Tag: credit score
Couples And Credit Scores: Is It A Match?

Couples And Credit Scores: Is It A Match?

Dear Readers: Imagine this scenario: Over a wonderful dinner, you and your sweetheart have discussed the future, what you each want out of life, your dream house, the possibility of a family, and everything seems to be pointing to your happiness. Then, the love of your life graciously offers to pick up the tab, hands over a credit card — and the card isn’t accepted. And then a second credit card gets the same response. Oops. Should warning bells go off? Or at least a caution light?

I’ve always believed that finance and romance should go hand in hand, and that couples need to be as open and honest about their financial feelings as they are about everything else. In fact, a study released last summer by researchers at the Brookings Institution, the Federal Reserve Board and UCLA narrows the financial focus for couples down to a very quantifiable number: your credit score. The study proposes that matching high credit scores can indicate not only financial compatibility but also a strong romantic match.

So, as Valentine’s Day approaches, I thought I’d give my readers’ love lives a potential boost by talking about the best way to boost their credit scores. Because if there’s one thing that can dampen the romance in a relationship, it’s not being able to get that loan or that mortgage — or even that perfect job — due to lousy credit.

Five Steps to Better Credit

Before we get into how to build a better credit score, let’s talk about why it’s important. Your credit score isn’t just about your ability to borrow money. It can affect many aspects of your life. Some companies use credit scores in making hiring decisions, landlords can use credit scores to screen rental applicants, and some insurance companies use your credit score to help determine your premium.

Plus, negative credit information generally stays on your credit report for seven years, so mishandling credit today can haunt you in years to come.

What can you do now? If you don’t know your current score, you can purchase it from one of the three major credit bureaus — Equifax, Experian, or TransUnion. Or better yet, some credit card issuers will provide credit scores for free, so be sure to check with your provider first. To put things into perspective, the top score is 850, the median is 725, and 760 or higher will typically qualify you for the best deals. Then, whatever your score, take these steps to keep it as high as possible:

–Pay your bills on time. Paying your bills on time and in full where possible is the best thing you can do. This alone accounts for about 35 percent of your score.

–Use credit cards with care. How much and how often you borrow makes up 30 percent of your score. Keep your credit card balances low — no more than 25 percent of your available limit.

–Increase the length of your credit history. The longer you have credit — and use it wisely — the better your score. Your history accounts for 15 percent of your score.

–Minimize new credit requests. Applying for multiple credit cards or loans in a given period of time can lower your score. New credit requests account for 10 percent.

–Hold different kinds of credit. About 10 percent of your score depends on the type of credit used. A consumer with revolving debt i.e., credit cards, a car loan, and a mortgage, and who keeps up payments, will have a higher score than someone who uses just one form of credit.

Why Couples Should Talk About This

I believe the way people handle money says a lot about them. It can indicate a sense of responsibility or lack of one. It can suggest how trustworthy a person is. And it can reveal attitudes about planning and working toward a goal. Ultimately, how you handle money reflects your values.

All of these things are relative and difficult to quantify, but a credit score is pretty tangible. Of course, your score can be affected by things out of your control. For instance, if you lose your job, you may end up being late on your bills. But if one partner in a relationship can’t handle debt, consistently runs up bills he or she can’t pay, or regularly falls behind on everyday financial obligations resulting in a low credit score, that can be a harbinger of future financial problems — and perhaps future relationship problems as well.

Making a Good Financial Match

So, if Valentine’s Day has you lovingly planning your future together, make sure you’re also financially compatible. Talk about your finances and your individual expectations. Lay it all out on the table: what you own, what you owe, your individual and mutual financial goals, and how you’ll share every-day and long-term financial responsibilities. Get your personal credit scores. If one of you has a lower score, talk about why this is, what this means, and how you can work together to raise it.

Whether it’s saving, paying off debt, buying a house or paying for a child’s education, today’s perfect romance will be affected by the future financial issues of having a life together — for better or worse. You can make it better by talking about these issues now, boosting your individual credit scores, and perhaps, at the same time, increasing your chances for a long and happy relationship.

