Your Credit + New Stimulus

...In less time than a haircut from Edward.

Credit is important to just about everyone. And it isn't just about getting low rates on loans - credit scores can be a factor in getting the best possible rewards credit cards, factor in employment decisions, housing decisions, car insurance rates and even utilities.

Translation: Do not ignore this task just because you think you have a good credit score or good credit habits.

Sure, always making on-time payments, avoiding carrying credit card balances and keeping a reasonable debt-to-income ratio will always provide a strong base. But being on your best financial behavior is not enough to ensure good credit. There is some annual maintenance involved. Here are the two (*free*) steps you need to take:

1) Get your free credit report from each of the three national bureaus. It's required by law for consumers to have once-yearly free access to your credit reports from Equifax, Experian and Transunion, respectively. You can even get weekly updates now, thanks to legislation passed during the pandemic. Just go to annualcreditreport.com and follow the steps. Make sure everything looks accurate on each report and be on the lookout for anything fraudulent. If you find something that doesn't look right, contact the credit bureau whose report contains the irregularity and dispute it.

2) Freeze your credit. It's free and surprisingly quick. I wrote a post on this very task with links for each bureau. If you're going to apply for a new loan or credit card in the immediate future, then go ahead and wait until after. More on freezing your credit:

This makes sense for everyone to do. Identity theft and financial fraud is a huge problem. Don't make it easier for the bad guys.
You can "unfreeze" your credit temporarily when you need to grant access to various companies as you are applying for credit/housing/jobs etc.
You can freeze a child's credit, too, in an effort to prevent child identity theft. If a bureau has no record of your child, that's a great sign, but you can still create one and then freeze it. More on child identity theft here. It'd be a real bummer to turn 16 and be turned down for a job or auto insurance because of fraudulent activity!

That's it! It's just a couple of steps to make sure your credit is in good order.

Bonus: Here's the link to permanently opt-out of those annoying credit card and insurance offers you get in the mail.

Relief is on the way...

A quick update on The American Rescue Plan Act of 2021

We're still learning all of the details behind the legislation passed today, but we know it's significant. What do you need to know? Here are the two biggest direct impacts I see so far, for those who qualify:

$1400 stimulus checks are heading out soon. But this time Congress has lowered the income ceiling ($75K AGI for single filers and $150K joint filers), and narrowed the band where it phases out. One big change: Any dependents you have are also eligible for a payment! How much you receive, and when you might receive it, will depend on whether or not you've filed taxes for 2020. So there is some consideration to be made if you would like your payment sooner (who wouldn't), and you haven't filed yet for 2020, AND you have the right mix of 2019 income versus 2020. Confusing enough? Let me know if you want to chat about what to do!
The expanded child tax credits are a huge deal for those who qualify. Phaseouts for income levels are a little more generous when compared to the stimulus checks, but households earning less than $150K will be eligible for tax credits up to $3600 per child. There may even be advances distributed for the credits, where families receive a monthly check instead of realizing the benefit at tax time. One caveat: this expanded credit is only for 2021.