When a third party looks at your credit score, this is called an inquiry. But these inquiries are not all the same. Some hurt your credit score, and some do not. An inquiry known as a soft inquiry does not affect your credit report, but a hard pull does.
Soft inquiry
A soft inquiry, or soft pull, is a term used to refer to an inquiry into your credit history that does not adversely affect the credit score. Often, you are not even aware that there has been a soft inquiry on your credit report. For example, if you receive a solicitation in the mail offering you a credit card, the credit card company has most likely conducted a soft pull to see if you qualify. When mortgage lenders pre-approve you for a loan, they initially use a soft pull. Potential employers use it as a part of background checks, and your current credit card companies use soft inquiries to check up on you. Banks use them to verify that you are who you say you are when opening an account. If you check your own credit report, which you can do for free once a year, this is done with a soft pull. Most of the time, you do not even know when they occur, and they do not affect your credit report.
Hard pull
A hard pull on a credit report is different. It does affect your credit score. Anytime that you are actually getting a loan or a new credit card, the lender conducts a hard pull on your credit report. This stays on the record. It also lowers your credit score by about five points for six months. For this reason, it is important to guard your credit report from too many hard pulls. If you get a store credit card just to save 10 percent on a single purchase, you have hurt your credit score. That is probably not worth the 10 percent savings. Some banks even use a hard pull if you are opening a savings account, so be sure to check your potential bank’s policy. Additionally, the incentives that credit card companies offer for signing up may not be worth the hit to your credit score.
Try to avoid any inquiries that are considered hard pulls. By limiting them your credit score will be higher and you can qualify for the best interest rate available to you when it comes time for you to apply for a loan that you truly need.
Unfortunately the public thinks it's ok to spend the $4 on that burnt bean because it's chic & if you order it w/ skim milk it'll help you lose weight.
I've been reading the entire Target Date series with great interest. My company's 401k plan is now offering them and the information you provided was really helpful!
Much thanks,
Liz
San Francisco
That's why I focus more on index investing, and dabble a bit in individual stock investing (with small amounts, and with my own money and picks.. which are doing well, if I do say so myself).
I've added a Forum topic on "Ways to Save" where users can post comments, share tips and ways to use the internet to save on some basics...Go to Tips and Tricks.
I've gotten some questions on where you can keep your emergency fund and still earn a little interest. Given where rates are in 2009, that is a good question.
I've been seeing some ads on an online bank called Ally that has some very good rates to keep your emergency fund in. Also, check out the RateBrain for some of the best rates around.
I've been seeing some ads on an online bank called Ally that has some very good rates to keep your emergency fund in. Also, check out the RateBrain for some of the best rates around.
Sorry I have to add this here but there was not "comment" section on the Emergency Fund blog. So if not a CD & a regular savings account doesn't give you much then where can you make your emergency money grow?
As a triathlete (medium to long course) and life-long endurance and outdoor sport freak, I'm definitely on your side of the fence. At the same time, I have family members who are seriously overweight and they are not evil people. I think that we as a nation need to do two things: indoctrinate our youth in healthy living and do as much as we can, within the boundaries of a free society, to provide them with an environment that encourages healthy living. That being said, I don't think we can penalize the currently overweight members of our society by different health care premiums or any measures of that type. It's too late for them. Focus on the future.
This website has motivated me to take charge of my finances. I've never even considered investing before today because I simply had no idea where to start (still don't, but Tonka Bean is a welcome resource). Thanks!
Great question. I hear this a lot. I would say that if you don't have the time to track individual companies, put your entire equity (stock) allocation into an index fund.
Mutual funds have a number of advantages over buying individual stocks. This is especially true if you don't have the time and resources to track individual stocks. Owning stocks means that you have to constantly be up to date with anything surrounding the individual stock or it's industry - basically anything that can affect its price and valuation. Do you have the time (or the expertise) to properly evaluate a company? Remember, good companies don't necessarily make good stocks either. And that's because the price of the company stock (or its valuation) can be too high compared to it's earning potential.
The biggest advantage mutual funds have over owning individual stocks for most investors is diversification. In other words, owning all the companies in the market is like not putting all your eggs in one basket. To understand this, we have to understand the sources of risk in investing.
There are two primary types of risk in owning individual stocks: stock-specific and market risks. You can't get away from market risk, but stock-specific can be virtually eliminated by owning a diversified portfolio of the stocks like in a mutual fund. The more diverse your portfolio the better.
Regarding investing in "blue chip" companies, the S&P 500 Index Fund also has most of the "blue chip" companies in it already.
What is the appropriate mix of mutual funds vs individual stocks? I have historically invested more actively in stocks and in recent years have gotten slammed. Mutual funds are therefore appealing, but should I also diversify and invest in some blue chip companies?
