Credit Archives - Page 4 of 4

How To Stay On Top Of Your Credit Situation By Getting Free Credit Scores And Reports

With the passage of the Fair Credit Reporting Act legislation it became a lot easier and friendlier on the wallet for average people to get a better handle on their credit situation. The law attempted to regulate a consumer credit industry that was hard for people to navigate, and make it more accessible – and easier – for people to figure out if there were any black marks on their record. By giving people access to their consumer credit file at least once a year, it was hoped that people could make more informed decisions, and be better able to improve their credit when problems were found. After all, your credit history is more important than ever!

Over the past couple of years it has become even easier for consumers to keep tabs on their credit situation with the launch of companies that will now give you your actual credit agency credit scores (or reports) for free as a tie-in to buy other products. Since you're not obligated to buy anything, however, it can end up being free to get your credit scores or reports. The ways mentioned below to get your credit score are all ways that I've personally used to stay on top of my own credit – and I highly recommend them.

Get Your Free Annual Credit Reports

First, let's start off with the three credit agencies, Equifax, Experian and TransUnion, and how to get a free credit report from each. It's simple. The government has a site at AnnualCreditReport.com that will allow you to get 1 free credit report from each of the 3 agencies every year. It should be noted that this is your credit report, not your credit score – which is not included for free. You normally would have to pay an extra fee to get that.

To maximize the impact that I'm getting from checking my reports I like to stagger checking my credit reports throughout the year. I check one agency every 4 months or so. That way I'm checking my reports more often, and I'm more likely to catch something if there is a problem.

Free Equifax, Experian And TransUnion Credit Scores

Equifax, TransUnion, and Experian all have their own version of a credit score that they put out, and it's a good idea to stay on top of these. Normally you would have to pay to get each one of these, but here’s how to get them for free.

NOTE: There is a myth out there that checking your credit score or report can actually hurt your credit score. That's not true as when you check your own credit it is considered a “soft inquiry”, which has no affect. When a lender checks it is a “hard inquiry”, which does affect your credit.

Equifax Credit Score

Equifax has a 30-day free credit monitoring trial offer. If you sign up for this offer you'll have access your Equifax credit score along with a variety of other perks. Just make sure to cancel the trial before it starts billing or it won't be free.

TransUnion Credit Score

The free credit monitoring service at Credit Karma will give you your TransUnion credit score for free, without giving them a credit card or other payment. I’ve been using Credit Karma for a few years now, and like the ability to get my score for free at any time. So how do they pull your credit file? You'll need to provide a driver's license number and a social security number in order to get your credit score. The service makes money by making product recommendations once you pull your score.

Experian Credit Score

There are a couple of places that you can go to get your Experian credit score for no charge. The first one is my favorite, and conjures up the idea of Alibaba and the forty thieves. It's called Credit Sesame. Credit Sesame is a credit and debt monitoring site that will take a look at your current financial situation, and then try and find better options for any consumer loans you might have. Signing up is easy and free of charge. You'll just need to provide some basic personal details as well as a social security number, and then you'll have access to a monthly credit score pull. I've been using them for a month or so now, and so far I'm loving it!

Another place that will give you your Experian credit score for free is the financial site called Quizzle.com, brought to you by Quicken Loans. This site also asks for some basic personal information and a social security number, and you'll then be provided with your Experian credit score. The site, like the others, is offering the free credit score as a lead-in to try and get you to use their financial products – either home loans via Quicken Loans, or other financial products. One thing I really like about Quizzle as well is that not only do they provide you with a free credit score, but they give you your Experian credit report for free as well! A 2-in-1 free credit score and report deal!

FICO Credit Score

While you can get your TransUnion and Experian credit scores for free without a credit card or signing up for a free trial, the one actually used by many banks, the FICO score, is a bit harder to find free of cost. The only real option at this time that I can find is if you sign up for one of the credit monitoring sites on a free trial. Here's one option:

Equifax 3 in 1 Credit Monitoring Trial (Includes free FICO score)

Again, just remember to cancel before the trial is up, otherwise you'll have to pay.

Get Your Credit Score When Taking Out A Loan

Another way to get a free credit score is to ask for it whenever you sign up for any kind of consumer credit. Whenever you get a loan, anything from an auto loan to a home loan, you may have the right to see the credit score the company used in making their lending decision. Depending on where you're getting the loan, and what agencies they use, you could be getting one two or all three agency scores, or just a FICO score. In any event, it doesn't hurt to ask to see this information, and if necessary, dispute any inaccuracies you find.

Do you currently check your credit scores and reports on a regular basis? Have you ever identified issues or identity theft? Do you have other services you use to find your credit information for free? Tell us about it in the comments!

