A Credit Score Boost

credit score

In the past, the only way to create a credit score for yourself was to borrow money.  This makes borrowing a little tricky for those who have little or no credit history.  How can banks or credit card companies comfortably lend people money if they have no history for determining if they are a good risk?

Payment history – how you have paid your bills in the past — is one of the most important factors in a credit score. Lenders check an individual’s credit score when deciding whether to lend money to him or her.

FICO, the developer of the most widely used credit score, will begin piloting a new score next year (2019) called the UltraFICO score. This new scoring model considers how you manage your checking, savings and money market accounts in addition to how you pay back your credit cards and loans; it could be good news for those who have a strong banking record but have little or no credit history or have negative information on their credit reports. If you manage your checking, savings and/or money market accounts wisely, avoiding overdrafts and usually keep a modest “cushion” of  at least $400 in your checking account, your credit score could receive a much needed boost that can make a difference when applying for a loan.

Use of the UltraFICO score is not automatic. Consumers must opt in before lenders can access their banking records and calculate the alternate score.  Consumers who already qualify for credit on good terms will never need to authorize the UltraFICO score; those whose “regular” FICO scores aren’t quite good enough to qualify are the ones who may benefit from use of the UltraFICO.

FICO has announced the new scoring model as a “pilot” and has not specified how widely it will be in use, so there is no guarantee it will be available through your lenders. Nevertheless, it is worthwhile to be aware of the possibility, for two reasons:

  1. If you are turned down for a loan or credit account, you may wish to ask the lender if they can check an alternate scoring model such as the UltraFICO score.
  2. It is a reminder that responsible management of your banking accounts can pay off; if you have a tendency to occasionally get sloppy and incur an overdraft, the existence of UltraFICO may motivate you to manage your accounts more carefully.

FICO is marketing the new score at its website, which includes a link to a short video describing the basics of UltraFICO.

As always, the best way to improve or protect your credit score is to consistently pay your bills on time, reduce the amount of debt you owe as much as possible and apply for credit only when needed.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

Downsizing & Organizing

I dug out my winter clothes this week. I had to open and move several boxes and containers to find the tubs containing my clothes. I was amused when I thought about how much time a year I spend opening the wrong tubs, looking for the right tubs. I resolved right then to downsize.

Despite the fact that the average household size has declined to 2.61 persons while the average home has doubled in size since the 1950’s, people still struggle with what to do with all their stuff. In fact, one out of every 11 people rent storage space during any given year.

There are many reasons to down-size: moving to a smaller place; passing treasures on to others; generating a little extra income by selling items; or eliminating the cost of storing stuff. For me the 2 motivating factors are eliminating the time and cost to care for and store stuff; and to not leave my kids, the burden of dealing with all my stuff when it is time to settle my estate.

If you are looking for tips on organizing and downsizing your home, check out Downsizing Your Home: A Guide for Older Adults from Kentucky University Extension.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

Plan for Change

The wife of a dear friend has lived in a care center for about 10 years now. I frequently cross paths with him and can see how much he misses her. I called him, excited to hear the details, when I saw on Facebook that she had moved back home. He explained that as her condition deteriorated over time, the cost of care in the nursing home had increased…so much so that they could no longer afford for her to live there.

That sounds like bad news, but it is truly turning into good news for them. You see, my friend has now retired from farming, and he can provide some of the care in their home. They have found it much more cost effective to hire a nurse to come at scheduled times to provide care and guidance for my friend, who wants only the best for his wife and is eager and able to be her caregiver. This solution has brought much joy to their home, as they are together again under the same roof.

As we plan for the future in retirement, we often think about three stages: early retirement when we do more traveling or activities that cost more…the middle years which cost less, when we are still healthy but do less because our goals have been met…and the later years when our health care cost rise. For my friend, the thought of bringing his wife home was not part of the original plan. Once he retired from farming and was more available to provide care, it made sense. It is important to make a plan but to also revisit that plan and see if it is still the best solution even after it has been implemented. Plans can always be revised.

The Finances of Caregiving is a series of five 2-hour workshops to expand your understanding of possible solutions for providing care for a loved one and help families plan together for the care receiver’s care. Understanding your choices means knowing your current situation. This program guides you through finding and collecting that information; it also provides information about communication strategies and options for care. To find a location of a program being offered near you, check out www.extension.iastate.edu/humansciences/finances-caregiving

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

Rechargables Make Cents

In a kitchen cupboard, we have a box full of rechargeable batteries of every size. My husband uses them in the sound-cancelling ear protection he wears in the barns. I have several small, battery-operated motion-sensitive lights I use in the rooms where grand kids sleep. I also have a digital camera, Christmas lights, a battery operated pencil sharpener and other electronics, keeping our battery charger busy.

