Tuesday’s need-to-know money news

Today’s top story: Disability and Credit Access: why scores are key in a crisis. Also in the news: 4 features to look for in the best credit cards of 2022, considering the suburbs, and is trading employee equity a good idea?

Disability and Credit Access: Why Scores Are Key in a Crisis
Having good credit can help you get low-interest loans or credit cards to help you cover your bills in an emergency. Here’s how to get started.

Best Credit Cards of 2022: 4 Features to Look For
Credit card issuers are offering more choice and flexibility as they add features to new cards.

Can’t Buy the House You Want? Consider Moving Out of the City
Suburban and small-town living has its perks, including more spacious and affordable choices for first-time home buyers.

Is Trading Employee Equity a Good Idea?
Buying or selling employee equity has become easier and more accessible, but is it right for your portfolio?

Q&A: Here’s why you have many different credit scores

Dear Liz: Have you ever covered the fact that the credit score that a person receives from the reporting agencies is entirely different from the one provided to lenders? The difference I discovered was 819 vs. 710. I’m a retired lawyer who represented investors in securities arbitration for 20 years, so not easily shocked or surprised by financial fraud, but I was.

Answer: The fact that there are many different scoring formulas has come up frequently in this column. What you consider to be fraud is actually a manifestation of capitalism.

Credit bureaus are private, competing companies. So are the creators of scoring formulas. Lenders and other companies that use credit scores have many to choose from.

FICO is the leading credit scoring formula, but rival VantageScore has gained market share in recent years.

Both types of scores come in multiple versions. The latest version of the FICO is the FICO 10, although the FICO 8 continues to be the most-used score.

Meanwhile, mortgage lenders tend to use much older versions of the FICO formula. Scores also can be tweaked for different types of lending, such as auto loans or credit cards.

Credit bureaus have created their own proprietary scores, as well. What this means is that the same underlying data — what’s in your credit report at a given credit bureau — can create significantly different FICO scores, depending on which FICO formula was used.

Even the same type of score, such as a FICO 8, could vary depending on which credit bureau’s information was used and when the score was “pulled” or created. The credit bureaus typically don’t share information with one another. Plus the information in your credit reports is constantly changing as information is added or deleted.

So it isn’t shocking that the score your lender used was different from the one the credit bureau provided you. What would have been surprising is if the number had been the same.

Q&A: Credit reports vs. credit scores

Dear Liz: I recently downloaded both my wife’s and my own credit reports. I noticed that, for a number of reasons, her report has much less information than mine. The probability is that I will die before her, so my question is whether you can suggest any ways to be sure she has a good credit rating after I’m gone. Do the credit reporting agencies give any weight to a spouse’s score?

Answer: They do not, unless the spouse is alive and a co-applicant.

The amount of information in a credit report doesn’t dictate someone’s scores, however. People can have good scores with only a few credit accounts, or bad scores with lots of accounts. Your wife should find out what some of her scores are to decide next steps. Her bank or credit card issuer may supply her with scores, or she could get free scores from one of the many sites that offer those. (FICO is the formula most often used by lenders, but VantageScore can give her a good idea how lenders view her, as well.)

If her scores are less than excellent (generally 740 and up), she could look for ways to improve them such as making all credit payments on time, using only a small fraction of her available credit and perhaps adding an account or two. Credit builder loans from credit unions can be a good way to build or rebuild credit.

Wednesday’s need-to-know money news

Today’s top story: 5 ways to prepare and pack for COVID-Era travel. Also in the news: 8 safety tips for solo female travel, how doing a subscription detox could plug monthly budget leaks, and how to take advantage of (and keep) a high credit score.

5 Ways to Prepare and Pack for COVID-Era Travel
A lot has changed in the travel world since the pre-pandemic days of 2019.

8 Safety Tips for Solo Female Travel
Traveling solo as a woman has its challenges, but these tips can help you avoid unwanted situations.

Doing a Subscription Detox Could Plug Monthly Budget Leaks
Take a look at auto-renewing subscriptions — should you go cold turkey or use a more targeted approach?

How to Take Advantage of (and Keep) a High Credit Score
Reaping the rewards.

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.