Get your free credit scores now with GoFreeCredit:

Why Your Credit History Matters

By Miranda Marquit 3 Comments

You've probably heard a lot about the importance of a good credit score. However, many people point out that they don't use credit cards, and they already have a house, and they buy used cars with cash. For those folks, it seems as though there is no need to worry about a credit history. The truth, though, is that even if you live an all-cash lifestyle, your credit history might still matter.

You Are Judged By Your Credit History

Fair or not, service providers and others make assumptions about you based on your credit history. Your credit history is no longer only a peek into how you have handled borrowed money in the past; it is also used to measure your general level of responsibility in various aspects of your life. Auto insurers think that your fiscal responsibility translates directly into your responsibility on the road. A lower credit score = a higher insurance premium.

Employers might decide that if your credit history shows what might be considered questionable financial habits, your work habits might not be desirable. On top of that, if you apply for a job of sensitivity, you might be suspected of being vulnerable to bribe attempts. What if you are required to handle cash? A sketchy credit history might red flag you as a potential embezzler.

None of this may be true, or fair, but it is a judgment that is made when people look at your credit history. Landlords and cable TV providers might also check your credit history. They want to know if you will cause potential problems when it comes time to make payments. Even some banks check your credit history before allowing you to open an account. A poor credit history can cost you more than just higher interest rates.

Be Prepared: What If You Do End Up Needing a Loan?

Even if you are convinced that your job is stable, you can live with a slightly higher insurance premium, and you don't need cable TV, you never know when circumstances might mean that you will need a loan, or to get a credit card. Your car may be unexpectedly totaled, and you may need to buy something else on short notice, necessitating an auto loan while you wait for the insurance check to arrive. You might end up with an emergency medical procedure that results in the need to have good credit to qualify for a payment plan.

There are any number of unexpected problems that can force you into getting a loan, even if it is only for a short period of time. Keeping up with your credit history, and making sure that it reflects your solid financial habits is part of financial preparedness. The good news is that building a good credit history doesn't have to mean going into debt. You can get a credit card and use it occasionally, for planned purchases, paying off the balance without paying interest. Make all your payments on time, and encourage your utilities and others to report to alternative consumer reporting agencies like PRBC.

Hopefully, with interest in alternative consumer reporting picking up steam, there will be more focus on good financial habits in general, and less on borrowing behaviors. But, until then, it's wise to be prepared and make sure you have a good credit history.

Get your free credit score now with GoFreeCredit:

Prepaid Debit Cards Often Cost More Than Checking accounts

By Contributor 5 Comments

Checking accounts and debit cards have something in common: hidden fees that are meant to catch you off guard. If you are trying to figure out the option that has fewer fees, you will probably find that a checking account is cheaper. There are several reasons why.

The Overdraft Factor

Generally speaking, a normal user will find that prepaid debit cards are more costly than checking accounts. At Nerdwallet.com we’ve conducted a small experiment: comparing the fees for a checking account at the ten largest checking account providers against the fees associated with ten prepaid debit cards, including America’s most popular, the WalMart MoneyCard.

On average, a prepaid debit card will cost you more than $19 per month, while the average checking account will only cost $6. In the appendix, you can find more details on how we got these numbers.

The major variable, though, is if or when a checking account holder decides to use overdraft protection, the mechanism banks use to make money on checking accounts. Usually, the overdraft charges assessed on a checking account-connected debit card are incurred by mistake. These mistakes are expensive though, as overdraft charges can be up to $35 per transaction. This can be especially damaging if you get hit with the fee without realizing your account is empty.

How much can overdraft fees end up costing you? A study conducted by the FDIC reports that Americans who overdraw their accounts more than twenty times a year stood to lose more than $1,600 for doing so.

Ultimately, you would have to overdraft your checking account five times a year in order to spend more on a checking account than with a prepaid debit card.

On average, the overdraft fee assessed by America’s 10 largest checking account providers is $33.75, which can certainly push users past the $229.67 in yearly fees that accrue to a prepaid debit card, when added the $81.80 in fees that are paid on the average checking account without overdrafts. But those with the discipline to avoid overdrafts will be best served by getting a checking account at a bank.

In addition, as of August 2010 the FDIC has prevented banks from opting customers in to overdraft programs without consent. So now you don’t even need to be disciplined to avoid overdrafts – just don’t opt in to them.

Rather than a prepaid card, get a secured credit card and a checking account

The state of your wallet will probably benefit from avoiding prepaid debit cards. Getting a secured credit card in combination with a checking account is the best option, for the following reasons:

A secured card can build your credit, something a prepaid debit card can’t do.
Since you need to pay upfront either way, why not pay for the service that improves your credit as well?
The woes of consumers expressed through internet forums also provide a grave warning about the potential of getting scammed by a prepaid debit card. Prepaid debit cards do not have the same level of protection for fraud, disputes, or travel-related incidents that most credit cards do.
Many secured cards also allow you to move up to a standard card after a period of proven trustworthiness. So, going with a secured credit card now could end up getting you access to more premium rewards credit cards in the future.

