Legitimately improving your credit score solo

In this economy more businesses are offering ways to improve your credit score, but are they just a waste of your money?
Payment history, and how much you owe creditors represents 65% of how your credit score is determined. And while paying a local agency to fix your problem may seem like a quick solution, one local couple is out hundreds of dollars and still in the credit hole.
Since 2002, the Moore’s of Kinston have faced credit problem after credit problem—chapter 13 bankruptcy—unpaid medical bills—-and past due loan payments.
So they gave a local credit correction agency $1200 to pull their credit score up—it didn’t work.
Rich Hutson, vice president of State Employees’ Credit Union in Greenville says the Moore’s should have kept their $1200 and invested time getting their hands on their credit report.
The Moore’s credit report is long. Hutson says they should go through it, page after page, find the items they believe are inaccurate and dispute it in writing, “You have to provide the proof that the bill is unjust and that they’re reporting it incorrectly.“
The consumer reporting agencies Equifax, Experian and Trans Union must investigate each item in question within 30 days. But Hutson warns, things like bankruptcies will stay on that report for a decade no matter what, so don’t be fooled by companies that advertise they can remove it.
Hutson adds, “They can’t erase any of that information…It’s going to save you a lot of money in the long run by making sure you’re paying everything on time and you credit score will reflect that.“
Hutson says if your credit score is below 620 you’re in trouble. Even if you have an average score of around 640—you should still review your credit report regularly. Identity thieves could be charging items on your credit without your knowledge. A 90-day late fee could stay on your credit report for 7-years.

Source:

A very interesting article related to Free Credit Report and Score in Canada. For more updates regarding free credit report services, check credit online score, and business credit report, subscribe to Free Credit Report and Score Canada blog.

Five Points to Fixing Your Credit

A couple of months ago a friend was telling me about some financial difficulty with their business and remarked how fortunate they were to have their credit line on their home available for backup. I advised them to check with their bank to make sure their credit line was still available. Unfortunately, I was correct because their credit line had been closed without their knowledge.

Another client called to ask about buying a home and when I asked about their credit history they said they were trying to pay down some credit cards only to find that once the amount due was paid the bank reduced their limit.

The first basic in credit scoring is to understand what the numbers mean. FICO or the Fair Isaac Corporation is the company that for the past 53 years has offered a measurable number by which creditors can determine your credit worthiness. Credit scores range between 200 and 800. Scores above 720 are considered desirable for obtaining a mortgage. They have determined five main factors will affect your score…things you ultimately have control over.

1. Your payment history. Whether you paid credit card obligations on time.

2. How much you owe. Owing a great deal of money on numerous accounts can indicate that you are overextended.

3. The length of your credit history. In general, the longer the better.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay promptly.

5. The types of credit you use. Generally, it’s desirable to have more than one type of credit—installment loans, credit cards, and a mortgage, for example.

There are some variations on the theme but the basics itemize your scores and more importantly indicate how you can improve your scores, which in turn, improves your life.

I spoke with Linda Ferrari who has a FREE ebooklet called: “Save Your Credit, Save Your Life” which is a 10 step action plan to help clean up your credit. She offers great advise starting out with only ordering your credit report when you visit the various agency websites. Apparently even the credit agencies are trying to sell additional services that you may not need. Another point she makes is that everyone is entitled to one FREE credit report each year and to be sure you order only from www.annualcreditreport.com …all other sites offer paid services so don’t be fooled.

Another option is to pay a credit repair company to “scrub” your credit. Typically this is done once you have a complete copy of your credit report from the three main agencies: Experian, TransUnion and Equifax. Thoroughly examine your report, line by line, and be ready to prove any incorrect information. Once you challenge any information they are required by law to look into and correct anything false. If you find you are having trouble this is where a credit repair service can come in handy.

First time buyers need to understand that they didn’t get into their situation overnight and it might take just as long to correct the situation so don’t despair. There is gold in those hills and it’s in the form of tax credits BUT they are due to expire Nov 30th 2009 so NOW is crunch time. Making the effort to improve your credit will pay big dividends and could ultimately result in home ownership…don’t let this market pass you by.

Source:

A very interesting article related to Free Credit Report and Score in Canada. For more updates regarding free credit report services, check credit online score, and business credit report, subscribe to Free Credit Report and Score Canada blog.

Five keys to a winning credit score

We all know paying on time is important. But there are other, less obvious best practices.

Of all the numbers attached to you -- Social Security, cellphone, your lucky one -- few are as important as your credit score. A credit score is a numeric summary of your credit history, ranging from 300 to 850, and it gives lenders an idea of whether or not you're a good credit risk.

If your score is 750 or above, the world is your oyster, purchased with a platinum card.

But try to get a loan with a score below 600, and the banks will be tighter with their money than your uncle's pants after Thanksgiving dinner.

And even if you do get the loan, it will not be at the best interest rates.

Five things make up a credit score: Payment history (35%), debt level (30%), length of credit history (15%), diversity of credit accounts (10%) and number of new attempts at getting credit (10%). The key to achieving and maintaining a good credit score is balancing all five.

John Ulzheimer, president of consumer education for Credit.com, and Gail Cunningham, vice president for public relations at the National Foundation for Credit Counseling, can help you master the credit juggling act. They say:

Pay on time. Late payments are at the top of a slippery slope that leads to collections, judgments and repossessions -- the credit assassins.

Keep debt low. Just 10% of your credit limit is preferable. If that's not doable, shoot for 50% or less. This is especially important if your credit limits have been cut by card issuers, which can make your account look maxed out.

Be prudent. Don't take the bait for every card offer you get in the mail or for the discount dangled in front of you at a department store. The more attempts you make to get credit, the lower your score.

Keep tabs on your credit. A free report is available at annualcreditreport.com. Check for errors or omissions. Report any mistakes immediately. You can buy access to your score at various places, including .