Paying off your mortgage depends on many factors. One of the biggest advantages is piece of mind. However, one of the biggest disadvantages is OPPORTUNITY COST. In economics, it's the cost of the next, best alternative action that must be given up in order to pursue a course of action. In other words, why use money that could be earning 8-10% (long-term in the stock market) to pay off a 5% loan? I'm not a fan of debt, but your house is probably the cheapest source of funds you'll ever have.
Instead, you may want to look into refinancing before paying off your mortgage. The biggest factor here for me is the interest rate on your mortgage vs what you can get currently. Mortgage rates are at some of the lowest I've seen in years. If your rate is north of where you can refinance now, then you may want to look into doing so. For example, if your mortgage is 6-7% and the going rates are somewhere in the 4-5% range, then it might make sense. If you want to try to avoid the closing costs, you may want to call up your bank and ask them if they can "modify" your loan to a lower interest rate. I just helped a friend do that and it only cost her $500 in fees, but it is saving over $3,000 a year in mortgage payments.
As for college savings, look at 529 Plans. These are tax-advantaged (no capital gains taxes and distributions are tax free) accounts designed to pay for college for a designated beneficiary (each kid). So if you have 2 kids, you would need 2 accounts. Each state has a plan and while most states allow out-of-state account holders, there can be some significant advantages to creating the account within your own state. For example, I'm in New York State. NY offers two types of plans: a direct-sold and an advisor-sold that accept balances of up to $235,000. A website that I have found helpful in outline state-by-state plans is Savingforcollege.com.
One word of caution though, the homepage seems to push finding an advisor. I think you could probably avoid paying an advisor if you educate yourself thoroughly and there are a ton of resources on the internet. Just be careful of those "pushing products". I set one up by myself.
Hey Grace,
Thanks for your note. It's only been in the last year or so, since I began thinking about Tonka Beans, that I realized there is a real need not only for encouraging women to save more aggressively (we do live longer after all, and our funds have to last longer), but also for teaching how to invest...really invest. There are a lot of things Wall Street doesn't want us to know because they simply don't make a lot money off us investing properly.
More to come...
Zina
Just want to thank you for making info available for women. I spent many years teaching business to women (average age - 28) and was amazed out how many women had never written a check! So sad--especially for widows who had no clue about their finances and now had to take over.
When a third party looks at your credit score, this is called an inquiry. But these inquiries are not all the same. Some hurt your credit score, and some do not. An inquiry known as a soft inquiry does not affect your credit report, but a hard pull does.
Soft inquiry
A soft inquiry, or soft pull, is a term used to refer to an inquiry into your credit history that does not adversely affect the credit score. Often, you are not even aware that there has been a soft inquiry on your credit report. For example, if you receive a solicitation in the mail offering you a credit card, the credit card company has most likely conducted a soft pull to see if you qualify. When mortgage lenders pre-approve you for a loan, they initially use a soft pull. Potential employers use it as a part of background checks, and your current credit card companies use soft inquiries to check up on you. Banks use them to verify that you are who you say you are when opening an account. If you check your own credit report, which you can do for free once a year, this is done with a soft pull. Most of the time, you do not even know when they occur, and they do not affect your credit report.
Hard pull
A hard pull on a credit report is different. It does affect your credit score. Anytime that you are actually getting a loan or a new credit card, the lender conducts a hard pull on your credit report. This stays on the record. It also lowers your credit score by about five points for six months. For this reason, it is important to guard your credit report from too many hard pulls. If you get a store credit card just to save 10 percent on a single purchase, you have hurt your credit score. That is probably not worth the 10 percent savings. Some banks even use a hard pull if you are opening a savings account, so be sure to check your potential bank’s policy. Additionally, the incentives that credit card companies offer for signing up may not be worth the hit to your credit score.
Try to avoid any inquiries that are considered hard pulls. By limiting them your credit score will be higher and you can qualify for the best interest rate available to you when it comes time for you to apply for a loan that you truly need.
So is it true every time you check you credit rating it goes down? Or is that just an urban legend?
Unfortunately the public thinks it's ok to spend the $4 on that burnt bean because it's chic & if you order it w/ skim milk it'll help you lose weight.
I've been reading the entire Target Date series with great interest. My company's 401k plan is now offering them and the information you provided was really helpful!
Much thanks,
Liz
San Francisco
There were a couple on here that I didn't think about, like making an extra mortgage payment to capture the tax deduction.
I'm all about Indexing and am trying to spread the truth about it. And, like you, the few stocks I dabble with I know very well and keep up with.
Investing is, to a large extent, all about managing risk. And knowledge is key to this.
That's why I focus more on index investing, and dabble a bit in individual stock investing (with small amounts, and with my own money and picks.. which are doing well, if I do say so myself).
Thanks!
FB @ FabulouslyBroke
I've added a Forum topic on "Ways to Save" where users can post comments, share tips and ways to use the internet to save on some basics...Go to Tips and Tricks.
Thanks for the tip!