Carrie Schwab-Pomerantz, Certified Financial Planner, is board chairwoman and president of the Charles Schwab Foundation and author of “The Charles Schwab Guide to Finances After Fifty.” Read more at http://schwab.com/book. You can email Carrie at askcarrie@schwab.com. For more updates, follow Carrie on LinkedIn and Twitter (@CarrieSchwab). This column is no substitute for individualized tax, legal or investment advice. Where specific advice is necessary or appropriate, consult with a qualified tax adviser, CPA, financial planner or investment manager. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
COPYRIGHT 2016 CHARLES SCHWAB & CO., INC. MEMBER SIPC.
DIST BY CREATORS SYNDICATE, INC. (0216-0472)

Photo: A couple holds hands on the beach. Flickr User Terrell Woods https://www.flickr.com/photos/terrellcwoods/8976772514/

A Few Tips To Bolster Your Credit Score

A Few Tips To Bolster Your Credit Score

By Patricia Sabatini, Pittsburgh Post-Gazette (TNS)

Except for maybe cholesterol numbers, few scores are more important in modern adult life than your credit score.

Unlike cholesterol, however, with credit scores, the higher, the better.

The American Bankers Association recently offered some tips for bulking up that crucial financial measure — used by lenders to gauge creditworthiness and by others in situations like setting insurance rates and deciding who gets hired.

––Review your credit report to ensure that it’s accurate. Errors that can be unfairly dragging down your score are common, said Corey Carlisle, senior vice president for the ABA. If you spot an error, such as an unpaid bill that isn’t yours, first try to clear it up with the company that reported it, then file a dispute with the credit bureau, Mr. Carlisle said.

Also look for accounts that may have been fraudulently opened in your name, or for old credit card accounts that you no longer use and may want to close, he said. For help understanding credit reports and scores, try the ABA at www.aba.com/consumers, the Federal Trade Commission at www.ftc.gov, and the websites for the main credit bureaus: www.Equifax.com, www.Experian.com and www.Transunion.com.

––Set up automatic bill payments so you don’t absent-mindedly pay late. The single biggest way to boost credit scores is to pay bills on time, Carlisle said. Payment history typically makes up about one-third of a credit score.

––Keep balances low on credit cards and other revolving credit. In creditors’ eyes, using too much of your available credit is unsettling because it could signal that you’re overextended financially. Even if you pay your bills in full each month, consistently racking up big balances can hurt.

––Apply for and open new credit accounts only as needed. “If you’re opening lots of cards you could potentially max them all out the next day,” Carlisle said. “We advise people to have the cards to pay bills and be financially sound, but not to open excessive amounts of accounts that could get you into trouble.”

In addition, each time you apply for a card, it triggers an inquiry into your credit history. Having too many hits over a long period of time can adversely affect your score.

––In general, don’t close old, paid-off accounts. Accounts in good standing with a long payment history are good for your score. Dumping a long-standing account could hurt by lowering the average age of your remaining accounts. Think twice about closing your oldest account, particularly if you don’t have much of a credit history.

––Talk to credit counselors if you’re in trouble. Using legitimate, nonprofit credit counseling can help you manage debt and won’t hurt your credit score, the ABA said. For information on debt management, contact the National Foundation for Consumer Credit at www.nfcc.org or 800-388-2227.

Photo: Longstanding credit cards help your credit score. Photo by StormKatt/Flickr

Stephanie Faris: How Gas Credit Cards Affect Your Credit Score

Stephanie Faris: How Gas Credit Cards Affect Your Credit Score

By Stephanie Faris, GOBankingRates.com (TNS)

Gas credit cards have declined in popularity over the past decade as consumers switched to using bank-issued cards at the pump. But for the credit-challenged, gas credit cards have long been touted as a way to quickly build credit, since even those with a less-than-desirable credit history can qualify and use them to build credit.
But are gas credit cards the best option for someone in search of a better credit score? Here are several factors to consider before you fill out that application.

PROS

GAS CREDIT CARDS ARE ACCESSIBLE

One of the biggest benefits to fuel cards is that they’re accessible to a wide consumer market. While standard credit cards may require a good or excellent credit score to open, a gas card provider will often issue a credit card to someone with less-than-stellar credit or no credit history at all.

YOU CAN EARN CREDIT CARD REWARDS AND REBATES ON GAS

Depending on the gas credit card you choose, you may be eligible for cash-back rebates on every dollar you spend at the pump. If you find yourself always fueling at the same gas station on your way to work or you have a fuel brand you prefer, this can be a huge bonus. Some of these cards require a minimum monthly purchase on gas each month to qualify for the rebate, however, so pick a gas card for a company that has a large selection of gas stations in the areas you frequently travel for best results.

