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Credit Score

Monday’s need-to-know money news

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Today’s top story: What you might get from the Equifax data breach settlement. Also in the news: 5 logical credit moves that can lead to trouble, 8 money mistakes newlyweds make, and how to decide if you should get a cash-back credit card.

What You Might Get From the Equifax Data Breach Settlement
150 million consumers were affected.

5 ‘Logical’ Credit Moves That Can Lead to Trouble
Common sense doesn’t always apply.

8 Money Mistakes Newlyweds Make
Don’t start off married life on the wrong foot.

Should You Get a Cash-Back Credit Card?
How to decide which card is best for you.

Q&A: Adding a child as a credit card user

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Dear Liz: I’ve read that adding a child as an authorized user on your credit card could help build his or her credit history. But I was specifically told that this was not the case, as the child’s Social Security number was not primary.

Answer: Whoever told you may not have understood how authorized user activity typically is reported, or may have been talking about a specific issuer’s policy.

Adding someone as an authorized user to a credit card typically results in the history for that card being added to the authorized user’s credit report. That in turn can help the authorized user build credit history and improve his or her credit scores.

Some smaller issuers, such as credit unions or regional banks, may not report authorized user activity to the three credit bureaus, but all of the major credit card companies do. Some of these big issuers, however, don’t report the information if the authorized user is younger than a certain age or if the information is negative. The age cutoff varies by issuer. For American Express and Wells Fargo, for example, it’s 18; for Barclays, it’s 16 and for Discover, it’s 15. Other major issuers don’t have an age cutoff. American Express and U.S. Bank also won’t report to the authorized user’s credit file if the account is delinquent.

The credit bureaus, in turn, have their own policies. TransUnion includes whatever the issuers report. Equifax adds the information to the credit report if the authorized user is at least 16. Experian adds the information supplied by the issuers, regardless of age, but will remove it if the original account becomes “derogatory” — which typically means payments are skipped or the account is charged off.

If you want to help a child build credit by adding the child as an authorized user, you’ll want to make sure you’re adding him or her to a card that will actually do some good. A quick call to the issuer can help you find out its policy on reporting authorized user activity.

Friday’s need-to-know money news

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Today’s top story: Tax planning for beginners – 6 concepts to know. Also in the news: Credit score up? How to build your credit smarts too, why it’s time to find a safety deposit box alternative, and here’s how much money Americans say you need to be ‘rich’.

Tax Planning for Beginners: 6 Concepts to Know
Basic steps to shrink your tax bill.

It’s Time to Find a Safe Deposit Box Alternative
Not as secure as we once thought.

Here’s how much money Americans say you need to be ‘rich’
Do you qualify?

Monday’s need-to-know money news

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Today’s top story: Logical credit moves that can lead to trouble. Also in the news: Investing is within Millennials’ reach, ditch the dealership with online used car sellers, and what you should know about the qualified small business stock tax exclusion.

5 ‘Logical’ Credit Moves That Can Lead to Trouble
Common sense doesn’t always work in your favor.

Take Heart, Millennials — Investing Is Within Your Reach
Just make sure your financial foundation is strong.

Ditch the Dealership With Online Used Car Sellers
Get in the driver’s seat from your couch.

If Your Compensation Package Includes Stock, You Should Know About This Tax Rule
The qualified small business stock exclusion.

Tuesday’s need-to-know money news

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Today’s top story: Why you should shop for a car loan before going to the dealership. Also in the news: The lowdown on new tools to jump-start your credit, 7 Father’s Day gift ideas under $50, and the best beach towns to spend your retirement.

Car Buyers’ Best Cost-Saving Move: Shop for a Loan First
Don’t put yourself at the mercy of the dealership.

The Lowdown on New Tools to Jump-Start Your Credit
The pros and cons.

7 Father’s Day Gift Ideas Under $50
It’s the thought that counts.

Dream of spending your retirement on the beach? Here are the best towns
Spending your golden years on the sand.

Q&A: How to boost your credit score before you buy a house

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Dear Liz: I am trying to purchase my first home. I have a 20% down payment for the price range that I am looking for. The issue I am running into is that I have relatively new credit and my credit score is not great at all. I had to go to the emergency room two years back with no insurance and have medical expenses that went into collections. I am now in a financial spot to pay them off. These are the only negatives on my credit report that are unresolved. Will paying these off get my credit to the point that I can buy a home? I am lost as to how to get my score where it needs to be.

Answer: Unfortunately, paying collection accounts typically doesn’t help your credit scores, especially the scores used by most mortgage lenders.

Since you’re new to credit, you may not realize that you don’t have just one credit score. You have many. The two major types are FICO and VantageScore. The latest versions of each (FICO 9 and VantageScore 3.0 and 4.0), ignore paid collections. In addition, FICO 9 and VantageScore 4.0 count unpaid medical collections less heavily against you than other unpaid debts.

But mortgage lenders typically use much older versions of the FICO score, which count all collections against you even if they’re paid.

That said, it would be tough to get a mortgage with unpaid collections on your credit report. Since you have the cash, you may be able to negotiate discounts so that you can resolve these debts at a somewhat lower cost. (Collectors typically would much rather get a lump-sum settlement than wait to be paid over time.)

You’ll also want to get some positive information reported to the credit bureaus to help offset the negative information. The fastest way to do that would be to persuade someone you know who has good credit to add you as an authorized user to one of his or her credit cards. This person doesn’t have to give you the card or any access to the account. Typically, the account history will be “imported” to your credit reports, which can help your scores as long as the person continues to use the card responsibly.

Another way to add positive information is with a credit-builder loan, offered by many credit unions and Self Lender, an online loan site. Usually, credit-builder loans put the money you borrow into a savings account or certificate of deposit that you can claim after you’ve made 12 on-time payments. This helps you build savings at the same time you’re building your credit.

Secured credit cards also can help. With a secured card, you make a deposit with the issuing bank of $200 or more. You get a credit limit that’s typically equal to that deposit. Making small charges on the account and paying it off in full every month can help you build credit without paying interest. You’ll want a card that reports to all three credit bureaus, because mortgage lenders typically pull FICO scores from all three bureaus and use the middle of the three scores to determine your rate and terms.