Independent, Fee-Only Financial Advisor

Independent, Fee-Only Financial Advisor

Monday, December 14, 2020

Credit Score Questions

Written by Chanda Davis

What is a credit score? Your credit score is a number that represents your credit worthiness, history, and potential risk to lenders. The higher your score, the lower the rate on your loan.

How do I know my credit score? Visit for the most accurate credit score. Be careful that you do not obtain your credit score from a third-party agency (such as Scores obtained here may be significantly higher or lower than the FICO score your lender will use. If you get turned down for credit, you have the right to get your score free of charge. 


How is my credit score calculated? Your score is calculated from your credit history. Five factors affect your score:  Payment History; Credit Utilization; Length of Credit History; New Credit; Types of Credit in Use. Payment History is the most important piece. If you want to improve your score, PAY YOUR BILLS ON TIME! For more information on your credit score calculations, check out this video..


How can I obtain a copy of my credit report? Your credit report will help you understand what factors are driving your credit score. Visit Here you can request a copy of your credit report annually, at no cost to you. Carefully review the details. Make sure there are no mistakes in your credit history report. You have the right to have any mistakes corrected.


What’s a good score? That depends on the type of loan you are seeking, but some general rules apply. A score of 700 or more is considered good and will get you most loans at a reasonable rate. A score of 600 or less means you are riskier for lenders. You may not get approved, or if you do, the rate on the loan may be high. A score of 800 or more puts you in the driver’s seat (literally, if you’re trying to buy a car). Lenders will fall all over themselves to lend you money. Need more?  


How do I improve my score? Time and good financial behavior are the best ways to improve a poor score. Pay down debt. Pay your bills on time. Show you can handle different types of debt. Hold onto old credit cards that show a good history. Close old cards that you haven’t used in a long time. Don’t open new cards.


How often should I check my credit score? At least once a year. Mistakes do happen, and you want those corrected as quickly as possible. 


What is the bottom line? A good credit score is like money in the bank. You’ll be able to get a loan at a good rate when you need it. Lower rates mean you can buy more house, more car, and more stuff for the same amount of money. 


Friday, December 11, 2020

Leaving Money on the Table

Social Security is a big part of anyone’s retirement income. On average, it represents more than 40% of overall income. Depending on circumstances, that can be more. 

It’s also a great investment. While nearly half take their benefits at the earliest time (age 62, unless you’re a widow), this decision leaves a lot of money on the table. Every month, up until age 70, that you delay taking benefits past age 62 results in 2/3 of a percent more on your benefit. That’s 8% a year! And it’s guaranteed! You can’t find that anywhere else.


It’s the reason we often encourage people to delay their benefits as long as possible. Know that the decision to start collecting Social Security and the decision to retire are two different decisions. They are not necessarily linked. For those with little savings and no pensions, starting SS at retirement is a must. It’s the only way to have income in retirement, but if you have other means, the two aren’t joined at the hip. Think twice before you pull the trigger on benefits. Much higher payments in the future may make waiting worth it.


Know that your benefits are based on your earnings record, so it’s important to monitor this for errors. Your retirement benefit is based on your highest 35 years of earnings, and these are adjusted for inflation. That makes earlier/older earnings quite important. Sign up for your own account at Social Security to track earnings and benefits. 


Employers only report earnings to SS one time a year, so your expanded benefits might not be fully reflected in your current payment. The lag in your earnings record may result in a lag in the benefit calculation. Don’t worry, though. The difference will be made up in the next year.


Now that we sign up newborns for a Social Security number, we know which baby names are the most popular. In 2020, it was Liam, Noah, and Oliver for boys. And Olivia, Emma, and Ava for girls. Hmmm… think Nancy was WAY down the list!