Monday’s need-to-know money news

Today’s top story: When it’s OK to let your good credit score drop. Also in the news: A new episode of the Smart Money podcast on crypto credit cards and short-term investing, why balance transfer cards are starting to make a comeback, and how a 24-year-old crushed $20K+ in credit card debt.

When It’s OK to Let Your Good Credit Score Drop
Don’t let possible score damage stop you from putting your credit to use in an emergency or to grab an opportunity.

Smart Money Podcast: Crypto Credit Cards and Short-Term Investing
A look at the best funds for short-term investing.

Why Balance Transfer Credit Cards Are Starting to Blossom Again
As the economy recovers from the effects of COVID-19, credit card issuers are bringing back these offers. Here’s where to find them.

She Crushed $20K+ in Credit Card Debt at Age 24
Annika Hudak’s road map included reviewing expenses, using balance transfers and tracking her progress.

Q&A: Boosting Credit Scores

Dear Liz: I’m frustrated with my FICO scores. At one point they were well into the 800s and now they languish in the 720 to 730 range. I have no debt — no mortgage or car loan — and fully pay off two credit cards monthly. I have millions (fact, not bragging) in assets with no liabilities. I don’t anticipate taking any loans but it is so odd to me. Why is this?

Answer: You likely had at least one installment loan, such as a mortgage or car loan, when your scores were near the top of FICO’s typical 300-to-850 scale. You can still have good scores without an installment loan — and you do — but the highest scores require you to have a mix of credit types.

You might be able to add a few points to your scores by paying attention to your credit utilization — the less of your credit limit you use, the better. Adding another card or two may ding your scores in the short run but also could add points long term.

Or you can just be happy as you are. As long as you continue to use your cards responsibly, you’ll continue to have scores that are “pretty enough for all normal purposes” — in other words, that will get you good rates and terms should you decide to apply for additional credit.

Wednesday’s need-to-know money news

Today’s top story: What to do if a fair credit score cuts your credit card options. Also in the news: Should you use points and miles to book 2021 travel, should you purchase travel insurance for your summer vacation, and how often you should be checking your credit report.

What to Do If a Fair Credit Score Cuts Your Credit Card Options
If you have only average credit, appealing credit cards aren’t as easy to come by. But you do have some choices.

Ask a Travel Nerd: Should I Use Points and Miles to Book 2021 Travel?
If you’ve been sitting on a pile of travel points, now might be a good time to start planning how to use them.

Do I Need Travel Insurance for My Summer Vacation?
If you’re making nonrefundable bookings, you might want to consider a travel insurance plan.

How Often Should You Be Checking Your Credit Report?
More often than you’d think.

Thursday’s need-to-know money news

Today’s top story: The tax credit fix many can’t afford to miss. Also in the news: Being the first in the family to invest, how to right your retirement savings after coronavirus setbacks, and why your credit karma score seems to high.

The Tax Credit Fix Many Can’t Afford to Miss
Working families could miss out on the refundable tax credits they need to make ends meet.

First in the Family to Invest: How I Saved Almost $700K
Frugality and a commitment to invest at least 20% of his earnings have paid off for this Missouri man.

How to Right Your Retirement Savings After Coronavirus Setbacks
For investors whose retirement savings have been disrupted by the pandemic, there’s a path to replenishment in 2021 and beyond.

Why Your Credit Karma Score Seems Too High
Not all scores are the same.

Q&A: When credit scores take a pandemic dive, how to figure out what caused it

Dear Liz: My VantageScores as reported by TransUnion were in the 780 to 790 range until around February, when they all dropped 40 points for no discernible reason. My FICO 8 and 9 credit scores remained unchanged around 760 and still continue to increase. What would cause that?

Answer: VantageScores tend to react more than FICO scores when you apply for new credit, but 40 points is a pretty big drop. The other usual culprit when good scores fall is higher credit utilization, or using more of your available credit, but typically your FICO scores would have dropped as well.

Most credit monitoring services will offer you some kind of explanation for why your scores changed, so that would be the first place to look for clues. You also should check your credit reports, which are now available weekly from AnnualCreditReport.com.

