When you start looking at credit report error statistics it’s easy to quickly get frustrated. There’s a ton that could and that does go wrong with the reporting of your credit information. Did you know that 79% of credit reports contain errors of some kind? Crazy.
Why the Errors in Your Credit Report?
Why does something so crucial to your financial success have to be so darn complicated and just plain messy? Can’t these people get it right? It’s been around long enough, hasn’t it? Reminds me of the IRS tax code. Except in the case of credit reports, we don’t have CPAs to help us figure it out.
But you can’t just leave your credit report alone and expect everything to be okay. Unless you’re debt free and don’t need a loan. Chances are, based on the number above, something is wrong with your report and that something could be lowering your score by enough points to cost you a lot of money, sooner or later.
My Credit Report Errors
I can’t say I’ve ever found a major error on my credit report. I also can’t say I’ve looked really closely at it. Every year I visit annualcreditreport.com and pull one or two of my free credit reports. I scan it to make sure my personal information is correct and that the credit accounts listed on the report all belong to me. I also scan the report for any reported negative items. Honestly, once I realize there are no big, glaring issues, I move on.
The last time I checked my credit report I did find one small error. The report states that one of my aliases is my middle name, followed by my first name initial as the middle name, and then my last name. I don’t think I’ve ever signed up for credit, or gone by that name when applying for credit or holding a job so I don’t know where they got the name from. I’m not terribly worried about the error though because there were no accounts that I didn’t recognize. “TP” Money has yet to sign up for any bogus credit accounts. Still, the stat above suggests I should check my reports a bit closer next time.
To see more of the types of errors you could have on your credit report, how they affect you, and what you can do about them, I encourage you to check out Liz’s book. You can also read my previous entry on How to Fix Your Credit Report.
Win a Copy of Your Credit Score
The winner from last week is SAH. Look for an email to arrange to ship the book. For the rest of you, I have one more copy to give away. So, if you live in the U.S. and would like to win a copy, simply leave a comment below. I’ll randomly select a winner next Wednesday, the 6th of May. Good luck!
If you know someone that could use to read this post, or who might be interested in this book, use the “share this” or “email this” link below to share it with them. Thanks.
I spend a lot of time talking about the need to have your money in a high-interest or high-yield savings accounts, so I thought it was time I put together a list of the top high-yield savings accounts.
This is by no means a complete list of the accounts out there. It’s just the one’s I’ve had some experience with. I’ll will link to this post from the home page and periodically update this listing with new accounts that I find and all the rate changes that take place.
I’ve sorted the list by annual percentage yield (APY). The rates are constantly changing, so don’t focus on that too much. One thing to note though is that any of these accounts would be great compared to the savings accounts held at traditional brick and morter type institutions. And don’t forget that all of these savings accounts are FDIC insured.
If you know of a high-yield savings account I could add to this page, or if you’re aware of a rate change, please let me know. Thanks. Read more about…high-interest savings accounts.
One day before the swine flu outbreak guess who booked a flight to Mexico City. Yours truly. Luckily I was able to cancel without penalty. Remember to consistently wash your hands and stay away from large groups over the next few weeks. Scary stuff.
You’ve heard it a thousand times, when it comes to your finances and securing your future, you’ve got to pay yourself first. I couldn’t agree more. That’s why I’m big on an action plan to make that happen: automating and separating my savings.
The Pay Yourself First Challenge is Complete
I’m big on paying myself first for another reason though. As some of you may know I’ve been participating in a contest put on by FNBO Direct called the Pay Yourself First Challenge. I entered the contest by submitting this rap video. Then, after a quick interview, I was selected as one of five individuals who would participate in a 6 month online savings challenge.
Well, the contest winner was announced yesterday. Even though I didn’t win the $7,500 grand prize, I still had $5K in matched savings deposited into my FNBO Direct account, had a lot of fun, met some great people, and learned how much I could stretch myself to save even more.
Kristen Shaul Wins Big!
The winner, deservedly so, was Kristen. She really blew the competition away with the amount of votes she received and how well she described her savings journey through her blog at the Challenge website. Kristen and her family, who are missionaries, were saving up money to pay for her nursing school program in full, without going into debt.
Not only were they able to do that, but they saved up a few thousand more. Now they’ll have an extra $5K in matched savings, plus the grand prize. They racked up! In part, because they live their lives paying themselves first. Are you paying yourself first?
Back in 2002, when I was getting rid of my excess credit card debt, I did a stupid thing. I closed my oldest credit card down. I didn’t know, or didn’t care at the time that this move would actually hurt me in terms of building a better credit score.
We all know the importance of a good score: better loan rates, better insurance rates. So today I thought I’d share with you how closing down credit accounts can actually harm your credit score. It does this in two major ways:
1. Raises Your Credit Utilization Ratio
When you close down an active account, the available credit from that account gets removed from your credit file. Therefore, to the credit agencies, you appear to have less available credit at your disposal. They translate this into: not as many people are lending to this person, so they must be a higher risk.
