Article in The Wall Street Journal on 12/9/2012
You, too, can be a credit-score hotshot.
Fair Isaac, creator of the commonly used FICO credit score, used to be tight-lipped about what it took to earn its best scores. But this fall, it provided some insights into common traits of the more than 50 million people—roughly a quarter of those with credit scores—who are in the superstar tier, earning a score of 785 or higher on a scale that ranges from 300 to 850. Here are some keys to joining the credit elite:
It takes debt to have a good credit score. The typical FICO high achiever has an average of four loans or credit cards that are regularly used. In addition, about a third of those high achievers owe more than $8,500 on nonmortgage accounts, indicating that they use a fair amount of debt. (Whether those balances are paid off each month or carried over isn’t known.)
You (almost) can’t have too much credit. Credit utilization—how much of your credit you actually use—accounts for 30% of the credit-score calculation. While the rule of thumb is to keep your credit use to no more than one-third of your available credit, FICO high achievers use, on average, a skimpy 7% of the credit available to them.
Be middle-aged or older—or piggyback on someone else’s account. The average account of a high achiever was 11 years old, and his oldest account was opened about 25 years ago.
If you are in your 20s or 30s and just getting going, you might be able to piggyback on parents’ or relatives’ good credit history by opening a joint account. Or you might benefit from being added as an authorized user on a family member’s old account.
Perfect payments pay dividends. On average, 96% never miss a payment, which can stay on your record for seven years, and only about 1% ever had a collection.
—Karen BlumenthalThe Wall Street Journal
‘Cliff’ Costs
The budget experts at the Tax Policy Center, a joint project of the Urban Institute and Brookings Institution think tanks, recently released an online “Fiscal Cliff Calculator” that lets you figure out how four different potential tax-code outcomes would affect your own annual federal taxes.
You can compare your estimated tax bill under the tax laws presently in force for 2012; under competing proposals from Senate Republicans and Senate Democrats; and under current 2013 law—in other words, what happens if we plunged without any compromise.
You’ll need to enter a relatively detailed set of information about your income (including investment income from any of your taxable savings accounts), as well as deductions.
—Matthew Heimer
Encore Blog
MarketWatch.com
Higher Net Worth
U.S. households’ net worth increased by $1.7 trillion in the third quarter, as gains from the stock-market and real-estate values boosted Americans’ portfolios.
A Federal Reserve report released last week showed that households’ total net worth rose to $64.8 trillion between July and September.
The value of corporate equities and mutual funds owned by households expanded $800 billion and the value of real estate owned by households increased about $370 billion, the Fed said.
—Sarah Portlock
and Kristina Peterson
Real Time Economics Blog
WSJ.com
Buzzwords to Ban
Would you describe yourself as “creative,” “effective” and “motivated”? So would millions of other people.
LinkedIn recently analyzed more than 187 million user profiles and came up with a list of the 10 most-used buzzwords of 2012. The findings show that professionals are using many of the same descriptors to play up their job skills. Here are the top 10 overused terms among U.S. LinkedIn members:
1. Creative
2. Organizational
3. Effective
4. Motivated
5. Extensive experience
6. Track record
7. Innovative
8. Responsible
9. Analytical
10. Problem solving
—Leslie Kwoh
At Work Blog
WSJ.com
You, Only Older
Want to boost your retirement savings? Meeting your future self may motivate you.
Merrill Edge, a division of Bank of America BAC -0.57% Merrill Lynch, last week unveiled an online tool with just a whiff of science fiction. The tool takes its inspiration from recent research that suggests that younger people who are exposed to visual approximations of what they might look like when they reach retirement age tend to save more.
Face Retirement, Merrill Edge’s tool, uses a webcam, rather than a virtual-reality headset, to capture its images. (Currently, customers can’t upload photos.) But it should produce the same result, says Alok Prasad, the head of Merrill Edge.
—Anne Tergesen
Encore Blog
MarketWatch.com
A 529 Match?
For years, companies have been matching employees’ contributions to 401(k) plans. Now, at least one firm has rolled out a match program for parents saving for college with a 529 plan.
Dun & Bradstreet Credibility, which provides credit-building services to mostly small businesses, announced last week a “multiple match” program for employees who contribute to a 529 college savings plan.
While experts say it’s too soon to tell whether the practice will spread, they do say companies are increasingly searching for creative ways to attract talent.
And at least one state government has been trying to encourage employers to offer 529 matches. Illinois has offered state employers a tax credit if they match employees’ contributions to an in-state 529 plan.
—AnnaMaria Andriotis
MarketWatch.com
More Photo Ops
Google GOOG +1.67% announced the launch of the Snapseed mobile photo app for devices powered by Google’s Android operating system.
Snapseed, which competes with Facebook‘s FB +0.50% Instagram app, allows people to add filters to photos they’ve taken using their mobile devices and to share them with friends.
—Amir Efrati
Digits Blog
WSJ.com