Fico Scores, Advantagescores and Credit Reports Explained

Hello the is Debra Marie the Tax Queen coming back with another wonderful post
where I will be sharing some helpful information on fico scores, advantagescores and
credit reports.  I will be going over the basics so you’ll have some knowledge when
researching this topic yourselves. So, let’s begin!

You’re probably wondering why you need to know about this stuff. Well when you go to
buy a car, a house or even apply for a credit card this is what the lenders will be
checking. They will be getting you info from three national credit bureaus
(Equifax, Experian and TransUnion) and they compete to capture, update and store
credit histories on most U.S. consumers. The fourth bureau collects what the Big Three
don’t. A range of data falls under the fourth-bureau umbrella, including rent payments,
cellphone and utility bills, magazine subscriptions and gym memberships. But we won’t
talk to much about that one…actually this is all we will talk about when it comes to the
fourth bureau.

So, what are credit bureaus?

A credit bureau is a company that collects and maintains individual credit information and sells it to lenders, creditors, and consumers in the form of a credit report. While there are dozens of credit bureaus across the U.S., most consumers are familiar with the big three: Equifax, Experian, andTransUnion.

Ok, now that you understand the functions of the bureaus it is now time to get to the
juicy stuff…. THE SCORES!  Let’s start with the FICO Score!

What is a FICO Score?

Well first off, FICO is an abbreviation for the Fair Isaac Corporation, the first company
to offer a credit-risk model with a score. Bill Fair and Earl Isaac are the founders.
A FICO Score is a three-digit number based on the information in your credit reports. It
helps lenders determine how likely you are to repay a loan. This, in turn, affects how
much you can borrow, how many months you have to repay, and how much it will cost
(the interest rate).
What are the credit score range?
Credit Score Rating % of People
580-669 Fair 17%
670-739 Good 21%
740-799 Very Good 25%
800-850 Exceptional 21%
THE MOST POPULAR CREDIT SCORE COMPANY YOU MAY HAVE
HEARD OF IS CREDIT KARMA…. BUT HOW ACCURATE ARE THEY?
WELL HERE IS A LITTLE INFORMATION ABOUT CREDIT KARMA

Credit Karma is a for-profit business that makes money by giving you a free credit score
in exchange for learning more about your spending habits and charging companies to
serve you targeted advertisements. Their business model is to earn commissions
off loan products you purchase through its site. Although the site positions itself as a
trusted adviser, its motivation is to sign you up for new loans. Overuse of credit can
have financially catastrophic results. Use Credit Karma to monitor your score–not to
received unbiased advice.

Also, the scores and credit report information from Credit Karma comes from
TransUnion and Equifax, two of the three major credit bureaus.  They also provide
Vantage Score credit scores independently from both credit bureaus.
And because Credit Karma uses only two of the three major credit bureaus, a
consumer’s credit score might not be entirely accurate. Although Vantage
Score’s system is accurate, it’s not the industry standard; the companies that will
approve or deny loan applications are more likely to look at FICO scores.
So, what’s the difference between a Fico score and a vantage score?

Although both the FICO Score and Vantage Score use a credit range of 300 to
850, there are some key differences in how the two scores are calculated. FICO
gives more weight to a consumer’s payment history, while Vantage Score
emphasizes total credit usage and balances.

As mentioned earlier although a Vantage Score’s system is accurate, it’s not the
industry standard. Credit Karma works fine for the average consumer, but the
companies that will approve or deny your application are more likely to look at
your FICO score.

What other companies are similar to Credit Karma and uses
the vantage score.
1. Credit Sesame
2. Quizzed
3. Credit.com
4. WalletHub

Now what’s the difference between a credit report and a FICO
score?

Your credit report contains personal information, credit account
history, credit inquiries and public records. This information is reported by your lenders
and creditors to the credit bureaus. … These four categories are: identifying
information, credit accounts, credit inquiries and public records.
A FICO Score is a three-digit number based on the information in your credit reports. It
helps lenders determine how likely you are to repay a loan. This, in turn, affects how
much you can borrow, how many months you have to repay, and how much it will cost
(the interest rate).

How can I get my credit report?

