How landlords weigh your credit history when deciding whether to rent to you
Dear Liz: I recently paid off a large amount of credit card debt: over $15,000 in total to several credit card companies. How long does it take for my credit report to reflect that? I will be moving into an apartment in the next month or two. I don’t want my application to be denied because my debt is still listed on my credit report. I live with my father right now as he needs 24-hour care, but in the near future he will need to move into a nursing home as he has advanced dementia.
Answer: Credit card issuers typically report balances to the credit bureaus every month. Many report your balance as of your card’s statement closing date. If you paid off a balance a few days after the card’s statement closing date, you may not see the change reflected in your credit reports and credit scores until the next billing cycle.
High debt levels relative to your income could be a concern for landlords. Typically, though, they’re looking for bigger red flags such as late payments and collections that indicate you don’t pay on time.
Many landlords use credit scores as an initial way to evaluate applicants, followed by a closer look at applicants’ credit reports. If you maintain good scores and have no negative marks, you should be seen as a good candidate.
A surprisingly low rate promised on a home equity line of credit is probably just a “teaser” rate, which eventually could go much higher.
Getting a second financial opinion
Dear Liz: My wife and I recently retired. Our investments are managed by a certified financial planner. Our nest egg has not shown much growth over the last several years. We think it is time for another professional advisor to analyze our portfolio and see if we are really heading in the right direction. Is this out of the ordinary to seek more advice and how would we go about it, without offending our current planner?
Answer: You can certainly consult another advisor, but consider talking to your own first.
Start by asking the certified financial planner how your portfolio has performed relative to an appropriate benchmark over the last five years. The planner should be able to explain what benchmark was chosen and why. A portfolio that invests heavily in bonds, for example, will have a different benchmark than one that invests mostly in stocks.
If your portfolio is lagging behind this benchmark, then ask the planner what changes can be made to improve your investment performance. Switching from actively managed investments to passive ones, such as index mutual funds or index exchange traded funds, could save on costs and improve performance because few actively managed investments manage to beat the market.
If your portfolio is performing appropriately relative to its benchmark, then discuss whether you want to take on more risk for better returns. Many planners recommend retirees have a substantial portion of their portfolios in stocks for inflation-beating growth.
Your certified financial planner should be open to this discussion and ready to course correct if necessary. If you find that’s not the case, then it may be time not just for a second opinion but for a new advisor.
The 50/30/20 budget was popularized by Sen. Elizabeth Warren and her daughter Amelia Warren Tyagi in their book, “All Your Worth: The Ultimate Lifetime Money Plan.”
Divorced spouse benefits and remarriage
Dear Liz: My recently divorced girlfriend receives Social Security based on her ex-husband, who is still living. If we were to get married, would either of us lose part or all of our Social Security benefits? It seems like a simple, straightforward question, but every Social Security representative I speak with by phone or in person gives me a different answer. My girlfriend did not work long enough to earn her own Social Security benefits. She was married over 30 years and is over 60.
Answer: The answer to this question isn’t complicated, so it’s unclear why you got different answers. If the ex-spouse is still alive, then your girlfriend’s benefit is a divorced spousal benefit that ends if she remarries.
If the ex-spouse were not alive, then your girlfriend would be receiving a type of survivor benefit known as a divorced survivor benefit. People receiving survivor benefits can keep them after marriage if they are 60 or older at the time of the marriage.
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
