credit

A free “Credit Score Boot Camp.”

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Concerned about your credit score? You should be. Like it or not, that three-digit number can make a big difference in your life. Credit expert Beverly Harzog can help, with a free e-mail course called “Credit Score Boot Camp.”

Every week for six weeks, you’ll get true, actionable advice from Harzog on how to increase your score. Already have a decent FICO? Her tips can help you keep it that way.

The course author is a consumer finance analyst for U.S. News & World Report. But she’s no talking head who looks down on those who have credit issues. In fact, she freely admits she’s had issues of her own: The title of one of her books is “Confessions of a Credit Junkie: Everything You Need to Know to Avoid the Mistakes I Made.” (As an Amazon affiliate, I may receive a small fee for items bought through my links.)

 

Beverly may have a highfalutin title, but she’s one of the most down-to-earth people I know. And yep, I know her in real life, as the kids say. I’ve even stayed in her home and petted her impossibly cute pup, Marshall.

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Credit card requirements easing.

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The good news: Banks have lately made it a bit easier to get a credit card.

The bad news: Banks have lately made it a bit easier to get a credit card.

According to the Federal Reserve’s new quarterly survey of bank senior loan officers, nearly 15 percent of large banks and 25 percent of other banks have eased the required minimum credit score in the fourth quarter of 2021. This trend is likely to continue in 2022.

Notice that not all banks are doing this. Notice, too, that I said it’s both good and bad news.

The relaxing of standards could help people who don’t currently qualify for credit, or who qualify only for cards with lousy interest rates and lots of fees. Getting a legitimate card and using it carefully can help them build their credit history. Without a solid credit history, you’ll pay more than you must for things like car loans, vehicles and insurance.

The idea is to get the best possible card and, more important, to have a plan to build credit, not create debt. That’s the “bad news” part: Being able finally to get a card could harm someone who doesn’t have a plan in place. A credit card is not the ticket to the good life, with zero consequences attached. It’s a tool, and like any tool it can be used for good or for ill.

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Free weekly credit reports offer extended.

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During the pandemic, the big three credit reporting bureaus offered free weekly credit reports through April 21, 2021. Normally each of the bureaus – Equifax, Experian and TransUnion – would give you one free credit report each year. The pandemic changed that.

And continues to change it: The bureaus have committed to making a free weekly credit report through April 21, 2022.

While the extension is a response to the continuing financial issues caused by the pandemic, you don’t have to be in dire money straits to check your report. It’s a good idea to make sure there’s nothing on there that shouldn’t be.

Recently I checked my Experian credit report and found an error. According to the report, I’d had a certain card since 1976. Except that no, I didn’t have a credit card at that time. I didn’t get my first card until about five years later.

I challenged the information and Experian was all over it. I got an immediate note saying, “We’re looking into this, sit tight.” Soon after, I was notified that the incorrect info had been removed* and they were sorry it happened.

Mistakes happen – and sometimes they can be very bad for your credit. 

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How are credit scores calculated?

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You try hard, but still have a mediocre credit score. You pay no attention and have a great one. Just how are credit scores calculated, anyway?

Good question – and it has a complicated answer.

This is a topic I tackled for the “How Credit Works” section at Self.inc. “How are credit scores calculated?” takes a deep and nerdy dive into the issue of credit scores.

<<Surviving and Thriving has partnered with CardRatings for our coverage of credit card products. Surviving and Thriving and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses and recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.>>

Every so often I do a “read me elsewhere” roundup of articles I’ve written. Lately a lot of the work I’ve done is either editing someone else’s site, doing non-bylined stuff or writing stuff that’s so ridiculously specialized that I wouldn’t bore my readers by sharing it.

The topic of how credit scores are calculated is one that I think can help a lot of people, though. No matter how unfair you think the credit scoring system is, the fact is that we are currently stuck with it. A smart consumer will learn to operate within its confines. That is, unless you like paying many tens of thousands of dollars in extra interest during your lifetime.

