Consumer questions: Credit score calculation

Who Decides Credit Scores?

Question: "Who decides my credit score and how is it calculated?"

Answer: For a long time there was only one company keeping track of credit scores, but now there are many. Currently, there is only one that is universally accepted, so if you're going to choose one, go with the FICO score. FICO stands for Fair Isaac Company and they are the ones who invented the credit score. A credit score tries to determine what the likelihood is that you will pay back any loan you take in. A good score has long been considered to be at least 720. However, that number has been creeping up recently to the 740 range. At 740 and above you'll get the very best rate. A credit score can range anywhere from about 300 to 825.

Long Term Insurance for Assisted Living?

Question: Is it worthwhile to get long-term insurance for assisted living? Some of us in this particular age bracket (50, 60 70 years old even) may have not gotten this insurance and we are wondering if we are better off just saving our money to pay for that in the future.

Answer: You're better off getting the insurance if you shop wisely. The problem is this kind of insurance is expensive. If, for example, you're 65 and in good health, a good long-term policy will cost you between $2,000 to $3,000 a year. The earlier you buy, the cheaper it is. Be sure to check what the insurance will cover (i.e. nursing home care versus care in your home). The federal government will pay these costs for you, but only after you're broke.

Merging Finances

Question: "We are getting married in October and we are wondering when is the right time to consider merging our finances?"

Answer: Immediately. More marriages get broken up over cash than over infidelity. The worst fights can often be over money. People have different ways of dealing with money. Some are very emotional and save it, while other spend frivolously. Start keeping track of how each of you spend and determine who will be responsible for what. Remember that at the end of the day, you're responsible for your own life. Ultimately, both sides need to keep track of the money

For more of Michael Finney's consumer stories and advice, visit 7 On Your Side.

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