If I were to buy a four-pack of Duracell AA batteries each week (which sells for $6) to keep my husband’s hearing protection working, I would easily spend $312 a year. For $10, I can buy a four pack of rechargeable batteries. These batteries will last between 2 and 3 years. By using rechargeable batteries, we are keeping between 400 to 600 batteries out of a landfill…and that is just for the AA batteries my husband is using.

It used to be that rechargeable didn’t work well with some technology.  Today,  I do not find any difference and I greatly appreciate the savings. What has been your experience with rechargeable batteries?

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

Meals Delivered

I recently participated in a meal prep event where a dozen women met at a local grocery store to make and take meals ready to cook. We came with empty coolers and each left with coolers filled with 12 meals in Ziploc bags and a copy of the recipe and cooking instructions. Each meal would serve 4 to 6 people. Each of the 12 women would assemble twelve of one meal. When everyone was done dumping all the ingredients for their meal, into a large gallon Ziploc, we walked around the room and grabbed one bag of each meal. Some of the meals were meant to be grilled; others were ready for the crockpot. These meals were healthy with lots of flavor. And…it was a fun social evening for us.

At first, I felt the per-serving cost was a little pricey. But, if you consider all the ingredients AND all the left overs of each ingredient I would have had to store (or toss because I didn’t use them) it wasn’t bad. For example, I paid for only the 1 cup of rice that was needed for the recipe…not the other 3 cups in the bag. The same is true for all the herbs and seasonings.

I recently helped a Veteran who was blind, figure out ways to stretch his budget. We talked about his struggle to shop and cook. He took advantage of the Meals On Wheels for one meal a day during the week; but what about the other meals of the week?

After a little research, I found that in Iowa, there are several businesses that prepare and delivers refrigerated meal. Naomi’s Kitchen, Mom’s Meals and Sisters Entrees are just a few.

A thought did cross my mind…what if I and a dozen of my friends volunteered our time to assemble meals for him. It would be a fun and he would benefit greatly. If we made only crockpot meals, it would make meal prep easy for him…just dump it a crockpot, and put it on high for 2 hours.

What other inexpensive ideas or options do you have access to for easy meal prep for individuals that have physical challenges in the kitchen?

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

The Importance of POA’s

My brother recently attended a medical conference in which a lawyer spoke about the physician’s responsibility when providing care for someone who is unable to make medical decisions for themselves.  If a patient has not completed a Power of Attorney for Health Care, the doctor is required to listen and weigh the concerns of all family members when caring for the patient. Speaking from our personal experience, my brother and I did not struggle while communicating with caregivers and making decisions for dad; we knew what dad’s wishes were and the two of us shared dad’s values and faith. Additionally, as Dad’s POA for Health Care,  it made it easier for me to say “no” when a family member made a request that was clearly not in line with his wishes…even when there was support from a fourth sibling for that request.

In comparison, the family of my brother’s wife is learning (the hard way) what happens when someone has not designated a Power of Attorney for Health Care. Their mother had a major medical emergency that has left her unable to communicate her wishes. Early on in her health emergency, there were 8 – 13 people in her room at all times and an additional 3 – 5 being consulted by phone; basically, they were making decisions by a majority vote while under stress and in an emotional state. Can you imagine being the physician in this example…having to listen and weigh the concerns of all family members?

The Finances of Caregiving is a series of five 2-hour workshops to expand your understanding of options and to help families plan together for providing care for a loved one. Understanding your choices is only possible when you know your current situation. This series guides you through finding and collecting that information, and includes the importance of identifying a Power of Attorney for both Health Care and Financial matters. For more information on this program, visit https://www.extension.iastate.edu/humansciences/finances-caregiving 

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

The Cost of Technology

My 3 year-old grandson recent asked Google to, “find my sister”. It seemed like a logical request, since his mom frequently asks Google to find her phone.

During a recent visit with family, a 90+ year-old aunt had fun asking “Alexa” questions. Her daughters had no idea all the skills this piece of technology had until I shared some of the things I use it for. During our discussion I learned that this Aunt calls her daughter every day to have the news read to her because she can no longer see well enough to read. So, the family decided their mom would get a lot of use of the artificial intelligence built into these home assistance devices.  She could have the news and daily bible readings read to her whenever she wanted it. AND, she could ask Alexa to call anyone on her list which could come in handy if she had fallen within earshot of the device.