From “very poor” to “exceptional,” credit scores matter. They determine the kind of interest rate you’ll get on housing, vehicle and other loans. They might determine whether you get that loan at all, at least from a conventional lender – and the others can somehow get away with charging loan rates of up to 35.99 percent. 

 

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How we use credit: A new federal report.

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A recent report from the Consumer Financial Protection Bureau contained a couple of concerns and a big surprise. For me, anyway.

“The consumer credit card market” states that both the total amount of credit line and the average amount of card debt have gone up over the past few years. No surprise there, given our national preoccupation with spending.

Here’s what got my attention: More people are signing up for secured credit cards, which require cash deposits. The number of secured cards provided by mass market issuers was 7 percent higher in 2016 than in 2015.

Until fairly recently most financial institutions haven’t put a whole lot of oomph into marketing secured cards. That’s changing, the federal agency notes, as consumer groups and the media suggest these cards as a good way to build credit scores.

What’s in it for the banks? Loyalty.

 

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Credit or debit? Here’s what consumers say.

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Recently the NerdWallet blog did a survey of more than 2,000 adults in the United States with regard to their use of plastic. Turns out that younger people prefer debit to credit.

The findings didn’t surprise me. But they did concern me.

Without credit use, you can’t build a good credit history. Without a good credit history, you will likely pay more interest than those without decent credit scores – that is, if you can get a loan at all.

This probably isn’t something people want to hear right after the Equifax data breach. But it’s something they need to know.

 

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Credit myths, plus a chance to win “Playbook Vol. 2.”

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Pop quiz! True or false:

Closing a credit card always decreases your credit score.

It is possible to lock all of your credit reports at once.

Utility payments are always included in credit scores.

Marital status affects your credit report.

Checking your credit score has an impact on your credit report.

If you said “false” to all of these, then you’re ahead of a bunch of your fellow citizens. Anywhere from 31 to 51 percent of those surveyed didn’t know that, according to a new study from TransUnion.

Want to learn a little more? Check out my guest post on I Pick Up Pennies. It’s an excerpt from “Your Playbook For Tough Times, Vol. 2: Needs And Wants Edition” – and if you act soon, you might win a copy.

 

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Credit score myths that will. not. die.

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th-1More than half of U.S. consumers (mistakenly) believe that carrying credit card balances will help improve their credit scores.

It won’t. It won’t. It won’t!

Yet according to the 2016 Capital One Credit Confidence Study, 52 percent of us still think it will. The study also mentioned a new (to me) credit score myth, one that’s believed by about the same number of people.

 

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Credit card debt got you down? You’re not alone

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thAlmost seven in 10 people surveyed by the National Foundation for Credit Counseling say their biggest financial worry is credit card debt.

Of the 1,869 respondents, 69 percent cited plastic arrears as being much, much scarier than having enough for retirement and emergencies (13 percent), paying off student loans (10 percent) or finding affordable housing (7 percent).

About 19 people checked answer E: “Nothing, I have no financial worries.” Lucky them.

It’s likely that most of the people reading the nonprofit agency’s website are already having money issues. But it wouldn’t surprise me if a decent number of the general population were also worried about credit card debt. And if they aren’t, maybe they should be.

 

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Nearing retirement? Check your credit

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th-2A whole lot of people approach retirement with a serious misconception about credit scoring.

A recent study from TransUnion indicates that almost half of Baby Boomers think that credit scores don’t matter as much after age 70.

Guess what? They do.

Generally speaking, seniors aren’t applying for mortgages or refinancing existing ones in their eighth decades. But a low credit score affects insurance premiums, auto loan interest rates and, maybe, getting accepted for long-term care.

Folks edging toward retirement with moderate to poor credit – or no credit – need to think about how they might handle any financial surprises. Even if you think that Social Security plus pension/retirement plan will let you live a cash-only lifestyle, you’re better off owning and using credit cards.

Life does tend to throw curveballs. Suppose during retirement…

 

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