Don't be hasty. Part of your credit history is showing how long you've been able to manage your credit responsibly, and closing an account shortens that.

Mix it up. Having a car loan, mortgage and credit cards show you can manage several types of credit at once.

Source:

A very interesting article related to Free Credit Report and Score in Canada. For more updates regarding free credit report services, check credit online score, and business credit report, subscribe to Free Credit Report and Score Canada blog.

Consumer Credit Card Debt Decreases in June

Credit Karma (www.creditkarma.com), the consumer's advocate for demystifying credit, today released its U.S. Credit Score Climate Report with trend data for June 2009. During the March 2009 to June 2009 time period, Credit Karma saw an increase in credit scores across all geographies; however, for the third straight month the percent of credit scores rising has tapered off and more consumers are seeing their credit scores remain stable. 38% of consumer credit scores have gone up, 28% have gone down, and 34% remained the same. The current average U.S. consumer credit score is 674, which is the same as in May.

Among consumers with debt, the average consumer credit card debt decreased by $134. In June, the average consumer with debt had:

-- $6,938 in credit card debt
-- $206,427 in home mortgage loans
-- $54,370 in home equity loans
-- $14,539 in auto loans
-- $27,201 in student loans


Here are some other key findings:

-- More consumers continue to see their credit scores remain stable.
Nationally, 34% of consumers saw their credit score stay the same in June,
compared to 32% in May. In addition, 28% saw their credit score decrease
in June which is slightly lower than in May. In May, 29% of credit scores
decreased, which is the same percentage as April. In May, 39% of consumers
saw their credit scores increase. In April, the increasing percentage was
41%.

-- The South region had the highest percentage of increasing credit
scores, ending the Midwest's four month run at the top. In June, 39% of
consumers in the South saw their credit scores increase; 28% of credit
scores decreased; and 33% of credit scores stayed the same.

-- In terms of overall debt, Midwest consumers continue to have the
lowest amount of debt. On average Midwest consumers have $6,500 in credit
card debt, $156,100 in home mortgage loans, $13,400 in auto loans, and
$26,400 in student loans.

-- Michigan saw the highest percentage of increasing credit scores during
June. 41% of Michigan consumers had their credit score increase; 27% of
credit scores decreased; and 32% stayed the same.

-- Texas saw the highest percentage of decreasing credit scores in June.
39% of Texas consumers' credit scores increased; 29% of credit scores
decreased; and 32% stayed the same.


Methodology

Each month, the Credit Karma U.S. Consumer Credit Score Climate Report compares the current credit scores of its user base with previous scores pulled at least 30 days prior and no more than 90 days prior to the stated month. This month's report includes a comparison of more than 44,000 Credit Karma user scores.

About Credit Karma

Credit Karma, the consumer's advocate for demystifying credit, is the only Web site that provides consumers free access to their credit score, plus a range of tools and information resources to help them monitor and manage the credit aspect of their financial health. Credit Karma's goal is to help consumers easily digest the contents of their credit report and understand what makes up their credit score. Credit Karma works with a range of partners, including mortgage lenders, credit card providers, banks, and wireless providers. For more information, visit www.creditkarma.com.


Source:

A very interesting article related to Free Credit Report and Score in Canada. For more updates regarding free credit report services, check credit online score, and business credit report, subscribe to Free Credit Report and Score Canada blog.

Free Debt Help Tips To Reduce Credit Card Debt

Do you suffer from bad credit or debt? Don’t worry, as you are not alone, and there is debt advice available. There are thousands of people just like you who are stuck with high debt and bad credit with no way to remedy it. They have found themselves in such an unfortunate financial state in which they cannot pay off the money they owe, thus negatively affecting their credit. Several are requesting their credit reports only to find several defaults.

Don’t despair! There is a solution, and a bit of free debt help to get your credit and you back on track. You have the ability to pay off your bills and fix that nasty fico score. You can finally have credit to be proud of! It will indeed take a little careful planning but a debt consolidation is definitely the answer. Here are some tips to follow to help you on your journey to a better credit score and reduced debt:

- The absolute first thing you must do is to get a thorough report of your current bad fico score. For the best results, you should use well known financial bureaus instead of the scam offers you often find online. Make sure to check the report in-depth to make sure that everything listed is accurate and that nothing is missing from your history. Occasionally errors are made, usually because an error in the entry of the data, that can cause the information to be incorrect. Compare and contrast the items against your own private records as well as those of your financial institution.

- The next thing you should do is immediately contact your mortgage company if you found any errors in your fico score report. Your analysis of your credit report and the correcting of any errors is extremely vital. These tasks must be accomplished before you move on to debt consolidation, or paid credit debt help and repairing your credit score.

- Once your credit report is completely correct, you must go for a debt consolidation. If for any reason an account or two cannot be consolidated, you must pay off the debt for that account. It is recommended that you talk to the company to which the money is owed and see if you can get the debt lowered by coming to an agreement with them. By doing so, your liabilities will be taken care of as well.

- There are many grants that the government offers, free of charge, which you can use to aid in your journey. These grants never have to be paid back. These grants are only given to people who are experiencing extreme financial hardships to be used for paying off all existing debts listed on ones fico credit score report. Another option is applying for federal government loans in addition to or instead of the grants.

Source:

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Loophole in credit card protection bill forces consumers to pay

LOUISVILLE, KY (WAVE) - The new Credit Card Accountability, Responsibility and Disclosure Act, signed into law back in May, is designed to protect consumers from unfair jumps in interest rates and credit card fees.

"It's really to protect consumers and avoid abusive practices by credit card companies," said Mary Jackey, community outreach director with Consumer Credit Counseling Service of Greater Louisville.

However, the act does not kick in until February 2010, leaving rates and fees hikes fair game until then. "We've seen creditors increasing minimum payments going from 2%, maybe be a minimum payment going as high as 4% or 5%, which is in this economy is really tough for most people. It almost doubles their minimum payment," said Jackey.