It’s important to keep your credit utilization ratio low. To do this you need to have a lot of credit available to you, but only be using a small amount of that credit. So, if your available balances all add up to $10,000, you need to be using $1,000 – 2,000, not $9,000. From what I hear, this is the case whether you pay it all off each month or carry a balance.
2. Makes Your Credit History Look Younger
The second thing closing an account will do is make you look younger in terms of credit history. One of the keys to a good credit score is a long track record of responsible borrowing. So it’s important to leave those old accounts intact, even if you’re not using it.
But What if You’re Struggling with Debt?
Honestly, the reason I called and cancelled my old credit card accounts back in the day was because I was sick of going in and out of credit card debt. I’d had enough, and just wanted to force myself to quit falling back into those bad habits of spending money I didn’t have.
So, if the whole reason you’re closing those old accounts down is to free yourself from debt and you won’t need your score for a home or auto loan in the near future, then closing them might be the best choice for you anyway. Also, if the card is charging you an annual fee, that may be enough to justify closing it.
This is the updated edition and highlights the impact of the 2008 financial crisis. This book is loading with information and tips, like the one above, that you can use to improve your credit score.
Liz was kind enough to send me a couple of extra copies of this book. So if you live in the U.S. and would like to win a copy, simply leave a comment below. I’ll randomly select a winner next Wednesday, the 29th of April. Good luck!
If you know someone that could use to read this post, or who might be interested in this book, use the “share this” link below to share it with them. Thanks.
I recently opened a Roth IRA for the first time. For more information on the Roth IRA, see that post. Today I wanted to get into a little more detail about that process, specifically the Vanguard Roth IRA opening process.
As an FYI, these screens may change over time, but the process should stay the same. You’ll need to select the type of investment account, enter your personal and banking information, select a fund or funds, and you’re done.
Here’s the Vanguard home page, where you simply need to click on the “open an account” button under the “Invest Now” section. You can see from the front page what Vanguard values most: the simple message of low-cost investing.
Vanguard keeps it pretty simple with their next screen. Here you’ll need to designate whether you want to open a new account (like I did), roll over an existing 401k (very common to have one of these back with an old employer), or transfer investment funds from another account. You’re also asked to register with Vanguard (but you can put this off till the end).
The next screen is almost a repeat of the previous one, except you have a section on the bottom to make a choice between going with Vanguard Mutual Funds, or stocks, bonds, and non-Vanguard funds. Since I’m at the Vanguard site looking for low-cost funds, this choice was a no-brain-er for me. Although, this is a good time to point out that you can invest in just about any type of investment product within your Roth IRA. It doesn’t just have to be mutual funds.
Okay, the next screen is when you begin to enter your personal information. All the basics, including the SSN are required. If you’re married and both you and your spouse are opening an account, make sure you put a different SSN in when you open your spouse’s account.
Up next is the screen where you’ll enter your bank information. This is the account you’ll be withdrawing your investment deposit from. A quick login to my ING DIRECT account enabled me to track down my routing and account numbers.
Alright, now to the fun stuff. To your right you’ll see the default option, the Prime Money Market Fund. If you have yet to do the research regarding which particular fund you’d like to invest in, this money market fund might be the best place to house your initial investment while you learn which particular fund or group of funds you want to invest in.
Keep in mind, most of the funds on the left have a $3,000 minimum deposit. So if you’re not at that level yet, then the money market fund will have to do. Note though, that these funds won’t be FDIC insured. So you might want to put a small amount here just to get started and save up the balance of your $3,000 in an FDIC insured high-yield savings account.
As for the mutual funds on the left, the choice is entirely up to you. This is definitely an area I’m not qualified to comment on. Let me just say that there are plenty of low-cost funds to chose from and there’s something in there to meet your risk tolerance and balance your asset allocation.
The final screenshot I have to show you is the page below where you’ll get to select what tax year you’d like your Roth IRA contribution going towards. This screen will only be active from January 1 to April 15 each year, as that’s the only time you can contribute to either tax year.
After that step is complete you will have made your initial investment. You will simply need to complete the online account opening process. I won’t take you through those last steps because they’re pretty straight-forward. I hope this guide will provide some value to those wanting to open up a Roth IRA with Vanguard. The process is really easy and takes less time than you think.
It’s been two years since I kicked things off here at Prime Time Money. I didn’t really find my blogging stride till early 2008, but technically I started this blog on April 18th, 2007. If you dare, you can venture back into the archives to see how far we’ve come.
I don’t have anything special planned for the anniversary. However, I did update the front page of the website to include a nice featured post gallery (thanks to featuredcontentgallery.com). I think it turned out nice. Hopefully it will encourage those that are new to the site to stick around and read more.
How to Share Articles with Others
Speaking of new people. If you’ve ever thought of sharing the content here with friends or family, I want to remind you of the many ways to do so. Each post contains a “share this” icon on the bottom which gives you the ability to share the blog post by email, text message, Facebook , Twitter, and several other ways. You can also print the article using the “print this” icon.
Sharing the content here with others is the biggest compliment you can give me. I’ll try and do my part by continuing to provide posts that are worth sharing.
