Spending Smart: A Year’s Worth of Financial Wisdom

By Gregory Karp
Chicago Tribune

Credit reports, taking away the checkbook from grandma and the No. 1 supermarket shopping tip you need to know.

That’s a sampling of Spending Smart topics this year, along with debt-paying tactics, building an emergency fund and figuring out how much car you can afford.

In abbreviated form, here is some of the top Spending Smart money advice from 2013, based on reader feedback, uniqueness of the advice and our own favorites.

Credit. It’s no surprise that a column about credit reports and scores garnered the most reader feedback of the year. That’s certainly because credit reporting is not only an important consumer topic, but also confusing and counterintuitive.

For example, common sense might suggest that if you have more credit accounts open, you have more ability to get into debt trouble and not pay your bills on time. But that’s not the way scoring formulas look at it.

Instead of looking at how much credit you have, and completely ignoring how much money you earn, scoring systems look at your “credit utilization,” how much of your available credit you’re actually using at any given time. Using less than 10 percent of your available credit is ideal.

Check your credit reports once a year from each of the big three credit agencies, Experian, Equifax and TransUnion. Check those reports for free at annualcreditreport.com, or call 877-322-8228.
Information from your reports is funneled into a formula that spits out a three-digit credit score, a shorthand way for lenders to assess your reports. Credit scores are simply a numerical snapshot, usually ranging from 300 to 900, of what’s contained in your reports that day.

FICO is the brand of score most commonly used by lenders, and one you must pay to access at myfico.com. Get other brands of scores, which is fine for a simple check-in, for free at such sites as creditkarma.com and quizzle.com.

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