Sep 20

I’ve written over the past months about the different factors that make up your credit score, and have referenced the site Credit Karma which provides a free scoring service that will help you monitor and improve your credit score. Today, let’s look at on time payments.

This one is a no-brainer. It’s a highly weighted part of your score but it’s also the one that you should never fail to keep at 100%. Even letting one account go past 30 days will have a detrimental impact to your score. It’s very simple. Pay the bill when it’s due. Never let your minimum payments become so large that you risk not being able to pay that bill. For the three cards I regularly use, I have a payment sent automatically each month, enough to cover the minimum so if the bill gets lost or misplaced, my biggest risk is to pay interest, but not to have missed the payment completely. One more article in this series, and then a wrap up and summary. Stay tuned.

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Mar 18


Let’s start this week with a recurring question -Does It Pay to Pay Off My Mortgage Early? Scott on Money addresses this question, offering discussion on what you should consider in making this decision.

The Time Management Ninja offered up a great list of 50 Things You’re Putting Off That You’ll Regret Later. Some of the list may seem obvious, but it’s a great list, and the theme for me was that these things just pile up, and by adopting a “just do it” approach you’ll have a heavy burden lifted off your shoulders.

This week Jeff Rose spoke to a group of college seniors at his alma mater, and was a bit taken aback when of the 50 or so in the room none raised his hand when asked if he knew what a Roth IRA was. To me, this raises new and troubling questions. Jeff’s response? Let’s Start a Movement (Roth IRA Style) And what a movement it will be. If I can quote Jeff – “On March 27, 2012, we’re going to have over 50 bloggers talk about why the Roth IRA is important, why they love it, and why every young investor needs to know more about it. ” 50? The movement is over 123 as I write this. The Roth can be a great tool to manage your lifetime tax bill, stay tuned and be part of the movement.

As the Roth conversation continues, Neal Frankle explains Roth IRA Recharacterization – What Your CPA Doesn’t Know. If Roth isn’t universally known, then the ability to convert from the traditional IRA to a Roth is even more obscure, and the concept of being able to reverse this through a recharacterization even less so. While we might forgive these CPAs, but we can also educate ourselves and potentially save a nice bit of money.

At Fabulously Broke, The Financial Blogger guest posted Early Retirement Extreme Idea or Reality? TFB has really worked out the numbers and is planning on retiring at 55. A nice goal. I wonder how many had a similar goal but the decade that just past changed their plans a bit. That would make an interesting research project.

I don’t usually include the major online papers in these roundups, but today, I’ll make an exception. Former Labor Secretary Robert Reich wrote Saving the Street From Itself, a reaction to the news that Greg Smith left Goldman Sachs and wrote a letter to the Times explaining his departure. After 12 years of raking in the big bucks he was sickened by how GS treated its customers. Without going into further detail, these two pieces are good reading and the Reich article has a comment of mine in the “NYT picks” tab, just one of a dozen chosen of the near 100 comments.

I guest posted at Best Rates In this week about how I am Taking Advantage of a Cash-Back Deal. There are some deals that are bit fringe, but I still had the urge to write about it, and was due to guest post elsewhere. A bit crazy, but the bucks add up fast on this one.

And to wrap it up, at My Money Blog – The Ethics of Credit Card Rewards and Bonuses. There are those who are concerned that signing up for a store card to get 10% off that day, but soon after, canceling, are being unethical. I can’t tell someone else how to feel, but I draw the line elsewhere. Doing so will hurt your credit score, but not your relationship with The Big Guy(tm).

Today’s roundup is named for the fact that J2’s basketball team made it to the finals, winning today’s game with the score above, and final game later today. Great to watch the kid’s get this far.

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Feb 26

Let’s start this week with Sustainable Life Blog’s Trade Borrow or Steal? An off-beat story of how the author’s office mates swap stuff. Elk meat, jam, beer, a whole lot of trading going on. Now, this may sound like bartering to the IRS,  but I wasn’t planning to tell.

At Stupid Cents, a guest post on the 5 Things That Have No Effect on Your Credit Score. I’ve written a number of articles on the componants of your credit score, it’s interesting to see what many assume impacts their score, but actually doesn’t.