Beginning in February, creditors cannot arbitrarily increase rates. In fact, cardholders will have to be given 45 days notice of a rate, fee or finance charge hike. Until then, increases are unrestricted.

"We've had a lot of clients come in and tell us they tried contacting the creditors before they came to us and a lot of the creditors said I'm sorry there is nothing we can do," said Jackey.

Jackey says if you do reach out to your creditors, a move counselors usually recommend, be extra careful. "Because we what we're seeing right now is those credit card companies would much rather keep that client then lose them to a bankruptcy. What we're seeing is that they are offering debt settlement a lot more frequently then they had in the past."

Jackey also says watch out for balance transfer promotions with interest rates that usually shoot up after several months or leave you able to transfer only some of your balance onto a new card. "They may end up with a new additional line of credit in addition to the old line of credit and it dings their credit score cause then they have a credit inquiry on their report and that can drop their credit scoring quite a bit."

According to Jackey, your best bet right now is to very carefully go over your monthly credit card statements and look at your fees and interest rates. If you see a spike and are concerned about meeting the new payments, contact a credit counselor. It is a free service and could make all the difference in your financial well-being.

Source:

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Unused credit cards - is it time to close them down?

Over 16 million people have unused credit cards. Many keep them as a financial safety net but they could have a negative impact on your credit rating and make you more vulnerable to credit card fraud.

Credit ratingAccording to research from uSwitch.com, whilst some consumers cut up unused credit cards or simply stop using them, many don’t actually close the credit card accounts.

Keeping these credit accounts open though could negatively impact on your credit rating - used by credit providers to determine whether or not to grant credit.

You might like to check your FREE credit report - it will show exactly what credit accounts you have and you can easily identify any you no longer use or spot if there are any mistakes on the information held.

You are less likely to get new credit if a credit provider assesses your credit score as low, and this could be at least partly driven by a belief that you already have too much credit available, contributed to by unused credit card accounts, and your ability to repay debt on time.

As well as a negative impact on your credit rating, keeping unused credit cards could more readily expose you to fraud.

Fraudsters often try and intercept new credit cards sent through the post.

If these are for dormant accounts, the cards could well be being sent to old addresses and it could be some time before you identify your card has been used by the fraudsters.

Louise Bond, personal finance expert at uSwitch.com, said ‘Overall it seems people are bombarded with conflicting opinions as to whether or not they should close credit card accounts that they no longer use.

In times of such financial turbulence, it’s hardly surprising that people don’t want to let go of what they consider to be a financial lifeline.

There are several issues to consider as credit checks are influenced by the amount of credit available to spend. So in effect, this lifeline could become a financial bottle neck to the next best deal.’

If you do apply for a new credit card but are rejected, don’t just keep applying and hope that you will get accepted. Your credit rating will be negatively impacted for each failed application.

Before reapplying, check your credit report, and see if there’s anything you can do to improve it - you may find our article ‘Your credit rating - how to improve it‘ helpful.


Source:

A very interesting article related to Free Credit Report and Score in Canada. For more updates regarding free credit report services, check credit online score, and business credit report, subscribe to Free Credit Report and Score Canada blog.

How being an authorized user can hurt your credit score

Question:
Dear Credit Guy,
How does being an authorized user on an account affect your credit rating? I am listed as an authorized user on two of my mother's accounts that have about a 99 percent credit-available to credit-used ratio. Does this negatively affect my credit and how significantly? -- B.C.


Answer for the CreditCards.com expert:
Dear B.C.,
It has been a practice for quite some time for persons who wanted to establish credit or improve their credit to be added as an authorized user on a relative's credit card. The account is considered just the same for credit scoring as if it were owned by the authorized user. The authorized user benefits from the good credit history provided by the owner of the account. However, it can also have a downside. If the owner of the account did not pay the account as agreed and on time, the negative actions would also affect the authorized user.

Several years ago, some enterprising people decided that adding authorized users to an account was a way to make money. They charged a fee to persons with no familial or other connection between each other to be added as authorized users to the account of a person with good credit. The account could not be used by the authorized user; the only purpose of being added was to raise the authorized user's credit score. Known as piggybacking, the industry blossomed overnight. As a result, the credit scoring folks at FICO decided that piggybacking in this way was not acceptable and proposed leaving authorized users out of credit scoring models.

However, after many protests and the realization that 50 million legitimate authorized users would be affected, the good folks at FICO came up with a formula to keep genuine authorized user accounts as part of the scoring process. Simply put, the account is legitimate as an authorized user when a person receives a credit card for their use on someone else's account. Just to note, the VantageScore has never considered authorized users as part of its credit scoring formula.

So, the answer to your question is yes, those accounts of your mother's on which you are an authorized user will affect your credit. In the FICO scoring model, 30 percent of your score is based on the amount you owe. One component of the amount-owed calculation is the amount of credit used compared to the credit limit on revolving accounts (credit cards), which is called the credit utilization ratio. How much the two accounts of your mother's affect your score depends on how many other accounts you have, whether they are in good standing and how long you've had any other accounts.

If you don't use the accounts and don't believe you need them for your credit history, just ask that your mother to remove you as an authorized user. She can do so with a phone call to her card issuer. I would recommend that you check your credit reports several weeks after the request to assure that they have been removed. If they still appear on your reports you can dispute the listing as "not mine" and see if that will get them off. You can receive a free copy of your credit report from each of the three major credit bureaus once a year at annualcreditreport.com.

Take care of your credit!

Source:

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Five steps to measuring your financial IQ

Most people work hard to be responsible with their money, but sometimes might wonder if you are "doing it right." Others are seeking new ways to make the most of their income and minimize expenses. And still others try, but might have a sneaking suspicion that they are making some major mistakes.