All this goes to show that you are probably better off with a checking account connected to a secured credit card than with a prepaid debit card. According to the FDIC, the number one reason why people opt not to open a checking account is that there is “not enough money” to make use of one. Since having a checking account is so much cheaper than a prepaid debit card, perhaps you should consider whether you can afford not to use one.

Appendix

In order to calculate the numbers above, we assumed that prepaid debit card holders would have 1.5 withdrawals from ATMs, eight purchases, two card reloads, and only one balance inquiry each month. Using these values, we evaluated cards from ACE Cash Express (NetSpend), Green Dot, RushCard, Emerald Card, Net Spend Visa, Vision Premier, Western Union MoneyWise, Walmart MoneyCard, AccountNow, and Pay Power.

For the banks in the comparison, we made the assumption that a checking account will start with a $100 balance, and that account holders would use an ATM that is out-of-network once per month. With these values, we looked at checking accounts from Citi, HSBC, PNC, Capital One, Sun Trust, US Bank, Wells Fargo, Chase, Bank of America, and TD Bank.

This post comes from the NerdWallet.com team, personal finance bloggers and experts in helping consumers find the best low APR credit cards.

Credit Card Companies Find New Ways To Take Your Money After Passage Of CARD Act Of 2009

By Mr. Money 2 Comments

Earlier this year in February 2010, Credit Card Accountability, Responsibility and Disclosure Act (CARD) of 2009 took effect. The law was supposed to be a a consumer friendly piece of legislation that aimed to put some limits on what the credit card companies could do in regards to charging exorbitant fees, upping interest rates with no reason, in the end was supposed to force them to be more transparent with their customers.

For a few months at least the outcomes seemed to be headed in the right direction, but now the credit card companies have started finding new ways to make up their lost revenues.

Credit Card Companies Find Revenue In New Places

Even though they have been forced to stop some controversial billing practices due to the 2009 CARD act, the credit card companies seem to still be one step ahead of the law. They've found new ways to make money:

Whomever President Barack Obama taps to head the new Bureau of Consumer Financial Protection could find it difficult to keep ahead of the credit-card industry … some of the biggest card issuers in the U.S., including Citigroup Inc., J.P. Morgan Chase & Co. and Discover Financial Services, are already rolling out a slew of fees designed to recapture some of their lost income, in part by skirting the new rules. Some banks may even be violating the law outright, say consumer advocates.

“Card companies are figuring out how to replace old fees with new ones,” says Victor Stango, an associate economist with the Federal Reserve Bank of Chicago and a professor at the University of California, Davis, who has been analyzing how the Card Act will affect consumer banking. “It's a race between regulators writing ever-more-complex laws and credit-card companies setting up ever-more-complex fees.”

The banks have a big gap to fill. The Card Act is expected to wipe out about $390 million a year in fee revenue, according to David Robertson, the publisher of industry newsletter Nilson Report. On July 16, during its second-quarter earnings call with analysts, Bank of America Corp. Chief Financial Officer Charles Noski warned that the Card Act and other regulatory changes would prompt the bank, the nation's largest in assets, to write off up to $10 billion in the third quarter.

“If you have every major issuer saying that we are losing our shirt, then that speaks volumes,” Mr. Robertson says. “Proportionately, these fees should be understood as almost inconsequential compared to the losses.”

So the banks are getting aggressive. According to a July 22 report from Pew Charitable Trusts, a nonpartisan research group, the industry's median annual fee on bank credit cards jumped 18% to $59 between July 2009 and March 2010. At credit unions, annual fees soared 67% to $25. During the same period, the median cash-advance and balance-transfer fees jumped by 33%.

The credit card companies are losing a ton of revenue because of the new laws, and now they're doing what they can to make up those revenues. They're charging higher annual fees for the cards, cash advance and balance transfer fees are going up and credit unions have had to raise their rates.

All of these increases are perfectly legal, of course. Banks and other issuers would have a difficult time extending credit to consumers, even at high interest rates, if they couldn't augment those revenues with fee income. “We're coming out of a deep recession that issuers are still working through,” says Peter Garuccio, a spokesman for the American Bankers Association.

We understand that the banks have to make money. But some of the banks are going a bit too far, and are doing things that are now illegal, or at least a bit iffy – under the 2009 credit card law.

some banks may be going too far. In a July 7 letter to the Office of the Comptroller of the Currency, which regulates many of the biggest U.S. banks, a coalition of consumer groups including the National Consumer Law Center, the Consumer Federation of America and Consumer Action flagged several “potential violations of the Credit Card Act.”