One Frugal Girl asked Would $10,000 Change Your Life? I agree with her, that it would be nice to have an extra $10K, but it wouldn’t be life changing. I can’t help but think there are those for whom $10K would wipe out some high interest debt, maybe saving them $2K a year for years to come. For others, it might be seed money to start a new business.

Smart Money published 10 Things Prepaid Card Issuers Won’t Tell You. A nice article with some things that you’d expect about fees, rules, etc, but what caught my eye was the subtitle “Suze Orman and A-Rod are pitching these popular products, but experts say beware of the pitfalls.” Amen to that.

At No Debt Plan, Kevin wrote How I’m Saving 22% to 42% On My Mortgage Interest Through Refinancing. It’s pretty amazing how the monthly payments multiply and a bit of effort to refinance can save a huge chunk of the interest you’ll pay over the life of the loan.

And last this week, at Careful Cents, How to Use Balance Transfers to Save Money and Pay Off Debt. The Credit Card issuers are lending again, and many offer balance transfers for minimal fees and a zero interest rate. Taking advantage of these deals might save you thousands of dollars in interest over the year the zero rate applies.

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Jun 02

Last month I posted Too Little Debt, in which I discussed how a zero balance credit card bill is actually a negative to your credit score.

Today, I’d like to offer another aspect of your credit score – the Average Age of Open Credit Lines. Here, longer is better. This is one criteria that I really object to. Think about it, a card issuer decides to raise their rate or annual fee and you decide to get a new card from a different bank. If you had only that one card, you may be dropping your average time from many years right down to zero.

You can see from this chart, a snapshot from Credit Karma, that offers a view of the image of account age on your credit score. So, find a credit card or two with no fee and stick with it. Keep in mind, it’s simple math, if you have a few credit lines, adding a new one will have less impact on average time than if you only had one. You are also far better off canceling a more recent line than one that’s older than your personal average.  How old is your oldest card?

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May 25

As I mentioned last week, I’m in the midst of one more refinance.
Today, the appraiser came, and looked around. Given that the loan to value is less than 35% on my guestimated value, I’m not too concerned. On the other hand, I’m always curious how accurate sites like Zillow are.  I don’t care so much what the house is worth. When we move, it’s all relative, if we move into a like neighborhood, the transition would be lateral, sort of a trade. If we trade down, we’ll pocket some money, but that’s not in the plan.

I also just got my credit scores in the mail. There is a bankruptcy score, I scored 476 on a scale of 1 to 600. Never heard of that before. Don’t know if it’s good or bad. Then the actual credit score, drumroll, 800. I trust this to be a FICO score, maybe it’s not. Credit Karma is not quite the same, but close. It had me at 784 the past few months, but dropped me to 782 for the fact that I had this “hard inquiry” in submitting this application. I’d be higher except I have “Too many open accounts with outstanding balances.” Interesting. I pay in full every month and have been using 3 cards. An Amex Open that gives 5% at office supply stores and 3% for gas, and 2 cards from Citibank both giving miles on American Airlines, one an Amex, one a Mastercard. Citibank runs promotions that vary for each card. Also, some stores (like Costco) only take Amex. I suppose after I close on this new loan, purely for research, I can experiment by paying these cards before the statement is cut. The float has little value to me as rates are so low, and it would just be a data point to add to my understanding of how these thing impact the scores. Also I should check my AnnualCredit Report and see if any accounts show open that I meant to close. I had opened a WaMu (Washington Mutual) account as they provided an actual FICO score, but that deal is gone with Chase taking them over. Time to cancel that one.

When it comes to your credit score, some things are counter-intuitive. Refinance to a lower rate, and cancel a bunch of credit cards, grabbing one new one that has no fee and low interest and then max it out consolidating all the high interest debt, and you may very well trash your credit score. It’s all relative though, I can take a hit and easily recover from it. It’s more a science project for me than anything else.

For more reading on this topic, check out The Military Wallet’s article Credit score needed to refinance a VA Loan and Wealth Pilgrim’s 5 Ways to Improve Your Credit Score Fast.


(By the way, today is the 33rd anniversary of the release of the original Star Wars, I can still recite the opening introduction word-scroll)

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