To check if your personal finances are on track, ask yourself about these five areas of money management:

1) Credit: Credit is an important part of financial management because it affects whether you are able to get loans for a home, a car or an education, and the interest rate you will pay for any money you borrow. A copy of your credit report is available at no charge once a year at www.annualcreditreport.com or by calling 877-322-8228. Review the report carefully to check if the report is accurate. To improve a score, and maintain a good one, always pay bills on time. Also, be aware of credit utilization, an important term in credit score determination. If you have a credit card with a limit of $10,000 and you owe $3,500 on it, your credit utilization is 35 percent. Anything over 35 percent is considered high and can impact credit scores. Over 50 percent will have a definite negative impact on a credit score, and a maxed-out card will verynegatively impact the score. And, work hard to pay credit card bills in full every month; in other words, do not purchase what you cannot afford.

2) Debt: Debt is not like childhood monsters under the bed -- if you close your eyes, it does not go away. It is important to know how much you owe, know how much you are paying for debt in fees and interest or finance charges, and have a plan to repay debts. Keep track of bills so that you will notice if a bill does not arrive, and mark due dates on the calendar so you can plan to have money available and pay on time.

3) Budget: For financial health, it is very important to plan how to spend your money. Whatever budgeting tool you use, it is important to know what you earn and what your expenses are so that you can spend less than you earn. Also, keeping a budget can help you anticipate expenses and save for them. With a savings plan, a higher-than-expected bill will not result in a crisis or a rush to the credit cards. Budgeting need not be complicated, either. While plenty of software and online guides (some free) are available, simple pencil and paper can work just as well.

4) Wealth: Wealth is ultimately not about seeming rich or accumulating flashy purchases, but about preparing for the future and building a safety net. Do you own a home, or are you on the road to home ownership? Are you planning for retirement? Are you covered with appropriate insurance? By looking ahead and planning accordingly, anyone can build his or her wealth.

5) Life plan: Another important part of financial smarts is matching your resources to your goals. Having an established career path helps anticipate both income from future work and costs, such as returning to school. Knowing what expenses are on the way will help you plan for major life events such as marriage, a child's education or retirement.


Source:

A very interesting article related to Free Credit Report and Score in Canada. For more updates regarding free credit report services, check credit online score, and business credit report, subscribe to Free Credit Report and Score Canada blog.

Yes, Virginia, there is such a thing as a free credit score

A free lunch may be hard to find these days, but a free credit score is not. You don’t have to subscribe to a “credit monitoring service.” You don’t have to sign up for a “free trial” by giving out your credit card number. You do not have to remember to cancel out of said “free service” on day 29 so you aren’t charged. And you don’t even have to give out your social security number if you don’t want to (if you use Quizzle, note that CreditKarma will need it).

Quizzle, a service of Quicken Loans, gives you not only your Experian credit score, but your full printable Experian credit report (mine is 17 pages long!), but also your house’s current value if you are a homeowner (good), an analysis of your saving habits called the “Rainy Day Fund” (good), a budget report (not so useful for me), and a mortgage calculator (again, of limited use to me). There are financial quizzes and calculators – the usual stuff. And, I repeat: you do not have to enter your social security number. You do have to fill out two short online forms. You get a free updated score/report every six months - no strings attached. If you don’t want to hear from quizzle.com again about rates, your credit score, or their newsletter in the future, be sure to unsubscribe under “Alerts.”

CreditKarma, which was started by a former financial services marketing professional from San Francisco, and is still in beta, looks to be a keeper. Tagged as a “pro-consumer” site, I see nothing to dispute that claim: they believe that free access to credit information is a right. Well, right on! CreditKarma gives you your TransUnion TransRisk credit score when you join. The site is secure, and I could not find any negative press or problems with identity theft or security. They use the same encryption and security precautions as leading financial institutions - TrustE, McAfee Secure, Verisign - and they even use Hackersafe. They are also registered with the Better Business Bureau. Here is what they say in their FAQ if you are nervous about entering your social security number: “In order to retrieve your first credit score, we must use your social security number. We only use your SSN for this first score retrieval, and we do not store it in our database. After this one-time use, we will not need your SSN again and it will not be stored on any of our systems.” When you get your score, you are given a soft-sell from various partners (I got offers for Discover Card and Virgin mortgage – no thanks!) but the credit dashboard is quite useful. You can see your score over time, and they have a very nifty realtime simulator that helps you understand the impact of various actions on your credit score. The site is still in beta, but the only issues I saw were cosmetic (the simulator had a a re-draw issue, no biggie).

Overall, the experiences using both services was easy and helpful. Both services claim to do a "soft pull" on your credit and it should not negatively affect your score. Remember, your Experian/TransUnion scores are not the same as your FICO score. They use different algorithms. One thing to mention: my TransUnion TransRisk score was lower than my Experian score by 38 points, but I’ve heard this is common. Other than that, I’m very happy with both free services. Take your pick!


Source:

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The new system will give every New Zealander on its books a credit score on a scale ranging from minus 330 to plus 1000. Photo / Christchurch Star

People will have free access to the credit scores being allocated to them by credit reporting agency Veda Advantage.

Veda has caused a stir by announcing that from next month every New Zealander on its books will have a credit score from minus 330 through to plus 1000.

A person with a score of less than 100 will have difficulty obtaining credit, 500 to 600 will be average, and anyone with a score of 700 and above will be considered a good credit risk.

The information will be based on their existing credit profiles, and under the law anyone can ask for a free copy of their file annually. From August 2 this will include the new scores.

John Roberts, Veda's New Zealand and international managing director, emphasised the only new factor built into the scoring system was an automatic driver's licence check to help counter rising levels of identity fraud.

But he said the system had been set up in anticipation of a move to what is known as positive or comprehensive credit reporting, whereby fuller details of a person's financial circumstances can be accessed by potential creditors.


At the moment only "negative" information is available, such as whether the person has ever defaulted on bill payments or been bankrupted.