By logging on to AnnualCreditReport.com, you can check your credit reports for free
once every 12 months from each of the major credit bureaus—Equifax, Experian,
and TransUnion. However, these reports will not give you a credit score.
While you can pay one of the reporting companies for your credit score, you really don’t
have to anymore. There are a number of websites and credit card companies that will
give you your credit score for free.

Here are five free services and five credit card companies that provide credit scores to consumers, along with what each of them offers and how they differ.
Credit Card Companies That Provide Free Credit Scores.

In addition to the services listed above, many credit card companies offer their
customers, and sometimes others, a free look at their credit scores. They include:

1. Discover Card—FICO Statement
Discover Card holders receive their TransUnion FICO credit score for free
on each monthly statement.

  1. Barclaycard—Credit Factors
    Barclaycard customers get a free FICO score on their monthly statements.
    In addition, they can see up to two factors that affect their credit score.
    These might be things like “balances on a bank card or revolving accounts
    too high compared to credit limits”.

3. Capital One Card—Credit Wise
Formerly known as Credit Tracker, Capital One’s Credit Wise service is
available to anyone, whether or not you’re a cardholder with the company.
Through this service, you can get access to your Vantage Score 3.0 every
month and be alerted to any changes in it.

4. First Bankcard—Monthly Lender ScoreFirst National Bank offers its credit card users a free FICO Bankcard Score
9, which is a score tailored to credit card lending. It is not, in other words,
the score a mortgage lender would use when deciding whether you can
borrow money to buy a house, but it will still give you some idea of where
you stand. Your score is updated once a month.

  1. Walmart Credit Card—Electronic Score
    If you’re a Walmart credit card holder, you’ll receive a free FICO score
    each month if you sign up for electronic monthly statements. You’ll also be
    able to see two “reason codes” affecting your score.
    Well I hope you enjoyed our little information session about fico scores,
    advantagescores, and credit reports.  If you are curious or have questions that
    you would like for me to do a podcast on please leave me a message or email
    me at debra@dmtbookkeeping.com or any of my social media platforms under
    dmtbookkeeping.  As always thank you for listening to my podcast and until next
    time …. Bye!

Are “Strippers” Employees or Independent Contractors? 

The legal distinction between an independent contractor and an employee is largely a question of control.

Are there “club” guidelines for the dancers to follow?  For example, do they have to wear a specific type of outfit or do they need to be a certain size or have favorable attributes.  Are they required to work a certain number of hours and if they do not show up will there be monetary consequences?

Most if not all dancers would prefer to work as independent contractors rather than as employees because of the tax implications, but unfortunately their employment status is not a choice it is a decision based on facts.

Ok, let’s go over the ten facts of what an employee is.

  1. The more instructions the employer gives the worker, the more likely the worker is an employee.
  2. The more closely integrated the work is with the employer’s business, the more likely the worker is an employee.
  3. Services rendered personally. If the worker must personally do the work, that tends to suggest employee status.
  4. Continuing relationship. The longer the arrangement’s term between company and worker, the more likely the worker will be considered an employee.
  5. Set hours of work. Set hours (such as 9 a.m. to 5 p.m.) are more consistent with employee status.
  6. Full-time required. Working full-time is more consistent with employee status.
  7. Doing work on employer’s premises. Working on the employer’s premises (as opposed to from home or from a neutral site) is more consistent with employee status.
  8. Order or sequence set. Performing services in a particular order or sequence set by the employer is more consistent with employee status.
  9. Right to discharge. The company’s right to discharge a worker tends to suggest employee status.
  10. Right to terminate. A worker’s right to terminate the relationship without incurring liability to the company suggests employee status.

Independent Contractor

  1. Hiring, supervising, and paying assistants. A person who hires, supervises, and pays his/her own personal assistant is more likely to be an independent contractor.
  2. Significant investment. A worker’s own significant investment tends to indicate independent contractor status.
  3. Realization of profit or loss. A worker’s potential to realize a profit or to suffer a loss tends to suggest independent contractor status.
  4. Working for more than one club owner at a time. Working for more than one club at the same time tends to suggest independent contractor status.

So the answer to the question is most likely the dancers are employees and not independent contractors.

SO WHAT DOES THIS MEAN?

It means that adult entertainment dancers or “strippers” are entitled to the same protections as any employees. 