PRE-QUALIFICATION PROTECTS YOUR CREDIT SCORE

When searching for a credit card, the process of applying and being rejected can take a toll on your already-low credit score. Fortunately, some credit card companies allow applicants to answer a few questions to determine if they’ll qualify before applying and incurring a hard inquiry on their credit, which can cause it to dip.

GAS CARDS OFFER CONVENIENCE

If you have a debit card, you probably already take advantage of the ability to pay at the pump. While gas cards extend this same convenience, many also offer small cards that fit on a cardholder’s key rings, allowing you to always have your payment method handy.

CONS

HIGHER INTEREST RATES

When choosing a gas card, be sure you compare interest rates from one franchise to another. Many gas cards come with interest rates in the 20 percent to 25 percent APR range, reports CreditCards.com, and with bad credit limiting your options, you may be forced to pay a higher rate than you can afford. Of course, your best option to build your credit and avoid paying interest is to pay your balance off each month rather than allowing it to accrue.

ANNUAL FEES

Because some gas credit cards come with annual fees, it’s important to scrutinize those fees carefully before applying. By being fully informed of the credit card’s terms at the outset, you can avoid unpleasant surprises once you have the card in your wallet.

LIMITED USE

Some gas credit cards are co-branded by a major issuer like Visa and MasterCard and can be used anywhere those cards are accepted. Others are dedicated gas credit cards are issued by a fuel company and are only usable at the gas stations bearing that brand’s name. On top of finding a card with favorable terms, you will have also have the card is issued by a gas station you’ll actually use.

ACCUMULATED COST

When your fuel cost is built into the rest of your monthly expenditures, you likely don’t even notice that expense. But with a gas credit card, you’ll get a bill at the end of the month for every gallon you’ve purchased. When you’re suddenly tasked with coming up with the funds to pay for your fuel purchases all month, you may find it’s more challenging to pay off the balance in full.

Fuel cards are an excellent option for consumers facing difficulty obtaining a general credit card. With careful selection, a customer can land a great gas card with low interest rates and rewards.

Stephanie Faris writes for GOBankingRates.com (), a leading portal for personal finance news and features, offering visitors the latest information on everything from interest rates to strategies on saving money, managing a budget and getting out of debt.

(c) 2015 GOBankingRates.com, a ConsumerTrack web property. Distributed by Tribune Content Agency, LLC

Image: Thomas Kohler via Flickr

One In Three Adults Admits To ‘Financial Infidelity’

One In Three Adults Admits To ‘Financial Infidelity’

By Heidi Stevens, Chicago Tribune

CHICAGO — One in three adults admitted to “financial infidelity” in a recent National Endowment for Financial Education poll, and 76 percent of those respondents said the deception affected their relationship. (“It meant nothing!” may be harder to get away with when “it” affects your credit score.)

The national survey of 2,035 respondents age 18 and older found that three in 10 have hidden a purchase, bank account, statement, bill or cash from their partner. Sixteen percent said they’ve lied to their partner about how much debt they have, and 14 percent admitted lying about their income.

One of the most fascinating revelations is why couples say they aren’t more forthright about their finances.

Just 16 percent said they lied because they were “embarrassed or fearful about my finances and didn’t want my partner to know.” Another 15 percent said they had never discussed finances with their partner and “feared they would disapprove” of the true picture.

A full 35 percent of respondents replied, “I believe that some aspects of my finances should remain private, even from my partner.”

The deceived partners don’t appear to agree, with 47 percent of respondents reporting that the deception eventually led to an argument and 33 percent reporting it led to “less trust in the relationship.” Thirteen percent said it “ultimately resulted in divorce.”

“Secrets cause fractures, and fractures cause divisions,” says relationship and conflict resolution expert Melanie Ross Mills. “When we’re hiding anything from someone we are supposed to be partnering with — in business, in marriage or in friendship — it’s going to cause a division.”

Financial experts at the National Endowment for Financial Education recommend couples take a “life values” quiz to help them start talking more honestly about money. (Questions touch on your thought process when purchasing a new car, how you define your ideal home and neighborhood, how you handle overdue bills, etc.)

Mills recommends scheduling regular “couples compass” meetings.

“Go through all the major areas — parenting, finances, intimacy — and have an honest discussion about where you’re on the same page and where you’re not,” she says. “If you’re not bringing each other in on your long-term plans, you’re most likely not fully investing in the partnership.”

Photo: 401(K) 2012 via Flickr