Nov 13, 2018
Today’s episode is all about credit and credit cards. FICO is
releasing new criteria aimed at helping people with poor credit
called “Ultra FICO.” Those who are unable to get a line of credit
because of a weak traditional FICO score will benefit from this
system if they have an average bank account balance of $400 and no
overdrafts in the past three months. Then being that we just
celebrated Veterans Day, the guys drop an interview they recently
did at FinCon with Air Force Veteran, Jason Williams. Jason is the
Director of Credit Card Product Management with USAA. In this
interview they discuss how to find the best credit card for your
needs, how balance transfers might become a thing of the past and
how USAA has made it their mission to assist active military and
veterans with their finances.
Highlights:
- The “Ultra FICO” is a new way to score consumers on how they
handle their bank account and cash transactions. It’s geared at
customers who are turned down for credit based on their traditional
FICO score.
- Ultra FICO places a heavier weight on your bank account
balance, the amount of debit transactions you make and your
overdraft history.
- Those with an average account balance of $400 and who haven’t
had an overdraft in the last 3 months will be the beneficiaries of
this new system.
- An argument against the Ultra FICO system is that its main
purpose is to broaden the pool of people the lenders can extend
credit to. Which will ultimately benefit the credit card companies
because of interest and late fees.
- Building credit history for those who don’t have credit:
- Open up a secured card – You put down the deposit and that
becomes the limit.
- Get a credit card and don’t purchase anything. Just make small
auto payments. This will show the lender that you’re using and
being responsible with the card.
- Pick a card for the right reasons. Most people focus on credit
card rewards, not the fee’s associated with the card or the
APR.
- As interest rates rise, zero percent balance transfers will
become a thing of the past.
- If you’re able to find a cheap or free balance transfer,
understand that balance transfers a short-term plan for trying to
pay off debt. You must come up with a more comprehensive
strategy.
- Opening a card while you’re in the military comes with certain
protections.
- Taxes on income for active duty Military are typically much
less then civilian taxes. It’s important to plan for this as your
service is nearing it’s end.
- While you’re in the service it’s a good idea to invest in the
TSP, Thrift Savings Plan. This will help supplement your pension or
take the place of your pension if you’re discharged early.
The Takeaway: Those with little to no credit
history, but who are responsible with money, as reflected in their
bank account balance could, be good candidates for the “Ultra FICO”
system. However, be weary that the reason FICO developed this new
system is to extend their reach of who they can loan money to and
thus get them paying interest and fees.
Paychecks &
Balances
Website:
https://paychecksandbalances.com/
https://www.patreon.com/paybalances
Instagram: @paybalances
Facebook: https://www.facebook.com/paychecksandbalances
Twitter: @paybalances
USAA
Website: https://www.usaa.com/
Paychecks & Balances – PB107
Today’s episode is all about credit and credit cards. FICO is
releasing new criteria aimed at helping people with poor credit
called “Ultra FICO.” Those who are unable to get a line of credit
because of a weak traditional FICO score will benefit from this
system if they have an average bank account balance of $400 and no
overdrafts in the past three months. Then being that we just
celebrated Veterans Day, the guys drop an interview they recently
did at FinCon with Air Force Veteran, Jason Williams. Jason is the
Director of Credit Card Product Management with USAA. In this
interview they discuss how to find the best credit card for your
needs, how balance transfers might become a thing of the past and
how USAA has made it their mission to assist active military and
veterans with their finances.
Highlights:
- The “Ultra FICO” is a new way to score consumers on how they
handle their bank account and cash transactions. It’s geared at
customers who are turned down for credit based on their traditional
FICO score.
- Ultra FICO places a heavier weight on your bank account
balance, the amount of debit transactions you make and your
overdraft history.
- Those with an average account balance of $400 and who haven’t
had an overdraft in the last 3 months will be the beneficiaries of
this new system.
- An argument against the Ultra FICO system is that its main
purpose is to broaden the pool of people the lenders can extend
credit to. Which will ultimately benefit the credit card companies
because of interest and late fees.
- Building credit history for those who don’t have credit:
- Open up a secured card – You put down the deposit and that
becomes the limit.
- Get a credit card and don’t purchase anything. Just make small
auto payments. This will show the lender that you’re using and
being responsible with the card.
- Pick a card for the right reasons. Most people focus on credit
card rewards, not the fee’s associated with the card or the
APR.
- As interest rates rise, zero percent balance transfers will
become a thing of the past.
- If you’re able to find a cheap or free balance transfer,
understand that balance transfers a short-term plan for trying to
pay off debt. You must come up with a more comprehensive
strategy.
- Opening a card while you’re in the military comes with certain
protections.
- Taxes on income for active duty Military are typically much
less then civilian taxes. It’s important to plan for this as your
service is nearing it’s end.
- While you’re in the service it’s a good idea to invest in the
TSP, Thrift Savings Plan. This will help supplement your pension or
take the place of your pension if you’re discharged early.
The Takeaway: Those with little to no credit
history, but who are responsible with money, as reflected in their
bank account balance could, be good candidates for the “Ultra FICO”
system. However, be weary that the reason FICO developed this new
system is to extend their reach of who they can loan money to and
thus get them paying interest and fees.
Paychecks & Balances
Website:
https://paychecksandbalances.com/
https://www.patreon.com/paybalances
Instagram: @paybalances
Facebook: https://www.facebook.com/paychecksandbalances
Twitter: @paybalances
USAA
Website: https://www.usaa.com/