The Office of the Privacy Commissioner is conducting a review into whether this country should move to positive reporting.

New Zealand and Australia are two of the few countries worldwide to retain a negative system.

Mr Roberts said negative reporting was an "archaic" system that penalised people if they had made the odd mistake. "What we're trying to do is drag [the system] kicking and screaming into the 21st century."

The national president of the Credit and Finance Institute, David Young, said the credit market had taken a battering of late and anything that gave people confidence to extend credit was a good thing.

He said that whereas large organisations had their own credit-scoring systems, small business operators did not necessarily have the skills to make an accurate assessment of someone's creditworthiness based on the raw data. "What they're getting here is a tool that will enable them to do that assessment."

For example, he had recently looked at a credit report where the person had five district court judgments against them, had defaulted 25 times and had applied for credit 32 times in the past two years. "There's a whole raft of information that I can interpret out of that quickly and decisively."

But John Scott, New Zealand head of rival reporting agency Dun & Bradstreet, said he did not see the commercial advantage of a consumer credit score.

Few small businesses extended credit directly to consumers.

He said what was more important was the quality of the data being fed into any credit reporting model.

Dun & Bradstreet supported an initial limited move to positive reporting, allowing information such as whether previous applications for credit had been approved, who the lender was and the extent of the credit.

Overseas credit reports contained details about a person's income, the size of their mortgages and credit card balances, but New Zealanders were "not ready to go all that way".

"No other other country apart from Colombia has moved from a negative to a full positive file."

Consumer magazine editor-in-chief David Naulls said the Consumers Institute did not have a problem with the new scoring system because it was based on existing information.

It cautiously supported a move to positive credit reporting because it could potentially bring costs down as financial institutions were able to make better lending decisions.

It might also aid those without much of a credit history. "Groups who haven't always accessed credit might find it easier in a positive system."


Source:

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Business Credit Report, Canada

We all know paying on time is important. But there are other, less obvious best practices.


Of all the numbers attached to you -- Social Security, cellphone, your lucky one -- few are as important as your credit score. A credit score is a numeric summary of your credit history, ranging from 300 to 850, and it gives lenders an idea of whether or not you're a good credit risk.

If your score is 750 or above, the world is your oyster, purchased with a platinum card.


But try to get a loan with a score below 600, and the banks will be tighter with their money than your uncle's pants after Thanksgiving dinner.

And even if you do get the loan, it will not be at the best interest rates.

Five things make up a credit score: Payment history (35%), debt level (30%), length of credit history (15%), diversity of credit accounts (10%) and number of new attempts at getting credit (10%). The key to achieving and maintaining a good credit score is balancing all five.

John Ulzheimer, president of consumer education for Credit.com, and Gail Cunningham, vice president for public relations at the National Foundation for Credit Counseling, can help you master the credit juggling act. They say:

Pay on time. Late payments are at the top of a slippery slope that leads to collections, judgments and repossessions -- the credit assassins.

Keep debt low. Just 10% of your credit limit is preferable. If that's not doable, shoot for 50% or less. This is especially important if your credit limits have been cut by card issuers, which can make your account look maxed out.

Be prudent. Don't take the bait for every card offer you get in the mail or for the discount dangled in front of you at a department store. The more attempts you make to get credit, the lower your score.

Keep tabs on your credit. A free report is available at annualcreditreport.com. Check for errors or omissions. Report any mistakes immediately. You can buy access to your score at various places, including .

Don't be hasty. Part of your credit history is showing how long you've been able to manage your credit responsibly, and closing an account shortens that.

Mix it up. Having a car loan, mortgage and credit cards show you can manage several types of credit at once.


Source:


A very interesting article related to Free Credit Report and Score in Canada. For more updates regarding free credit report services, check credit online score, and business credit report, subscribe to Free Credit Report and Score Canada blog.

How Long Does Your Employment History Stay On Your Credit Report?

The Wallet
Answering Reader Questions on Credit Reports

Wallet readers recently wrote in wanting to know more about all things credit-related. They asked savvy questions about what information is put on a credit report–and for how long–and what factors can hurt or help your credit score. We did a little digging on your behalf. Here is what we learned:

One reader wanted to know how long one’s employment history stays on a credit report. The short answer: Don’t worry about it. Employment history, which is sometimes included in the identification section of a credit report, “doesn’t count in your credit score and doesn’t have a negative effect on your credit at all,” says John Ulzheimer, president of consumer education at Credit.com.

In fact, most consumers have outdated employment information on their credit reports, says Norm Magnuson of the Consumer Data Industry Association, a trade group for the credit-reporting industry. If having the information on there is bugging you, you should contact each of the three national credit reporting agencies (TransUnion, Equifax and Experian) to have employment information removed, says Ulzheimer.

Readers also wanted to know how long it takes for your credit report to reflect recently paid-off credit-card balances. Any payments made to your credit card should show up on your credit report within 30 days. Credit-card issuers send updates to the credit bureaus once a month, so depending on when you made the payment, it could take a few days or a full month before the lower balance shows up on your credit report.

Another reader asked how going over your credit-card limit affects your credit score. Credit bureaus look at how much of your available credit is being used up when they calculate your credit score–and going over the limit on a credit card will give you a high debt-to-credit ratio, which can ding your score. “And that can lead your other lenders to take actions like lowering limits, increasing your interest rate, increasing your minimum payment requirement or closing the account down completely,” says Ulzheimer.

The experts advise avoiding this situation by being conservative with credit-card use and making timely payments. If you happen to go over the limit accidentally, you might be able to minimize the damage if you immediately pay down the balance before the credit-card issuer sends an update to the credit reporting agency. But this is a risky gambit that you’re likely to lose.

Remember, you’re entitled to see your credit report–the blueprint for your credit score–once a year at no cost from each of the credit-reporting agencies. You can order a free credit report at AnnualCreditReport.com.


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Struggling with credit card debt?

