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Miami Herald
4 days ago
- Business
- Miami Herald
Ace the test: How to boost credit scores
Every American knows how critical their credit score is. Or at least, they should. A high score unlocks a whole host of financial opportunities: Lower car payments, cheaper mortgages, or even approval for that new rental apartment or job you've been eyeing. But here's something you may not know: Some parts of the country are doing better than others when it comes to boosting credit scores, reports Current, a consumer fintech banking platform. The financial site WalletHub recently crunched the data, to find out which city cranked its collective credit up the most in a single year. The winner: St. Louis, with a 3.49% increase compared to last year, resulting in an average score of 652. Runners-up included Des Moines, Iowa, with a 3.19% jump to 647; and Winston-Salem, N.C., with a 2.28% increase to 628. That's exactly the kind of positive momentum you want: Even if your credit record is sparse because you're just starting out in life, or if it is on the low side because of missed payments, you are aiming to boost those scores over time and reap the rewards. "If you get to a score like 760 or 780, then you're going to be getting best interest rates available," says Liz Weston, a personal finance columnist for the L.A. Times and author of the book "Your Credit Score: How To Improve the 3-Digit Number That Shapes Your Financial Future". "Even if you have bad credit, you can make it better." Some states are doing better than others, too. WalletHub did a deep dive into which parts of the country are being most 'diligent' about their credit: That means whether people are paying their debts on time, the share of the population experiencing foreclosures or bankruptcies, and even whether residents are checking and correcting errors on their credit reports. The winners: People in Massachusetts, Iowa, Vermont, Alaska, and Hawai'i. So what's the big secret of these credit-boosting cities and states? A number of factors go into analyzing credit records, to generate the 'FICO' score (thanks to the firm behind it, Fair Isaac Corp.) or the competing VantageScore, developed by the major credit agencies Equifax, Experian, and TransUnion. A few key points to consider: A solid payment history. Obviously, lenders want to see that a borrower is a reliable risk. So pay every bill on time, every time – you don't want to be a few days late, and you definitely don't want to be 30 or 60 days behind. In FICO's system, that history accounts for around 35% of your total score. Mistakes do happen - bills get lost in the mail, due dates slip your mind - so scheduling payments beforehand is a smart strategy, especially when dealing with joint accounts. "Set up autopay to avoid missed payments and assign who's tracking what," says Doug Boneparth, president of Bone Fide Wealth in New York City and co-author (with wife Heather) of the upcoming book "Money Together". "Clear roles reduce stress and credit slip-ups." A reasonable amount owed. Don't max out your credit lines, because that makes lenders nervous. Ideally, you want to keep what's called the 'credit utilization ratio' below 30%. So if you have available credit of $1,000, as an example, keep the amount borrowed below $300. "There should be a nice big gap there," advises Weston. "Credit utilization below 30% is good, below 20% is even better, and below 10% is best." Length of credit history. For young adults fresh out of high school or college, establishing credit is an uphill climb, because they just don't have proof of years of reliable debt payments. One potential solution here: Leveraging the power of being an 'authorized user'. For teens or young adults, that means being named as a user on parents' cards (even if they're not actually making purchases). Couples, too, can "add each other as authorized users on credit cards with strong histories," says Boneparth. "One person's good credit can lift both scores over time." Secured credit cards can help. A secured charge card essentially pulls spending power from the balance in your spending account, minimizing your risks of debt. In a nutshell, you can't spend more than what you have in your account, and as you spend, the funds are held in reserve to 'pay your bill' at the end of each month. Look for one without a minimum deposit requirement that reports these on-time monthly payments to the three major credit bureaus (TransUnion, Equifax, Experian) each month to help build your credit score. It can be an effective way to build your credit history and minimize risks of debt. No credit splurges. Open too many credit lines, too quickly, and lenders get skittish, because it could indicate you're in some financial trouble. It could also suggest identity theft, if a scammer has gotten hold of your information and is applying for numerous cards in your name. That's why the amount of new credit factors into 10% of your FICO score. If you don't know what goes exactly into your credit score, this whole process can seem pretty mysterious. But when you do know, then you can get to work on making it better. Says Weston: "Lenders just want to see smart, healthy credit habits." This story was produced by Current and reviewed and distributed by Stacker. © Stacker Media, LLC.
Yahoo
31-01-2025
- Business
- Yahoo
How couples can achieve more fairness in their household finances
Listen and subscribe to Decoding Retirement on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. Successful financial partnerships involve more than just dividing money — they need equality in financial knowledge and decision making. "What I strive for is creating fairness and equality inside households when it comes to finances and money,' Doug Boneparth, the president and founder of Bone Fide Wealth, said in a recent episode of Decoding Retirement (see video above or listen below). 'What we're striving for here is everyone knowing at a minimum where your assets are, knowing what income is being generated, having an idea of what the household expenses are, both having access to accounts." This embedded content is not available in your region. Boneparth and his wife are in the process of writing 'Money Together,' a book that will help couples have meaningful and productive financial conversations. Rather than just offering advice about joint accounts, they aim to help couples navigate five crucial areas of financial partnership: financial upbringing, past money mistakes, caregiving responsibilities, power dynamics, and risk tolerance. Ultimately, healthier conversations about money lead to stronger relationships, happier families, and better outcomes for everyone involved, Boneparth said. 'Money is one of these games; it never ends,' he said. 'You play it your whole life and it's constantly changing and constantly evolving, right? It is tricky.' In the podcast, Boneparth emphasized that while it's fine for one partner to manage day-to-day finances, both partners need to be actively involved to achieve financial equality in a relationship. This includes knowing the location of all accounts, having shared access to financial apps and accounts, conducting regular check-ins to review net worth and goals, and understanding both the quantitative and qualitative aspects of money management. "There's no right or wrong way as far as the division of labor goes,' he said. 'But it would be completely unacceptable for [my wife] not to know where the accounts are, where they're located, how to access them, what our net worth looks like, what spending looks like." Boneparth said he and his wife sit down to go over finances on a quarterly basis. 'We go through net worth, we take a look at how we're doing, and we actually have a real conversation around what's going on behind those numbers,' he said. 'Numbers only tell you so much of the story. How about what our goals are? What did we do well this year? Do we feel free to spend?" These conversations matter because it's rewarding to strive toward goals together. Moreover, not getting on the same page with respect to financial matters could put your relationship at risk. "It's almost cliché at this point to say that most relationships don't work out due to something financially related,' Boneparth said. 'If that's the biggest issue in the long-term success of relationships, we should be addressing that.' To help couples get started, Boneparth offered some tips for couples to build stronger financial teamwork through understanding and communication. Ensure both partners have full access to all financial accounts and apps, regardless of who handles day-to-day money management. Schedule regular financial check-ins to review net worth and spending. Boneparth recommended doing this quarterly. During these meetings, discuss both the quantitative and qualitative aspects of your finances. This means talking about both the numbers and feelings around your money and goals. Create equality in your financial knowledge — both partners should know: Where all accounts are located. How much income is being generated. What the household expenses look like. How to access all financial information. Remember that dividing financial tasks is fine, but both partners need complete visibility and understanding of the overall financial picture. Boneparth also noted that shared resources can help couples track household finances together. For instance, using shared financial apps and online tools creates transparency. Also, consider working with a financial adviser to establish a framework for money discussions. "By getting household participation around this, we really do increase the probability that you're going to hit your goals together," he said. "This is a team game you're playing." Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service. Sign in to access your portfolio