I've gotten some questions on where you can keep your emergency fund and still earn a little interest. Given where rates are in 2009, that is a good question.
I've been seeing some ads on an online bank called Ally that has some very good rates to keep your emergency fund in. Also, check out the RateBrain for some of the best rates around.
I've been seeing some ads on an online bank called Ally that has some very good rates to keep your emergency fund in. Also, check out the RateBrain for some of the best rates around.
Sorry I have to add this here but there was not "comment" section on the Emergency Fund blog. So if not a CD & a regular savings account doesn't give you much then where can you make your emergency money grow?
Zina,
As a triathlete (medium to long course) and life-long endurance and outdoor sport freak, I'm definitely on your side of the fence. At the same time, I have family members who are seriously overweight and they are not evil people. I think that we as a nation need to do two things: indoctrinate our youth in healthy living and do as much as we can, within the boundaries of a free society, to provide them with an environment that encourages healthy living. That being said, I don't think we can penalize the currently overweight members of our society by different health care premiums or any measures of that type. It's too late for them. Focus on the future.
This website has motivated me to take charge of my finances. I've never even considered investing before today because I simply had no idea where to start (still don't, but Tonka Bean is a welcome resource). Thanks!
Great question. I hear this a lot. I would say that if you don't have the time to track individual companies, put your entire equity (stock) allocation into an index fund.
Mutual funds have a number of advantages over buying individual stocks. This is especially true if you don't have the time and resources to track individual stocks. Owning stocks means that you have to constantly be up to date with anything surrounding the individual stock or it's industry - basically anything that can affect its price and valuation. Do you have the time (or the expertise) to properly evaluate a company? Remember, good companies don't necessarily make good stocks either. And that's because the price of the company stock (or its valuation) can be too high compared to it's earning potential.
The biggest advantage mutual funds have over owning individual stocks for most investors is diversification. In other words, owning all the companies in the market is like not putting all your eggs in one basket. To understand this, we have to understand the sources of risk in investing.
There are two primary types of risk in owning individual stocks: stock-specific and market risks. You can't get away from market risk, but stock-specific can be virtually eliminated by owning a diversified portfolio of the stocks like in a mutual fund. The more diverse your portfolio the better.
Regarding investing in "blue chip" companies, the S&P 500 Index Fund also has most of the "blue chip" companies in it already.
What is the appropriate mix of mutual funds vs individual stocks? I have historically invested more actively in stocks and in recent years have gotten slammed. Mutual funds are therefore appealing, but should I also diversify and invest in some blue chip companies?
Paying off your mortgage depends on many factors. One of the biggest advantages is piece of mind. However, one of the biggest disadvantages is OPPORTUNITY COST. In economics, it's the cost of the next, best alternative action that must be given up in order to pursue a course of action. In other words, why use money that could be earning 8-10% (long-term in the stock market) to pay off a 5% loan? I'm not a fan of debt, but your house is probably the cheapest source of funds you'll ever have.
Instead, you may want to look into refinancing before paying off your mortgage. The biggest factor here for me is the interest rate on your mortgage vs what you can get currently. Mortgage rates are at some of the lowest I've seen in years. If your rate is north of where you can refinance now, then you may want to look into doing so. For example, if your mortgage is 6-7% and the going rates are somewhere in the 4-5% range, then it might make sense. If you want to try to avoid the closing costs, you may want to call up your bank and ask them if they can "modify" your loan to a lower interest rate. I just helped a friend do that and it only cost her $500 in fees, but it is saving over $3,000 a year in mortgage payments.
As for college savings, look at 529 Plans. These are tax-advantaged (no capital gains taxes and distributions are tax free) accounts designed to pay for college for a designated beneficiary (each kid). So if you have 2 kids, you would need 2 accounts. Each state has a plan and while most states allow out-of-state account holders, there can be some significant advantages to creating the account within your own state. For example, I'm in New York State. NY offers two types of plans: a direct-sold and an advisor-sold that accept balances of up to $235,000. A website that I have found helpful in outline state-by-state plans is Savingforcollege.com.
One word of caution though, the homepage seems to push finding an advisor. I think you could probably avoid paying an advisor if you educate yourself thoroughly and there are a ton of resources on the internet. Just be careful of those "pushing products". I set one up by myself.
Hey Grace,
Thanks for your note. It's only been in the last year or so, since I began thinking about Tonka Beans, that I realized there is a real need not only for encouraging women to save more aggressively (we do live longer after all, and our funds have to last longer), but also for teaching how to invest...really invest. There are a lot of things Wall Street doesn't want us to know because they simply don't make a lot money off us investing properly.
More to come...
Zina
Hi, Zina,
Just want to thank you for making info available for women. I spent many years teaching business to women (average age - 28) and was amazed out how many women had never written a check! So sad--especially for widows who had no clue about their finances and now had to take over.
Grace in Florida