If they get hurt on the job while dancing, then they should be entitled to medical care and wages under the workers compensation law.

It also means that unless there are drastic changes in payment policies, dancers are entitled to minimum wage and overtime if they work past 40 hours. The Club owner/management also cannot fire a dancer if she gets pregnant.

Club owners are going to have to do business differently by determining how they’re going to have to hire a dancer.

If you want to know if the Covid-19 messed up the strippers money go to my podcast Strippers Classification Status And Their COViD 19 Relief Exclusion!

The US Supreme Court’s Sales Tax Ruling

Online shopping may become more expensive after the U.S. Supreme court ruled on June 21, 2018 that states can require internet retailers to collect sales taxes.

The 5-4 decision broke with 50 years’ worth of legal rulings that barred states from imposing sales taxes on most purchases their residents make from out-of-state retailers.

**Online retailers were previously protected from paying sales tax if they had no physical presence in a state.**

“State and local governments have really been dealing with a nightmare scenario for several years now,” said Carl Davis, research director at the Institute on Taxation and Economic Policy, a Washington think tank. “This is going to allow state and local governments to improve their tax enforcement and to put local business on a more level playing field.”

This will mostly impact the other half of products sold online by third-party merchants on certain marketplaces like Wayfair, eBay, Etsy and Overstock just to name a few. They potentially face the added burden of collecting sales tax in states that begin taxing online sales.

The ruling would present a “compliance challenge” for internet start-ups. Independent merchants who simply post their inventory on online stores are responsible for calculating and paying the various state taxes if they are owed. In the past year, Washington State and Pennsylvania have enacted laws requiring internet retailers to collect taxes on third-party sales. More states are expected to follow suit.

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Will Trump Sign the Newly Passed Tax Bill before Christmas as Promised?

Will this still be an early Christmas Gift for the Taxpayers?

new years at white house

Trump may wait until January to sign the tax bill into law.   The reason this may happen is because once this tax bill goes into law it will add to the deficit and when that happens it will trigger a 2010 law known as “PAYGO,” or “pay-as-you-go.”   Once this happens the budget law will require spending cuts to Medicare and other programs.  The reductions would cut spending on Medicare by $25 billion in 2018, according to the Congressional Budget Office.

If Trump signs the tax bill into law in January it would likely defer those spending cuts until 2019,  giving Congress almost a year to come up with a solution.

So what will the Taxpayers get out of the tax saving plan.  Well, let’s see!

In 2018, taxpayers earning less than $25,000 would receive an average tax cut of $60, the nonpartisan Tax Policy Center found.  Those earning between $49,000 and $86,000 would get an average cut of about $900; those earning between $308,000 and $733,000 would receive an average cut of $13,500; and those earning more than $733,000 would receive an average cut of $51,000.

And in 2025 these tax cuts will expire for individuals but the corporations tax cuts will remain permanent.

Happy Holidays Everyone!!!!

 

The Christmas Tax Bill

 

Senate Republicans passed President Donald Trump’s tax plan on December 2, 2017. Republicans still have a lot of differences between the House and Senate tax bills to compromise on.   The House and the Senate have to pass the “same” tax bill.   So which one would be “better.”   Better for whom, would be the question to ask.

I’m going to keep this simple for now.   After this bill is put into law that’s when things will get complicated.    But for now I will go over just a few things that make the House tax bill and the Senate tax bill different.

Family and Child Tax Credit
The House bill expands the credit to $1,600 per child and begins to phase it out for married couples making more than $230,000.   The Senate bill expands the credit to $2,000 per child, with a phaseout beginning at $500,000 of a couple’s income.

Mortgage interest deduction
The Senate bill keeps the limit for the mortgage interest deduction in place for homeowners  for  the first $1 million of home debt.   While the House bill caps it at the first $500,000 of debt.

Medical and Student Loan Deductions 
The House bill eliminates deductions for high medical expenses and student loan interest.  The Senate bill would leave the aforementioned deductions, intact.

The Affordable Care Act (ObamaCare)
The Senate bill repeals the Affordable Care Act requirement that individuals buy health insurance coverage.   Currently, the mandate is enforced via a tax penalty for people who fail to purchase coverage.  The House bill does not touch the mandate.

Trump predicts final passage before Christmas…..