At church, a week ago, a friend had a diabetic reaction. She is on an insulin pump which could communicate with her doctors through her smart phone. She also carried a small device that could tell her what her blood sugar levels were without pricking her finger. We keep fruit juice boxes in the office just for occasions like this…this was the 3rd scare that I was aware of. She was so confused. She was not sure if the phone in her hand was hers and when we tried to access her numbers in the phone, she didn’t know what the passcode was to get into the phone; in fact, she was sure HER phone didn’t require a code.  Several juice boxes later, she was able to enter the passcode in her phone and access the information she needed to help us, help her.

Some of what today’s technology does seems frivolous especially if you consider the price tag. I recognize the fact that you have to “use it as a toy” before you can truly discover the amazing potential these devices have.  I also know that the price drops the longer it is in use. As for my friend with diabetes, I worry about her ability to call for help when her disease takes over her ability to think well enough to access the information in her phone. I can see the potential for the technology to help her control her sugar levels but there is a downside.

How has technology improved your life and save you money?

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

Save the Extra

Today’s theme for America Saves Week is – Save the Extra. Saving a little does add up and can make a big difference.  So, where and how do you find the “extra” to save?

 

  • Save the tax refund (all or some of it). Put it into a retirement account and it will help reduce your taxable income next year.
  • Save the extra paycheck you will receive in March and August (if you are paid bi-weekly). If you are paid monthly, save the extra bump in funds you will see in your checks on those months.
  • Consider saving a percentage of every pay-raise.

We’re more likely to save a windfall than a small amount consistently over a long period of time. This tax season, get ahead of your financial goals by saving at least $50, and reward yourself with SaveYourRefund by entering to win one of over 100 prizes up to $10,000.

I would love to hear your saving strategies and sources of “windfall” cash.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

Need it? Use it? Afford it?

Yep, that’s Glen with his golf cart: snow blade in the front; a 50# bag of sand in the back and chains on the wheels. Mark proudly boasts, “Had Dad been born today, he would have gone to college and been an engineer. He can invent and create anything!”

I used to wonder why people would buy a golf cart…it is expensive; it is used for a few short months; and it takes the exercise out of the sport.  However, if you were to drive through any of the small towns in my area, you are sure to see people driving golf carts to visit friends or to run home from the camp ground on the far side of town; one elderly woman enclosed her cart with plastic so she could drive it year round…without a drivers license.

Seeing Glen and his golf cart made me stop and think…how much of the stuff I own was purchased with a single purpose in mind and is underutilized? I reached out to a couple of my kids this weekend, asking if they wanted a few of these things that I no longer have time to use. It created a bit of concern, “Mom’s giving her stuff away…WHY?”

I have Spring Fever. I have a goal of removing 50 bags of stuff from my home by Easter. If I don’t use it, don’t need it or can’t afford it…it is gone. By “can’t afford it,” I mean “do I really want to store it?” It costs money to store, insure, clean and maintain stuff.

How about you?  Spring is coming! Take a look at YOUR stuff. How much is it costing you to hang on to it?

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

A Smooth Running Home

My job provides me opportunities to expand the financial management skills of people of all ages and stages of life: basic money management, investing, how to pay for long-term care. I find that people are most willing to come to a class and get the most out of a class when it is a teachable moment for the individual. I think the reality that “you don’t know what you don’t know” often prevents people from participating in financial programs. Wouldn’t it be nice to have a crystal ball that showed you what financial challenges you are soon to face so you could sign up for classes and check out self-help books to better prepare yourself BEFORE the challenge strikes.  THE TIME TO DIG THE WELL IS BEFORE YOU ARE THIRSTY.

I participated in a discussion this weekend with professionals and volunteers who work with couples preparing for marriage. Again…a skill building program that should be full with a waiting list. Failed relationships (especially when children are involved) carry high and long-term financial and emotional costs. Among the reasons stated by couples as to why they won’t sign up for a relationship-strengthening program is MONEY and TIME – both very important assets that are in limited supply. Yet, if you stop and think about it…taking the time (and money) to strengthen relationships could save you a lot of time and money and heart ache in the long run.

It is easier and cheaper to prevent disaster than to clean up and fix disasters. Check out our web pages for programs and publications to keep your home running smoothly… https://www.extension.iastate.edu/humansciences/, https://www.extension.iastate.edu/humansciences/relationships and https://store.extension.iastate.edu/Topic/Finances

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

More Posts

    

Subscribe to “MoneyTip$”

Enter your email address:

Delivered by FeedBurner

Archives

Categories