Unaffordable credit card debt is a heavy burden; here are some tips to lighten the load.


NEW YORK (CNNMoney.com) -- Rising unemployment is pushing strapped U.S. borrowers over the edge, with delinquencies and balances on delinquent credit cards surging -- that's according to an industry report. Here's your step-by-step guide on what to do if you can't afford your credit card payments.

1. Contact your lender

Let's say you've lost your job, or are looking at a steep medical bill, and worried you won't be able to make your credit card payment.

Make sure you call your lender and explain the situation. The sooner you contact them, the more willing they may be to work with you.

More and more credit card companies are willing to negotiate. Realize that they're not being charitable -- they're just trying to get what they can out of you.

So, what can you ask for? If you can make some sort of monthly payment, ask your issuer to lower your rate and possibly waive your fees. Also ask to work out a payment plan.

If the first person you speak with can't help lower your rate or make adjustments to your account, ask to speak with a supervisor. Persistence may be necessary to find the person who can or will help you.

Document all conversations, including the name and title of the person you spoke with, date, time and results.

Go to helpwithmycredit.org -- a Web site operated by credit card companies for more information on dealing with debt issues.

2. Get your debt forgiven

Increasingly, credit card issuers are accepting dimes, if not pennies, on the dollar as payment in full. But if you're striving to get a debt forgiven, don't expect a sweetheart deal.

Generally you have to meet certain criteria. For example, most cardholders have to be delinquent for at least 90 days and -- usually -- your credit report needs to show that missing payments isn't a common occurrence. But that doesn't mean that once your debt is settled, there are no consequences.

Closing an account due to settlement is bad for your credit score and will affect your score for several years. If the forgiven debt is more than $600, you must pay income taxes on that amount.

If you're looking for guidance on negotiating with your credit card company, go to the National Foundation for Credit Counselors at NFCC.org.

Don't waste your time with third party debt settlement companies. These companies charge you fees for a service you can do yourself -- for free.

3. Prioritize your payments

If you're having trouble making your monthly bills, it's time to prioritize.

First, look at your immediate needs. Pay your mortgage or rent bill, keep making payments to your utility company and keep food on your table.

Then start to think about paying down your credit card balances. Find out which card has the highest interest rate and pay that one off quickly while making modest payments to your other credit cards.

Remember that credit card debt is unsecured debt -- meaning that there's not much that the credit card company can take away from you if you're delinquent. You should always strive to pay off your debts. And stop using your credit cards until you pay off your current balances.

-- CNN's Jens Haley contributed to this article.

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National Debt Relief Stimulus Plan Warns Consumers Seeking Debt Help about Abusive Debt Settlement Companies

The National Debt Relief Stimulus Plan educates consumers and small business owners who were incapacitated by a financial hardship. The information alerts people seeking debt management options about the pros and cons of debt settlement.

San Diego, CA (PRWEB) July 9, 2009 -- A wealth of debt help education has helped consumers prevent the long-term negative credit implications of filing bankruptcy. Today, people are more cautious about dubious credit repair, which offers no guarantees and leaves debtors legally liable for payment of unpaid debts. Plus, more folks are avoiding ineffective consumer credit counseling services, which according to a Consumer Reports survey produce a 79% dropout rate. Yet, little is known about the pros and cons of debt settlement.

Lately, much light has been shed on debt settlement by DetbFreeLeague.com, provider of the National Debt Relief Stimulus Plan. After bankruptcy, the rapidly growing bankruptcy alternative has been most effective offering debtors a fresh start.

It's scary to see companies that do loan modifications also offering debt settlement services. But the biggest threat is seeing people being ripped off with exorbitant fees at a time Americans are most financially vulnerable
Legally, no one can guarantee to reduce a debt for a specific amount. Yet, many debt settlement companies often make this promise and purposely low-ball, not estimating increases of fees and interest charges to clients' enrolled accounts.
Debt settlement works on behalf of consumers, negotiating with creditors a repayment of unsecured debts at a reduced percentage of the total amount owed. The settlement examples at DebtFreeLeague.com, confirm debts can be reduced by more than half.

Despite the considerable benefits, critics contend, if consumers defer minimum payments to creditors, the debt help strategy causes their credit to decline. However, graduates of the National Debt Relief Stimulus Plan have found substantial credit repair relief.

The plan lowers the debt-to-income ratio and debt-to-credit ratio, making consumers more creditworthy. According Fair Isaac, the creator of the credit scoring model, the debt-to-credit ratio composes one third of the consumer FICO (credit) score.

Critics also question the tax consequences; if the forgiven portion of the settled debt exceeds $600, the debtor may need to report the savings to the Internal Revenue Service (IRS Form 980) as taxable income. The forgiving creditor must also provide the debtor with a 1099-C tax form.

However, IRS Publication 525 states the forgiven debt to may not need to be reported if the debtor was insolvent when the creditor forgave the debt, which is true for many debt settlement candidates.

Despite the good, Debt Free League cautions people about debt settlement services. In the past few years, inexperienced companies have caused the number of debt settlement companies to triple. "It's scary to see companies that do loan modifications also offering debt settlement services. But the biggest threat is seeing people being ripped off with exorbitant fees at a time Americans are most financially vulnerable", states G. Hernandez, Operations Director of Debt Free League.

Recently, the Illinois Attorney General filed a lawsuit on Debt Relief USA alleging the debt settlement company charged an upfront fee of up to 10% of the consumer's debt, and upon settling one of the consumer's accounts, charged a settlement fee of 13% of the amount by which they were able to reduce the consumer's debt. (Note: Quite frequently, consumers, who realistically could not afford the excessive fees, eventually drop out of debt settlement programs in far worse financial conditions.)

