Asset Planning, Inc Blog

As clients age, there is an increased risk of serious illness, diminished mental capacity and potential elder abuse. In order to protect our clients, we will be asking them to fill out a Backup Contact Information Form. This will allow our clients to direct us to who we should speak with and how to get in contact with them if we are unable to contact them for 60 days, if there is serious illness, fear of diminished mental capacity or elder abuse. This information allows for the continued protection of our clients and their finances if one of these instances occur. Due to the current privacy rules, backup contact information is needed in writing.

This information is especially essential for those who are single, as there is no co-owner of the assets and accounts. For those with co-owners/spouses, it is still important to make the designation early in order to protect yourselves. There may be things that can be done in order to protect the client and their beneficiaries. It may also be beneficial to send backup contact information to your CPAs, estate attorneys, insurance agents, etc.

Please be aware that this will not allow the backup contact to make any changes to your account or withdraw any funds.

If you would like a copy of our form, please contact us at (714) 827-5794 or sjg@assetplanninginc.com.

Every time you apply for a personal credit card your average time length of your credit accounts decrease and in turn decreases your credit score. It is sad news if you were looking to open a new personal credit card account; however, applying for a business card will not reduce the average time length of your credit accounts. The personal credit bureaus do not receive reports on the amount you spend on a business credit card, as well as your credit line.

For Example, theoretically speaking if one was to use up an entire credit limit from a business credit card, it would have no impact on a personal credit score. In contrast, if the same was done a personal credit card, it would dramatically reduce your score even if the balance was paid in full when the statement arrives.

Bottom line, not only do business credit cards provide more sign-up bonuses, they also have less of an impact to your personal credit score. You don't need an established business to get approved for a business credit card and you can often get approved for existing businesses which you run as the sole owner or which you are thinking of starting. It is advisable to be cautious of what you apply for, the interest rate and any penalties that come with any credit card including business credit cards.

It is very easy to want to sign up for credit cards that offer miles and points for purchases you make, especially with sign-up bonuses offering 50,000 miles or points when you apply and receive the credit card. Yet, you should take into consideration how this might impact your credit score.

You should think twice on getting these kinds of credit cards if:

1. Interest rates on these are especially high.

2. You shouldn't apply for them unless you know you can definitely pay off the entire balance each month

3. You are having trouble budgeting or you can't resist making unnecessary purchases just for the sake of increasing your points or miles.

4. You have a score lower than 700

5. Don't apply for these kinds of credits cards if you seek to increase your credit score, especially if you are thinking of taking out a home loan in the near future.

In the short-term your score could decrease; however if you are strict with yourself, make considerable purchases and pay your balance off in full each month, then the score will increase and also you will be able to redeem points and miles.

Your credit score is determined by the following:

-35% payment history

-30% amount owed

-15% length of credit history

-10% new credit

-10% types of credit.

The percentages are based on the importance of the five categories for the general population. For particular groups; for example, people who have not been using credit long, the relative importance of these categories may be different.

PAYMENT HISTORY is considered the most important variable. The next most important variable to watch are the AMOUNTS OWED. Having debt doesn't mean you are a high-risk borrower. Keep in mind that if a high percentage of your available credit has been used, it may suggest that you take on more debt than you can probably handle. This might reflect as a risk of you not being able to pay back your loans.

It is important to not max out your credit cards and keep a low credit utilization rate. Example:

If your credit limit is $5,000, don't charge more than a $1,000 if you want to keep your utilization rate below 20%.

Spend healthy and keep that payment history a priority!

First: What is a credit score?

In the U.S, a credit score is a number used to predict the likelihood of you not paying back loans. There are three main credit bureaus in the US A and they are Equifax, TransUnion and Experian; however Fair Isaac Corporation dominates the US credit score business and issues FICO scores ranging from 300 to 850.

The higher your credits score the better; however there is a limit. A score of 650 is always better than a score of 550 and a score of 750 will get you access to lower interest rates than a score of 650. Here is the catch, after a gaining a score of 760 you won't necessarily get lower interest rates than someone with a score of 830. As long as you maintain a score above 750 you will be in great shape.

Please stay tuned for our weekly series on credit cards and FICO. Next week I will post on what your FICO score is, what it means and how it is calculated. Feel free to share with other family and friends!

Mortgage rates recently hit an all time low & if you haven't already refinanced your mortgage, now might be the time to do so. We have found a new mortgage resource that is very professional, timely, and offers competitive rates. If you would like a referral, please feel free to contact us.
 

The government just announced another mortgage refinance program in hopes to aid underwater homeowners. The new program is called The FHA Short Refinance Option and it allows borrowers to refinance up to 97.75% of their home's value. However, a borrower's current lender must be willing to write down at least 10% of the current principal balance and the total mortgage debt on the property can not exceed 115% of the home's value.

A borrower must meet the below criteria to qualify:

• Be current on payments for their underwater mortgage
• Refinance their primary residence
• Have a mortgage debt-to-income ratio of less than 31 percent
• Have a total debt-to-income ratio of less than 50 percent after the refinance
• Have a credit score of at least 500

For more information on the program please vist the HUD website.