Monday’s need-to-know money news

Today’s top story: Your last chance for high CD rates is right now. Also in the news: How a credit card can help home improvement plans, how to search for scholarships without getting lost in spam, and a new episode of the SmartMoney podcast on credit scores.

Your Last Chance for High CD Rates Is Right Now
The impact of Fed rate changes.

Got Home Improvement Plans? How a Credit Card Can Help
Rewards and sign-up bonuses.

How to Search for Scholarships, Not Get Lost in Spam
Finding legit offers.

SmartMoney Podcast: ‘Why Did My Credit Scores Suddenly Drop?’
Sorting through the reasons.

Monday’s need-to-know money news

Today’s top story: 6 types of conventional loans all home buyers should know. Also in the news: How your credit score can save you money, why you need to verify your Equifax settlement claim, and why you need to be careful when deciding to claim Social Security based on break-even calculations.

6 Types of Conventional Loans All Home Buyers Should Know
All the details.

SmartMoney podcast: ‘How Can My Credit Score Save Me Money?’
Answers to real-world money questions.

If You Asked for $125 from the Equifax Settlement, You Need to Verify Your Claim
Check your email.

Deciding when to claim Social Security based on break-even calculations? Be careful

Q&A: Be strategic when closing credit accounts

Dear Liz: I recently moved to a new state and would like to open a credit card at my new credit union. I’m concerned that closing my old credit union account and card will hurt my credit scores, which are over 800. The old card, which I no longer use, has a high credit limit. My income is also lower, so I’m not sure how that will affect the credit limit I get.

Answer: Closing credit accounts can ding your credit scores, but that doesn’t mean you should never close an unwanted account. You just need to do so strategically.

First, understand that the more credit accounts you have, the less impact opening or closing an account typically has on your scores. If you have a dozen credit cards, for example, closing one will likely have less impact than if you only have two.

Still, you’d be wise to open the new account before closing the old one. That’s because closing an account lowers the amount of available credit you have, and that has a large impact on your scores.

If the new issuer doesn’t give you a credit limit close to that of the old card, you’re still probably fine closing the old account if you have a bunch of other cards. If you don’t, though, you may want to hold on to the old account to protect your scores.

Q&A: This is why credit scores are so confusing

Dear Liz: I am from Germany. I have had a bank account in America for over one year. Now I get my FICO score. After six months it was 738, half a year later, it was 771 and one month after that, 759. Why does it change in such a short time? Is it the real FICO score?

Answer: Welcome to the U.S. and its sometimes-baffling credit scoring systems. Even people who were born here often misunderstand how credit scores work.

You don’t have just one score; you have many, and they change all the time to reflect the changing information in your credit reports. Higher or lower balances on a credit card, a new credit application or the simple passage of time can make the numbers change.

The FICO scoring system is the most dominant, but lenders also use VantageScore, a FICO rival created by the three credit bureaus (Equifax, Experian and TransUnion), plus proprietary scores.

You also will see different numbers depending on which credit bureau report is used to create the score and which version of the score is used. Credit scoring formulas may be designed for certain industries and formulas are updated over time.

So your FICO Auto Score 6 from Experian likely won’t be the same as your FICO 4 from TransUnion, your FICO Bankcard Score 4 from Equifax or your VantageScore 3 from any of the bureaus, even if you get all the scores on the same day.

It can be hard to predict which score a lender will use, but the same behaviors tend to be rewarded by all of them. Those behaviors include paying bills on time, using only a small portion of your available credit, having different types of credit (installment loans and revolving accounts, such as credit cards) and applying for new credit sparingly.

If you’re using a score to monitor your credit, it’s important to use the same kind from the same bureau — otherwise you’re comparing apples and oranges, as we say in English.

Tuesday’s need-to-know money news

Today’s top story: What to do when back-to-school bites you in the budget. Also in the news: Advice and warnings for starting your own cannabis business, why Millennials need to build credit smarts and find out of your state is having a back-to-school tax-free weekend.

What to Do When Back to School Bites You in the Budget
You’ll need to prioritize.

Advice and warnings for starting your own cannabis business
The new Green economy.

Millennial Money: Credit score up? Build credit smarts, too
Protect your score.

Find Out If Your State Is Having a Back-to-School Tax-Free Weekend in 2019
Did your state make the list?