Other banks are ramping up their marketing of so-called professional cards. These are like corporate cards but can carry the same terms as consumer cards—and aren't covered under the new law. In the first quarter of this year, issuers sent out 47 million professional-card offers to U.S. households, up from 13.2 million in the corresponding period last year, according to research firm Synovate.

“This can be a very easy way around the Card Act,” says Josh Frank, a senior researcher at the Center for Responsible Lending, a consumer group.

The upshot: Borrowers must be more vigilant than ever—even before they make their first charge on a new credit card.

Other Ways To Get Revenue

Other things that the banks have been doing that seem the skirt the edge of legal and illegal?

Playing fast and loose with late payment fees and payment deadlines: the Card Act stipulates that late-payment fees shouldn't be triggered on a Sunday or holiday, when there is no mail delivery, however, some banks are saying that because they accept payments 7 days a week online, that they are in compliance with the Card act.
Rebate cards allow banks to jack up rates: These types of credit cards find the credit card companies offering to refund up to 70% of finance charges if a customer pays on time. Problem is that rebate offers aren't governed by the Card act, so the companies can revoke the card or hit the cardholder with high charges at any time.
Shortening the billing cycle: Despite the requirement of the Card act that companies provide a window of at least 21 days from when a statement is mailed to when a payment is due, some consumers are alleging that their billing cycles have been shortened to fewer than 21 days.

Credit Card Companies Aren't Your Friend. Be Wary.

Credit card companies are for profit entities, and as such they're usually going to find as many ways as they can, and as many instruments as they can to make money. The credit card companies are not your friend, and if you think they've got your best interests in mind, you've got another think coming. They only want to get their hands on as much of your money as they can.

When signing up for a credit card, remember that if it isn't used correctly, it can lead you down a road to debt, bankruptcy and foreclosure – so be careful. And remember, the best way to live is to live with a cash only mindset!

What do you think about the new ways the credit card companies are trying to make money? Does it surprise you? Is it to be expected? Tell us your thoughts in the comments.

10 Things That Broke People Do (That Keep Them Broke)

By Mr. Money 28 Comments

We've all got friends in our lives that are nice people, but they always seem to be broke.

They don't have a dime to their name, and if you ask them why, they don't have a clue.

It never seems that they can figure out why they're short on cash.

Today I want to look at a few reasons why broke people are broke, and why they'll most likely continue that way (unless they make some major changes).

10 Reasons Why You're Broke

Here are a few of the reasons why people find themselves without money.

Their problems are never their fault: Broke people don't like to take responsibility for their problems, they will often shift blame and say it's someone else's fault. They blame their friends, family and the government. They believe the old saying, “the little guy just can’t get ahead“.
What's a budget?: A lot of people who are broke find themselves that way because they have no idea where their money is going. They've never done a budget. Their money quickly disappears every month into an endless black hole of large and small expenses.
They don’t plan for the future. Today is all that matters: Money doesn't stick around for future uses because it is all spent today. Saving and planning for the future are foreign concepts.
Money gets spent on things that aren't needed: We've all got those friends who just can't help themselves – they already have a couch, but they find a design they like better and buy it – even though they can't afford it. They have a phone, but decide to buy the newest greatest Iphone.
Keeping up with the neighbors: Far too often people will buy a house in a neighborhood they can't afford, and then they end up spending even more money on the other lifestyle accessories to keep up with the Joneses. They end up buying a nicer car, a boat, expensive landscaping, etc. One bad spending decision begets another.
You paid what?: Broke people far too often don't know how to find a good deal and even more often don't negotiate to get a better deal. Why pay more than you have to?
Credit is their best friend: They don't practice delayed gratification, and they would never save for something they want. Just put it on the credit card until it's maxed! We'll figure out how to pay it some other time!
They rely on others to get them out of trouble : We’ve probably all know someone who always ends up going to their parents, family or friends to help them pay for one of their debts. They get in debt up to their ears, and then when they can't pay for it, it's back to mommy and daddy's house to beg for money.
Why budget for the future when I can have fun today: They don't like to plan ahead for tomorrow because it seems so far away. Instead, let's eat drink and be merry today!
They are all about appearances: Broke people often are broke because they would rather have others think they are doing well, or are wealthy, than actually do the hard work of actually finding a way to be wealthy. The result? They spend a bunch of money on things they don't need in order to appear like they've got power and influence.

Obviously this list of things that broke people do isn't exhaustive, but it is more of a way to get people thinking about how and why they're making the decisions about their money that they are.

If you can catch nip some of these behaviors in the bud, you'll be much better off for it.

Have you ever engaged in any of these behaviors? Do you have a broke friend or family member that just can't seem to get out of a hole? Tell us about it in the comments!

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