Dear Liz: I had a problem last year and had no income so I couldn’t pay my bills for three months. I explained the situation to my creditors, but they still recorded the late payments on my credit reports. I called and sent letters, but it was not good: my credit rating fell to the middle of 500. How do I remove late payments?
Reply: Over the past year, many lenders have offered various types of hardship programs due to the pandemic. If your forbearance was approved, the payments you missed should not have been flagged as late. You can dispute the errors with the three credit bureaus (start at www.annualcreditreport.com) and ask the lenders to correct the record.
Unfortunately, lenders don’t always tell clients that forbearance or other hardship programs are available. If you weren’t given a chance to sign up when you called to explain your problem, contact your lenders again, in writing, to report it and request that the late payments be removed from your credit reports.
If a lender refuses to cooperate, consider filing a complaint with the Consumer Financial Protection Bureau.
Dear Liz: I know different factors are involved, but I find a recent increase in my FICO score inexplicable. My score went from around 740 to 815, according to a note on my last credit card statement. Yet I have done next to nothing in terms of major credit activity – no purchases, no changes in my already low credit card usage. I transferred about $ 800 from one card to another, and that’s it. If such small things can affect the FICO score, it makes that score ridiculous. Can you suggest possible explanations?
Reply: Credit scoring formulas are a bit of a black box, but they are sensitive to the amount of available credit you are using.
If you transferred the balance from a card with a very low credit limit to a card with a higher limit, your scores would generally improve, although perhaps not as drastically as the increase you describe.
Your scores might also improve if your balances go down on other accounts or if something that was negatively impacting your credit “drops” or stops being reported. The simple passage of time can also improve your scores, increase the age of your credit accounts and the time since your last credit application.
It’s impossible to say exactly what combination of factors may have affected the score you saw, but at least it has moved in the right direction.
Social security after the death of a spouse
Dear Liz: My husband recently passed away. Since he and I received essentially the same amount from Social Security, I will not receive any additional money. Can you explain this? Social Security couldn’t when I both called and went to the local office. I did not see this covered in your column. I think that would be a problem for many spouses.
Reply: The issue of survivor benefits has been raised frequently in this column, but unfortunately many people still do not understand that their benefits will drop, sometimes precipitously, when their spouse dies.
When a member of a married couple dies, one of their two social security checks disappears and the survivor receives the larger of the two benefits. If your husband’s check had been greater than yours, that amount would become your survivor benefit. If your benefit was the higher of the two, you would continue to receive this amount.
Many people ignore the impact their claim decisions will have on their surviving spouse, which is unfortunate since the survivor could live for years, or even decades, on this reduced income. Couples can often maximize their benefits and lessen the severity of this drop in income by ensuring that the higher income delays their social security claim as long as possible, ideally until it peaks at age 70. .
Liz Weston, Certified Financial Planner, is Personal Finance Columnist for NerdWallet. Questions can be sent to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.