Also alleged, Debt Relief USA failed to negotiate substantial reductions on most consumers' accounts, which points to another complaint, failing to reduce the consumer's debt as promised.
However, Mr. Hernandez warns, "Legally, no one can guarantee to reduce a debt for a specific amount. Yet, many debt settlement companies often make this promise and purposely low-ball, not estimating increases of fees and interest charges to clients' enrolled accounts."

As the following illustrates, the low-balling practice can dig a debtor deeper in the hole:

A client enrolls a total debt of $15,000. The debt settlement company bases the client's monthly savings estimating to settle the enrolled debt at 40% (debt payoff: $6,000). Later, the creditor accepts a 40% settlement. However, the added interest and fees jumped the debt to $16,500 and the debt payoff to $6,600. Since the monthly savings were grossly underestimated, the client must spend more money and time to settle the debt. Additionally, if a large portion of the monthly savings pays the company's steep fees, the time to settle the debt must also be extended.

Exposing the above consumer abuse is not an attack on the respected practice of negotiating debt settlements. Every year, banks manifest debt settlements to reduce billions of dollars in losses.

After a nationwide research on fifty debt settlement companies, Debt Free League also found that few provided complete and unbiased information to help consumers make informed decisions about joining their debt settlement programs.

To counter the unscrupulous practices, Debt Free League established the National Debt Relief Stimulus Plan.

In contrast, the plan educates consumers and provides full disclosure on the debt settlement procedure. Additionally, while most debt settlement companies charge fees upwards of 15% of the total enrolled debt, the plan's fees are about one third less.

Furthermore, the plan estimates the future buildup of interest and fees to the enrolled debt into the client's monthly savings. Due to adding the money saved in fees to their monthly savings, clients have gotten out of debt more conveniently.

Other benefits offered by the National Debt Relief Stimulus Plan include a 100% money-back guarantee. If a cancellation occurs within 30 days of enrollment, the plan will refund 100% of the client's deposit. Additionally, their re-enrollment credit allows clients who cancel after 30 days due to a financial hardship, to re-enroll with a credit up to 100% of the fees they previously paid.

People who owe $10,000 or more in unsecured personal debt, medical debt, or business debt are encouraged to apply by calling the National Debt Relief Stimulus Plan at 1-800-213-9968.

About Debt Free League:
Debt Free League is a financial services organization, which employs professional debt arbitrators to help consumers and small business owners who may be in need of unsecured debt relief.

More information may be obtained at the Debt Free League blogs:


* Debt Settlement Tips: http://debt-free-league.blogspot.com/
* Debt Settlement: http://debtfreeleague1.wordpress.com/


Contact:
Media Relations
Debt Free League
800-213-9968

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Getting to the Number That Matters Most

The three national credit bureaus are for-profit competitors regulated by the Fair Credit Reporting Act. Under federal law, consumers are entitled to a free copy of their credit report from each of the three bureaus each year. Consumers can get their credit reports at http://annualcreditreport.com.

Lenders also use credit scores to determine whether to extend credit to consumers and at what interest rate. The majority of lenders use the FICO score, developed by what was formerly known as Fair Isaac. Here is a rundown of the scores:

FICO: This is the score that most lenders use. Consumers can buy them at http://myFICO.com.

Equifax: The bureau has chosen to offer only FICO scores to consumers at http://Equifax.comwhen they sign up for a credit monitoring service.

Experian: The bureau has developed its own score known as a Plus score. Consumers can get that score when they sign up for a credit monitoring service at http://Freecreditreport.com. The Plus score is not sold to lenders.
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TransUnion: The bureau has developed its own score. Consumers can get that score when they sign up for a credit monitoring service at http://TrueCredit.com. Lenders can also buy these scores.

VantageScore: A score developed by Equifax, Experian and TransUnion and sold to lenders to compete with the FICO score.


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Obtaining your credit score

I’m surprised how often people don’t know their credit scores. Your credit score (commonly known as your FICO score) is a personal report card on your credit worthiness that is used whenever you apply for credit of any type -- home loan, car loan, equipment lease, business line of credit or credit card. A credit score isn’t the only factor that determines if you get a loan, but it’s important. You have many credit scores. For example, you have one from each of the three major reporting agencies (Experian, TransUnion and Equifax) and a rating from specific industries like insurers. Each agency uses different data and scoring approaches so a high score from one agency doesn’t always mean another agency sees your credit worthiness the same way. If you’re applying for credit, you won’t know which score the lender will use either.
If you want to see your credit report, try to get it for free. Federal law gives you the right to get your credit report for free from the three major credit agencies once every 12 months. Go to www.annualcreditreport.com.

You can also pay for your credit report from one of the major reporting agencies (TransUnion, Experian or Equifax). They charge about $15.95 and you probably only need one version. If you check out the web sites of the major credit reporting agencies, be cautious about their “free” credit reports. These usually require you to sign up for a membership. For example, on the Experian site, below the “free credit report” offer there is this note:


IMPORTANT INFORMATION: This offer is not related to the free credit report that you are entitled to under federal law. To obtain that report, you must go to www.annualcreditreport.com. The free credit report and score offer above requires enrollment in a trial of Triple AdvantageSM. Cancel anytime during the 7-day trial period and pay nothing. Otherwise, you will be billed just $14.95 for each month that you continue your membership.


The major benefit of reviewing your credit report is to see the reasons your score isn’t higher. You can use a credit report as a long-term plan to improve your credit report. Keep in mind though, that it takes many months to improve your credit score. If you’re thinking about obtaining a real estate loan or refinancing and have been plagued by poor credit scores in the past, start improving your credit scores at least 6 months in advance of when you expect to submit loan papers.

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Upstate judge tosses out suit against credit agencies

An Upstate judge has tossed out a class action lawsuit against the nation's top three credit reporting agencies — a legal action that the judge said had involved a request for as much as $4 billion in damages.
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U.S. District Judge Ross Anderson's dismissal ended — at least for now — a three-year legal battle over whether Equifax Information Services, Experian and TransUnion wrongly allowed a credit provider's accounting practices to raise the cost of borrowing money for millions of people.

