Ask Liz Weston

Get smart with your money

Q&A

Q&A: Could new job affect credit rating?

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Dear Liz: I have been employed at a small business, a sole proprietorship, for 34 years. My boss is going to just shut down the business, with no plan for succession. I have a job offer from a rival firm, so I don’t plan on being out of work for very long. How will this affect my credit rating? If I apply for a loan after being employed for, say, six months at the new firm, will the short time at that job be a negative mark against me? Should I hurry to apply for a loan before the business shuts down? Would that be illegal or unethical, since I know that I won’t be there much longer?

Answer: Few people know with any certainty how long they’ll remain in their current jobs. If only those who planned to stick with their employers indefinitely were allowed to apply for credit, lenders would go out of business.

That said, a recent job change can complicate the process for getting some loans, such as a mortgage. If you’re planning to borrow the money anyway and can complete the loan process before changing jobs, you’ll likely have an easier time getting approved.

While some lenders take job stability into account, your credit scores do not. Credit scoring formulas don’t include any information about employment or income. You get and keep good scores by using credit responsibly. But part of responsible credit management is not applying for loans you don’t need, so don’t rush out to borrow money just because you can.

Q&A: Survivor benefits for divorcees

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Dear Liz: I am 76 and widowed. I’ve been collecting half of my ex-husband’s Social Security payment for the last nine years. We were married for 20 years. He remarried in 1987 and his wife is still living. He is now terminally ill with cancer. Am I eligible for survivor benefits?

Answer: You will be. If you qualify for divorced spousal benefits while your ex is alive, you will qualify for divorced survivor benefits when he dies. Instead of collecting an amount equal to half his benefit, your check will increase to 100% of the amount he was receiving.

Survivor benefits differ from spousal benefits in another key way. If you remarry, divorced spousal benefits end. Survivor benefits can continue after marriage, as long as you’re 60 or over when you re-tie the knot.

By the way, your benefits don’t take any money away from his current wife. She, too, will be eligible for a survivor benefit equal to what he was getting, unless her own retirement benefit is greater. One primary earner’s work record can support a number of divorced spouses in addition to a current spouse, as long as the previous marriages lasted at least 10 years each.

Q&A: Factors to consider for refinancing into a 15-year mortgage

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Dear Liz: I am considering refinancing my home from a 30-year mortgage to a 15-year loan and wondered if it would be a wise decision. I am 57, divorced and make a little over $100,000 a year as a high school teacher (and I plan to keep working until at least age 65). Other than a car loan, I have no debts and an excellent credit rating. I will receive a pretty decent teacher’s pension and I have about $150,000 in mutual funds in retirement accounts. I can afford the larger payment on a shorter loan. Do you think this would be a good move for me?

Answer: For most people, a 30-year mortgage is a good option. People can always make extra principal payments to pay down the loan faster, but the lower monthly payment is easier to handle if they face financial setbacks such as a job loss.

Your employment situation seems pretty stable, though, and you’re in good shape with a pension plus savings. If you can swing the payments, you’d be building equity much faster and while paying less interest. You’ll still have home debt into your 70s, which isn’t ideal, but it’s certainly better than having a mortgage in your 80s.

Q&A: Where to find FICO scores

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Dear Liz: I’m looking to buy a car and I’d like to see the FICO scores that lenders use. I already visited MyFico.com, but I want another site that shows my real FICO scores for auto lending. If you could point me in the right direction, that would be great.

Answer: You were at the right site. When you buy one credit score for $19.95 from MyFico.com, you actually get several scores from the same credit bureau. Those include FICO 8, the most commonly-used score, as well as the FICOs that bureau typically supplies to mortgage, auto and credit card lenders. If you want to see FICOs from all three bureaus, you can buy them for $59.85 and get a total of 25 different scores.

The scores lenders actually use to price your loan may be somewhat higher or lower from the ones you’ll see because credit scores change all the time. But if you apply for a loan shortly after buying your scores, they should be pretty close to the ones you see.

Q&A: Accessing Social Security account data

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Dear Liz: I read your answer to the gentleman trying to locate his W-2 forms to add missing years to his Social Security account. I wonder why, even as you give advice about keeping old W-2 forms indefinitely, you didn’t mention that the Social Security Administration allows everyone who has paid into the system to receive an annual report showing the income, year-by-year, that was subject to Social Security taxes. I have been receiving that report for most of my adult life (I’m 60 now) and I don’t find the need to keep old W-2’s past seven years if I’ve already compared their totals against the annual SSA report. I wonder why this gentleman didn’t do likewise over the years.

Answer: You may not have noticed, but those annual statements went missing for a few years.

Social Security began mailing annual reports to workers 25 and over starting in 1999 but suspended those as a cost-saving measure in 2011. The suspension saved the government about $70 million each year in printing and mailing costs, but workers lost easy access to information about their future benefits and their earnings.

People with access to the Internet could create online accounts to check their earnings records, and about 26 million have done so. But that still left the majority of workers in the dark about whether their earnings were being properly credited to their accounts.

In 2014, mailings resumed but only for workers reaching ages 25, 30, 35, 40, 45, 50, 55 and 60 and over.

Q&A: When to take Social Security benefits

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Dear Liz: I’m about to turn 66 and my wife is 60. I plan to delay Social Security benefits until I’m 70. My benefit will be large enough that whenever she starts benefits, her spousal benefit will be larger than what she earned on her own. Here’s the question: I think that the time for her to start taking benefits will be immediately upon reaching her full retirement age, not waiting until 70, as I am doing. Correct?

Answer: Correct. You will earn delayed retirement credits that will boost your benefit by 8% for each year you put off applying. Spousal benefits don’t get those credits. The maximum spousal benefit is 50% of your primary insurance amount, or the amount you would get if you applied at age 66. She’ll receive that maximum if she applies for spousal benefits at her own full retirement age.