higher interest rates you are offered,” says the author.

What women’s lower credit scores indicate

If there were a 9-point gap between prime credit (661-780) and super prime credit (781-850), you’d miss out on the greatest offers and interest rates when taking out a loan.

Even worse, there may be a 9-point gap between non-prime (601-660) and prime credit (661-780), meaning you would pay substantially higher interest rates on all loans.

Experian auto loan data from 2015 show that the average interest rate for a prime new car loan was 3.67% and for a subprime new car loan was 10.96%. In order to lower monthly payments, subprime auto loans have a longer term of 72 months as opposed to 60 months for prime auto loans. This can result in thousands of dollars less paid toward a car loan.

Over the course of a 30-year mortgage loan, that can add up to hundreds of thousands of dollars in interest.

Carbonaro describes a current client who is making mortgage loan payments at a 6.5% interest rate. “At these rates, she is paying 2.5% too much. She is also excessively overspending because she is underwater on her mortgage and cannot refinance. This is seriously affecting her retirement and making it difficult for her to pay her monthly expenditures.

Due to their lesser wages than men, women’s credit suffers.

American women made 78 cents for every dollar a man made in 2015, according to data given by the US Federal Government, and this ratio has been constant since 2001 between 76 and 78 cents.

I questioned Carbonaro as to why this was still taking place given that women hold just under 50% (49.3%) of all employment in this nation.

Nobody declares from the beginning that they will pay a woman less on purpose. But a lot of very real variables that do not affect men operate against women in the workforce, she says.

The first is that when it comes to their pay, privileges, and perks at work, women do not aggressively advocate for themselves.

When negotiating for clients, business partners, or when closing deals, women are positively seen. However, when negotiating their own pay, women are perceived as pushy, demanding, and “not kind,” according to Carbonaro, who cited a 2014 Harvard Business Review paper that examined published data on working adults and negotiations.

Why don’t women bargain for higher wages?

Women being paid less by employers and other very real reasons may weaken a woman’s will to advocate for herself. One is that women may spend longer away from the workforce than males do due to childbearing and caring for a kid or elderly parents. And as a result of these obligations, Carbonaro notes, women typically put in fewer hours in the office than males.

According to Carbonaro, “There is undeniable gender prejudice that both men and women have that harms women in negotiating their salary.” And because their debt-to-income ratio (DTI) is inherently higher when women have lower incomes, lenders are less likely to extend them credit, resulting in higher interest rates for vehicle loans, smaller credit card limits, and lower mortgages.

Your DTI is the difference between your income and the total of all your debt payments, including your mortgage. A healthy total DTI, according to Carbonaro, should be at most 36%.

Credit utilization, or how much credit is used compared to how much is extended, increases when credit limits are reduced, which lowers women’s credit scores. This was confirmed by the Credit Sesame data, where women’s credit utilization was 21% and men’s was 19% despite only a $230 difference in average amount.

According to internal data from Credit Sesame, people with credit utilization rates under 15% have the best credit scores.

According to Carbonaro, women should take all reasonable precautions to guard against having a low credit score and seek to improve it to the next highest tier. This calls for timely payment of all payments, the reduction of credit card debt (while keeping the accounts open), and unquestionably salary negotiations this year. If you believe your current position is unproductive, you may need to look for a new one and bargain for a higher compensation.

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