Your Financial Review

Have you done your annual financial review yet?

Every year, when you do your income taxes, you should take the time to review your finances too!  Think about it.  You already have all of your income, expenses, receipts, etc., put together for your annual income tax filing.  Why not take it one step further?  Review your finances!  Not only could doing your financial review now save you time, but it could also save you money!

Start with your credit report.  Have you looked at your credit score lately?  From all three credit bureaus?  Do you know your FICO score?  If not, you definitely want to look at your credit report.  Typically, your score is updated monthly, and chance are, it changed this month.  Depending on your credit card use during the holiday season, your score may have dropped a few points.  Why?  More than likely your credit usage went up.  If not, it may have stayed the same.  But you won’t know for sure unless you make it a regular practice to review your credit report.  So, log in and get started!

Once you have reviewed your credit report, it’s time to look at your credit cards.  What are you paying in interest?  Is there a cheaper interest rate for your credit range?  Perhaps there is an introductory offer for a new credit card that could save you money?  Has your credit score improved?  If so, you may qualify for a better credit card.  You’ll never know unless you review your current credit cards and compare them to what’s available to you.  One simple change could save you hundreds in interest, earn you better rewards, or enable you to afford that one thing that you really want.  Go on, what are you waiting for?  Compare your current credit cards to better credit card offers today!

Finally, once you’ve reviewed your credit report and credit cards, it’s time to look at your budget.  How did you spend your money in 2021?  How would you like to spend your money in 2022?  After you have taken your food, housing, utilities, and other necessities into consideration, did you spend too much on the extras?  Discretionary spending is the easiest place to start if you really want to save money.  What can you cut back on?  What can you change?  Remember, what you save now will enable you to take that vacation, buy that house, buy that car, or have that one thing that you want later!

So, have you done your financial review?  If not, there’s no better day than today to start improving your finances!

New FICO Scoring Could Change Your Credit Score!

FICO’s new scoring model, which was announced this past week, will likely lower credit scores for those with a current credit score below 600, as it is based more on the past two years of payments, and it takes personal loans into account.  However, those who already have good credit scores, and who continue to whittle away at existing loans, make payments on time, and don’t acquire new balances, will likely see higher scores under the new model.

“We’ve unfortunately found ourselves in an era where it’s becoming commonplace to water down the breadth of information on credit reports,” Ulzheimer says, adding that tax liens, judgments, medical collections and medical debt have all been removed or delayed from some credit scoring models.

“All of this is great for consumers who have tax liens, judgments, and medical collections…but it’s not great for scoring models and their users,” Ulzheimer adds. But he notes the new scoring model is not “consumer unfriendly” either. “People with good credit are going to score higher with newer models. People who have elevated risk are going to score lower.”

Despite the changed scoring model, it may take a while for it to hit your credit report.  “Change comes slowly in credit monitoring,” says CreditCards.com’s industry analyst Ted Rossman. “Rather than getting too hung up on which model a particular lender is using, consumers should practice fundamental good habits such as paying their bills on time and keeping their debts low,” Rossman continues.

Of course, ultimately, which model is used will be decided by banks and other lenders.  FICO 9, released in August 2014, is still not used across the board.  Many lenders still use FICO 8, whick was released in 2009.  And still other lenders use VantageScore, which is produced by the credit bureaus Experian, Equifax and TransUnion.