The QuickHits
Here’s some blog posts by others from last week that I’d like to share with you:
No Debt Plan is about getting and staying out of debt with a plan. Kevin, the author, is passionate about budgeting, saving for the future, and using goals to reach financial freedom. You can subscribe to his blog by RSS or email.
This interview is part of a new feature he’s developed called Subscriber Swap Saturday. The basic idea is to get the subscribers of one blog to subscribe to the other blog for at least a week, just to try it out. After a week if you don’t find that blogger’s content enticing, drop it. The hope is that over time you will find several writers that you weren’t familiar with who provide meaningful content to you. You can read more about Subscriber Swap Saturday at his get out of debt blog, as well as his interview with me.
Here’s my interview with Kevin:
1. What motivates you to get up everyday and write a blog post for No Debt Plan?
The idea that I am building an online business that helps other people. I started off writing to get my thoughts on money on paper and to challenge myself to blog consistently for a year. I hit that goal and I’m starting to see some income being earned from my efforts. The idea that one day I might be able to live off of blogging is a big consideration as well (or at least use the money to pay off our mortgage faster while holding down my job).
2. With so many voices to listen to in the personal finance blog-o-sphere, why should people pay attention to what you’re presenting at No Debt Plan?
I think its a mixture of me being just an average guy with above-average money management skills and the knowledge that I’m continuing to improve myself with an MBA (and likely a Certified Financial Planner certification in the future). I’m 25, happily married, and we live in a house that we can easily pay for (I won’t say we “own” it until we’ve paid off the mortgage).
3. What can my readers do in the next 15 minutes that will help them improve their finances?
That depends on their current situation. Recently I’ve had success calling my service providers and winning discounts ($175/year from DirecTV and $150/year by switching car insurance companies). These calls didn’t take a lot of time and for that time I saved a considerable amount of money. The DirecTV call was somewhere in the 15-30 minute range so I might be stretching it a bit.
4. If you won $20 million in the lottery, what would you do with the money?
Ahhh… how many times have I played this game with myself?
Without totally geeking out on your readers with a seriously complex answer, here’s what I would do if I won a $20 million (after-tax) lottery:
Not change who I am or what I believe — I wouldn’t go completely crazy and I doubt I would tell many people
Get a very high quality tax/financial adviser that would help protect us (set up trusts for future kids, etc.)
Pay off our house
Pay off any debt my parents have
Set my parents up for life with whatever they wanted
Travel and give the money out to people/friends in need
Let’s say that through all of the above I blow through $5 million (highly unlikely we would spend that much, but let’s roll with it). That leaves $15 million. I would then set up our investments to expect 1-2% after taxes each year. I would invest the money most likely in bonds that would earn well above that, but plan on 1-2%. That’s $150,000 to $300,000 per year to do whatever we want.
Continue blogging.
5. I notice you like PC gaming. If you were a game character, who would you be and why?
Hmmm I haven’t spent much time thinking about who I would want to be since most games are set in bad times (zombie invasions, wars, etc.). If I had to choose I would pick Gordon from the Half-Life series. He’s quiet and intellectual, but kicks butt and takes names at the same time.
6. What is the last vacation you went on?
It depends on what you mean by vacation. Our last true week long vacation (the kind where you forget the rest of the world and all of your worries) was our honeymoon in January 2007. Since then we’ve been on several small trips — Memorial Day weekend with friends at the lake, two weeks at home over Christmas — but nothing really huge and significant. My MBA schedule includes summer courses so that has limited our availability to disappear for a while.
7. You and I have both been blogging seriously for about the same length of time (since January 2008). You mention on your about page that you’d like to be doing this full-time on day. Something I’d like to do as well. What’s your plan to get there and/or how will you know you’re ready to make the leap?
Let me grab my crystal ball! I’m planning to kick things into high gear after August of this year when I finish school. I think I’ll have more time to devote to all of the little details of blogging — more editing, more time to write posts in advance, more time to write guest posts for bigger blogs, more time to focus on building up my search engine rankings and monetization, more time for everything. (And yes, more time to actually come up with that plan!)
As to making the leap… I imagine that being a gut wrenching decision. I think the problem I’m going to run into is the possibility of being able to manage blogging on the side while maintaining a full-time income. That would be like having three incomes from two people — obviously a good thing. I think that will be my biggest hurdle… giving up that full-time income. Losing benefits isn’t as big of a deal because we’re on my wife’s benefits. But the security will be gone.
I guess I’ll know when I start to get quoted in major media outlets like many of the big time bloggers, yourself included. When I have a “Media Requests” page I think it will start to dawn on me that this is getting pretty serious.
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Thanks, Kevin! To my readers: now it’s your turn! Head over to No Debt Plan and subscribe. Give him a week and see what he has to offer. You just might become a full-time reader like me.
I am NOT a finance professional and no content within this website should be considered financial advice. Please consult a certified financial expert before attempting any of the ideas described in this site. Please read the disclaimer for more information.
Still, the stat above suggests I should check my reports a bit closer next time.
There’s lots to consider when it comes to your credit score. Over the next few weeks I’ll be sharing information I find from Liz Pulliam Weston’s national best seller, 
.
