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According to the latest analysis from FICO, average credit scores are rising and the number of delinquent payments are dropping. This article from The New York Times looks into some of the reasons for these developments – highlighted by the continuing recovery of the housing market – as well as some valuable credit score advice from Ethan Dornhelm of FICO.
Consumers appear to be better these days at managing their use of credit. The national average FICO score is now 695 – the highest it has been in at least a decade, according to the latest analysis from Fair Isaac Corporation, the score’s creator. Nearly 20% of consumers now have scores above 800.
The rise in the average score is partly because of a drop in seriously delinquent accounts, since payment history is a major component of credit scores.
The passage of time also helps, said Ethan Dornhelm, a principal scientist in FICO’s analytic development group: Older, well-managed accounts help increase scores, and negative information – like accounts that are sent to collection – typically starts dropping off credit reports after seven years. So the impact of delinquencies that weighed on scores during the recession is most likely starting to recede.
Stephen Brobeck, executive director of the Consumer Federation of America, said in an email that many consumers committed to reducing burdensome credit card debt after the recession. That probably helped their scores by lowering their card debt relative to their credit limit, an important factor in determining credit scores.
The drop in late payments is mostly a result of an improvement in the real estate segment as the housing market continues to flourish. Late payments in other areas are actually ticking upward.
In addition to a better economic picture, another contributor to higher scores may be the wider availability of information about credit scoring in general. “Don’t underestimate the influence of the number of places now giving out credit scores at no cost,” said the credit expert John Ulzheimer.
Numerous credit card companies, lenders and banks, both large and small, now offer free periodic access to credit scores, and more continue to join the pack.
The numbers provided are true credit scores, reflecting those used to make lending decisions. “Consumers are increasingly well informed and aware of their credit score,” said Mr. Dornhelm.
Many business news sources offer a lot of financial advice for college students, millennials and retirees. But here’s an article from TIME that offers some valuable money advice for people in their 30s.
After a decade of experimenting, failing, learning from those failures, and “figuring things out,” you might find yourself in a more secure financial position once you hit your 30s.
What do you do with excess money when you’re no longer living paycheck to paycheck? And how do you prepare for big expenses you’re bound to face in your 30s?
We spoke to Michael Solari, a certified financial planner at Solari Financial Planning, about the smartest things 30-somethings can do with their money to set themselves up for a prosperous future.
When setting your savings goals, you can’t just go through the motions. “If there are no savings goals, then there won’t be any progress,” says Solari, and your 30s are bound to be filled with bigger expenses – such as a home, car, and children – that require diligent saving.
Mint and You Need A Budget are online tools that allow you to create savings goals and see your progress.
If you plan to buy a home, it should be one of your savings goals. Ideally, you’ll want to have saved enough to make a 20% down payment – anything lower and you will have to pay for private mortgage insurance (PMI), which is a safety net for the bank in case you fail to make your payments.
If you’re thinking about purchasing a home in a major metro area, take a look at how much you need to save per day to put 20% down on a home in major US cities, and see how to make sure you’re buying a home you can afford.
If you plan to have children, it’s time to start saving. The average cost to raise a child is about $245,000, and that doesn’t include college expenses. The best way to prepare for these expenses is to start setting aside money as early as possible. The dependent care flexible savings account could help with daycare; as for the additional costs of college, start by looking into a 529 savings plan.
Insurance in general – health, life, home, and disability – often gets put on the back burner, but it’s important to put in time to research insurance plans, or talk to a trusted adviser, and purchase the right insurance for you. One type of insurance that gets neglected more so than others is long-term disability insurance, but not having it can be extremely risky. Disability insurance is meant to provide income should you be disabled and unable to work, which is more likely to happen that many of us may think.
The last time I counted, there were four people living in our home: my wife, our two daughters and myself. And only two of us actually drink coffee. So why does our cabinet drawer struggle to hold 37 different coffee mugs? And why are there so many mugs bundled up in there that we usually can’t even get the drawer open? Since we’re not planning to have 35 friends over for a coffee party anytime soon, this article from BrightNest helped us realize that it’s probably time to get rid of most of those mugs, along with a few other things around the home that were making life much more complicated than it should be. Here are ten things around the home you can think about tossing, recycling, or giving away.
If clutter is stressing you out, you don’t need to overhaul your entire home. Start with repeat items. These are the things you really only need one or two to function, but somehow own ten.
Not sure what we mean? Here are a few extraneous items to toss today:
Although it’s easy to get attached to your favorite stories, books can quickly equal clutter, dusty shelves and wasted space. Share the knowledge and donate your read books to schools or used bookstores. Then, give your local library card some exercise. Bonus: If you switch to borrowing from the library, you’ll save some cash, too.
If you generally leave the grocery store with three reusable shopping bags, keeping four is appropriate. Once you exceed four, you’ve entered the scary-pile-shoved-under-the-sink phase. Avoid that at all costs!
Unless you have a constant supply of cut flowers coming into the house, a cabinet full of vases will likely never come in handy. Pare down your collection to the vases with sentimental value and toss the rest.
When it comes to dishware, we recommend having enough for one week, and then it’s time to do the dishes. So, if you drink coffee every morning, save your favorite seven mugs and donate the rest.
In the era of Netflix, CDs and DVDs have basically become irrelevant and can take up a lot of space. If you watched or listened to it 20 times, and you’re ready for 20 more, you should keep it. If you’re likely to never use it again, away it goes. Don’t want to say goodbye to your collection but are interested in having more space? Try downloading the movies & MP3s onto an external hard drive.
