5 No Cost Things You Can Do to be Financially Stable

People that teach financial education often talk about lowering your expenses and increasing your income to increase your financial stability. Of course those things are good but today I want to focus on the five free things you can do to increase your financial stability.

For all of my personal finance tips, order my book “10 Things College Students Need to Know About Money“. If you already have a few challenges, order my Amazon Best Seller “Money Matters: The Get It Done in 1 Minute Workbook“.

 

#1 Open an Account at a Credit Union

One of the best financial decisions you can make is to open a checking account at a credit union. It costs nothing to open an account and the benefits are many: better customer service, often lower account fees, usually cheaper car loans, mortgages, and credit cards, and the opportunity to build a relationship with a financial institution with all these great benefits before you need to ask for a loan. Check here to find the credit union closest to you.

 

#2 Check Your Credit Reports

You may know that there are three credit reports and three credit scores for each of us but did you know that you can have free access to your reports? The credit bureaus have the right to control who has access to the scores that they’ve created the mathematical formulas to create, BUT the records …  the information that make up the data those formulas use is your data and is free for you to access. Visit AnnualCreditReport.com to get a free copy of your reports once every 12 months.

 

#3 Collect Your Change

For years I’ve told people that an easy way to find money to build up your Emergency Fund or invest in a no-load mutual fund was to throw your spare change in a jar. I still believe it’s true. On average, you’ll have about $50 per month is quarters, dimes, nickels, and pennies. Instead of that spare change ending up under the couch cushions, in your car’s ashtray, and at the bottom of your purse throw it in an empty water jug or an actual piggy bank. Don’t believe me? Check out this blog.

 

 

#4 Open a High Yield Savings Account

Since I’ve been badgering you to create an Emergency Savings Account, I thought I’d help you out by providing you with the latest lists of accounts with the highest interest rates (you’ll earn more money than at your local financial institution) across the US. Check out the highest yielding savings accounts here.

 

#5 Choose You

This is the hardest free thing you might ever have to do: choose yourself over everything. Choose to save some money for an emergency instead of eating out. Choose to invest some money in a mutual fund instead of purchasing an extra excursion on a trip. Choose to think you’re going to create the exact life you’d like to have …   and then do the prep work so when your opportunity comes, you’re ready.

 

 

 

 

 

 

Credit Scores Could Rise This Fall

This fall credit scores across the country may rise. There are four new changes to the VantageScore  (a new thing created by the big 3 credit bureaus) that may increase credit scores for those that need it most. Unfortunately for those looking to buy a home the FICO scoring model will not be effected.

KETV says, “The new method is being implemented later this year by VantageScore, a company created by the credit bureaus Experian, TransUnion and Equifax. It’s not as well-known as Fair Isaac Corp., whose FICO score is used for the vast majority of mortgages. But VantageScore handled 8 billion account applications last year, so if you applied for a credit card, that score was likely used to approve or deny you.”

The changes include:

Trended data – CNBC says, “Using what’s known as trended data is the biggest change. The phrase means credit scores will take into account the trajectory of a borrower’s debts on a month-to-month basis. So a person who is paying down debt is now likely to be scored better than a person who is making minimum monthly payments but has been slowly accumulating credit card debt.”

Legal data – Civil judgments, medical debt and tax liens will no longer affect your score. Mortgages are still primarily using FICO scores so don’t get too excited but for other types of loans (credit cards, auto loans, etc.) this could really help some folks out.

High Limits – the debt ratio portion of scoring for VantageScore is about to be turned on it’s head. Instead of the lower the debt ration, the better people with “excessive” credit card limits could be hurt. the rational is that those with higher limits could rack up more debt, faster.

Less Robust History – According to the Motley Fool those that have fewer items on their credit histories may also see an increase in their score due to, “The model will examine thousands of various consumer behaviors in an effort to identify those who have a propensity to pay their bills on time, because these are the people that lenders want to attract.”

Some changes may help and some may hurt depending on what’s going on with your credit scores right now. Motley Fool gives the easiest explanation of the biggest changes. Read more here.

 

Shay Olivarria is the most dynamic financial education speaker working today. Previous clients include: the Yorba Linda Water District, Verizon, and Friends of Allensworth, among others. She has written three books on personal finance, including Amazon Best Seller “Money Matters: The Get It Done in 1 Minute Workbook”. Shay has been quoted on Bankrate.com, FoxBusiness.com, NBC Latino and The Credit Union Times.The 2nd edition of “10 Things College Students Need to Know About Money” is available now.

Will Reporting Rent Payments Help Working Poor?

A few years ago, I wrote about a new formula for credit scores that includes rent payments. Some like the idea as now renters will a history of 0n-time payments will have their scores increased by continuing to do what they’ve been doing. Some dislike the idea because some renters could be hurt by reporting not-so-on-time payments.

The Credit Builders Alliance (CBA) has done a study to provide more insight.

• 79% of participants experienced  an increase in their credit scores
• Average scores  increased by 23 points
• Participants that were previously “credit invisible” had a credit file created.

To read more about the study click here.

Should Utilities Be Included in Credit Scores?

In Sunday’s LA Times “Changes weighed that may boost credit scores” talks about a recent hearing before the House Financial Services Committee headed up by Los Angeles Representative Maxine Waters. Due to the recession many Americans that had favorable credit scores have seen their scores decline due to job loss and stagnant pay. Water is advocating for negative things to fall off of one’s credit report in 4 years instead of the 7 years that it is currently and for the inclusion of so-called “alternative credit data” such as rent payments and utility bills (water, power, cable, etc,).

Many think that including these payments will help people increase their credit scores because they will be recognized for paying these bills every month. Others think that it might make things worse because many people prioritize payments and when money is tight choose to pay their rent and wait to pay their utilities that would trigger 30-day-late and possibly 60-day-late marks on credit reports thereby lowering scores.

What do you think? Would you like to see alternative credit data included in credit reports?

 

ReasonCode.org

This Sunday I read about ReasonCode.org in the LA Times. Reason Code is a website powered by the new Vantage Score that aims to help people understand their credit reports a bit better. The name Vantage Score might ring a bell because I wrote about the new Vantage scoring system over at Black Voice News a few years ago.

When you visit the website, you can enter the code that was given to you by a lender that refused to give you a loan and you’ll be provided with an explanation of what the code means. From what I understand, the codes don’t always align with the codes from the FICO scoring system that Equifax, TransUnion and Experian use however if you type in a word or two with the code you’ll more than likely be able to get a reason.

This is a new service so I can’t say how well it works, but when I put in a few codes to test it they all came back correct. Give it a whirl yourself and let me know what you think of it.