How a new credit card can improve your credit score


Dear Liz: I received a notice that a retail credit card that I have had for over a decade will be converted to Mastercard. I already have an American Express charge card and a Visa Rewards credit card. I don’t need another credit card. But I’m worried. Will the conversion hurt my credit scores? Or is it better to have a credit card rather than a retail card for my credit scores?

To respond: Congratulations! Such conversions indicate that you have used the card and your other credit accounts responsibly. If you keep doing this, the new credit card might improve your credit scores more than the retail card.

Although getting new plastic is both good and bad for your credit scorea credit card typically factors into more FICO score variables than a retail card, said Ethan Dornhelm, FICO’s vice president of scores and predictive analytics.

“So to the extent that you have positive behaviors, it’s more likely to have a broader positive impact,” Dornhelm said.

The flip side is that if you mess up by missing a payment or racking up large balances, those mistakes could have a bigger effect on your scores, Dornhelm said.

Closing the account would likely be one of those mistakes, as closures reduce your available credit and should generally be avoided unless there is a compelling reason, such as an excessively high annual fee. Benefits that come with the retail card, such as discounts and free shipping, will likely carry over to the credit card, so you can continue to benefit from the account without worrying about it hurting your scores.

Was this kid scammed?

Dear Liz: My niece’s father remarried when she was a child. His father and stepmother bought a house as community property in California. Ten years later, his father died. Shortly after, her mother-in-law died. The mother-in-law had no children and my niece was her father’s only child. The mother-in-law’s niece took the house and sold it, and kept all the proceeds. Was my niece entitled to any of the benefits?

To respond: Your niece should consult an experienced lawyer, as the answer depends on a number of factors.

Estate planning attorney Jennifer Sawday of Long Beach points out California homologation code section 6402.5, which could give your niece priority over other heirs for property proceeds, but only if the facts line up. If the mother-in-law died no later than 15 years after the father, did not remarry, had no children, did not put the house in trust and did not make a will after the death of the father, then the California probate court could consider your niece an heiress, Sawday says.

That’s a lot of ifs, and your niece will need some expert advice to keep going.

Consequences of selling a house for a pensioner

Dear Liz: I am 67 years old, divorced since 1992 and retired with a good government pension, a retirement investment fund, some stocks and some cash savings. I plan to sell my 33 year old house soon for a big profit and buy a smaller house. I owe $100,000 on the mortgage. I worry about a significant increase in Medicare payments and tax liabilities to the IRS. What financial advice do you have for me? This is my first time selling and buying a property on my own.

To respond: Now would be a great time to consult a tax professional about your options. You can exempt up to $250,000 of profits on the sale of a home, but gains beyond that would incur capital gains taxes and could increase your health insurance premiums.

The amount you owe on your mortgage doesn’t affect the taxes you owe on the sale of a home, but other expenses might. For example, you may be able to reduce your taxable income if you keep good records of the amounts spent on home improvements. What you’ve spent on maintenance and repairs over the years won’t help, but any work that has improved the value of your home can be added to what you’ve paid for the home to increase your plate. tax. This basis is what is subtracted from the sale price to help determine your taxable profit. Certain expenses you incurred to buy your home, such as closing costs, and to sell it, such as real estate commissions, can also help reduce the taxable portion.

IRS Publication 523 details how to calculate the profit from the sale of a home, but an enrolled agent (you can get references from the Assoc. National Enrolled Agents) or a CPA could be extremely helpful in advising you on these calculations.

Liz Weston, Certified Financial Planner, is a personal finance columnist for Nerd Wallet. Questions can be sent to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at


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