In his order, Anderson wrote that the class of 4 million plaintiffs that stretched from West Virginia to South Carolina couldn't prove that they were harmed by the practice or to what extent. The suit had sought $1,000 for each plaintiff, Anderson wrote.

“Had we not been successful, the result would have been devastating to the defendants,” former 4th U.S. Circuit Court of Appeals Chief Judge Billy Wilkins, who represented the agencies, said Wednesday.

James Ledlie, an attorney for the plaintiffs, said Wednesday his team is studying Anderson's decision and will decide what to do next. However, Ledlie said that forthcoming federal regulations governing reporting of credit limits could achieve the lawsuit's original purpose.

In nearly identical complaints filed in Greenville district federal court, the plaintiffs alleged that beginning in at least 2004, the agencies issued inaccurate information by failing to force one of the nation's largest credit providers, Capital One Financial Corp., to report credit limits on individual credit card accounts.

The information that credit reporting agencies gather is used to determine a credit score, which lenders use to determine the likelihood that a borrower can repay a loan.

At issue was how the credit reporting agencies would leave blank or report as $0 the "credit limit" entry for Capital One accounts provided in their reports. The lack of information caused credit scoring software to reflect an artificially lower credit limit, the complaints alleged, misrepresenting exactly how much available credit a cardholder had actually used.

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Free credit reports really are available to consumers

Q. Where can I find a "free" credit report?

So far, different sites want information to charge me for extra services.
-- Lost

A. There are plenty of services that offer free credit reports, but you'd have to buy other products in order to get the so-called "free" report.

Think of those catchy commercials with that guitar-carrying guy who sings, and sings and sings about his employment troubles while adorned in themed costumes. That site offers so-called free reports, but they're only free if you buy other products, such as credit monitoring services.

The good news is that there really are free reports available to consumers. Once a year, you can request a free copy of your credit report from each of the three major credit bureaus: Equifax, TransUnion and Experian.

Much of the confusion about free reports is that some consumers believe they're entitled to free credit scores, which are different from credit reports. A credit report will list all of your past borrowing experiences, while a credit score is a number that indicates to potential lenders whether or not you'd be a good credit risk.

''Scores, which most individuals are interested in, will come at a cost regardless of which site you visit,'' said Michael Gibney, a certified financial planner with Highland Financial Advisors in Riverdale.

You can visit the web site for Fair Isaac, the maker of the FICO credit score, at myfico.com. You'll pay for your credit score there.

The official web site to get free credit reports once a year is annualcreditreport.com. This site is sponsored by the three credit bureaus.

''The reports are a good source of information, especially to see if there are any erroneous accounts that may affect (lower) your score,'' Gibney said.

You can choose to take all your reports at once, or you can space it out, for example, taking Experian in January, TransUnion in May and Equifax in October.

You can also get a free credit report when you apply for a loan or line if you are denied credit, said Vince Pallitto, a certified financial planner and certified public accountant with Summit Asset Management in Florham Park.

''Your credit report can be a very important factor in your lifestyle,'' Pallitto said. ''Therefore paying a reputable site such as Equifax, TransUnion or Experian may be worth the small investment.''


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Americans Feeling More Confident That Their Identities Are Safe Compared to a Year Ago

Perception Levels Conflict with Increasing Number of Identity Theft Crimes in America

ITASCA, Ill., July 7 /PRNewswire/ -- Reported cases of identity theft are on the rise, increasing 22 percent in 2008 from the previous year(1). However, according to newly-released findings, Americans are feeling more confident that their identities are safe compared to a year ago.

This new research is part of a long-term awareness initiative called Americans' Identity Confidence Index, which gauges how consumer perceptions of identity theft and specific preemptive behaviors change over time. Through the Index, Fellowes and the Identity Theft Resource Center (ITRC) annually survey consumers on five questions pertaining to vulnerability, and report on changes. This year, the Index jumped to 96.7, showing Americans are feeling more confident that their identities are safe compared to a year ago. This marks a three percent increase over last year (93.7). The increase in confidence over the last year is largely driven by women, whose Index score jumped seven percent or six points to 94.8 compared to 88.7 in 2008.

The survey also revealed that feelings of personal vulnerability have decreased significantly with only 56 percent of Americans believing they can be a victim of identity theft compared to 65 percent in 2008. While many Americans may feel they're protected from the crime, consumers remain aware that the threat of identity theft is real, with a majority (86 percent) believing identity theft can happen anywhere and at any time. In addition, 59 percent of Americans recognize that identity theft is a real problem versus a media hype, similar to 2008.

"While Americans' confidence surrounding identity theft are up from previous years, it's still important to practice proper safety measures to ensure the crime does not impact them," said John Fellowes, vice president and general manager, Fellowes, Inc. "Each year, this index provides valuable insights into America's thoughts and perceptions surrounding the crime, and allows us to better educate consumers on how they can prevent the crime."

Increase in Confidence Coincides With Increase In Protection Habits

Despite the fact that Americans are feeling more confident, more consumers are adopting protective measures to defend against identity theft, a crime which impacted 9.9 million people in 2008(1). In fact, the Index revealed a larger percentage of Americans are:

* Ignoring unsolicited information requests online (87 percent in 2009 compared to 81 percent in 2008)
* Withholding personal information over the phone (82 percent in 2009 compared to 75 percent in 2008)
* Keeping their Social Security card in a safe place, other than their wallet (76 percent in 2009 compared to 71 percent in 2008)

In addition, the vast majority of Americans (90 percent) say they check their bank accounts and credit card statements on a regular basis. Seventy percent report shredding their personal information, such as bank statements, old bills and tax returns after use, comparable to 2008. However, Americans are less vigilant in ordering credit reports regularly with only one in two ordering credit reports at least once every two years.

While Americans are taking extra precautions to guard their sensitive information at home, more can be done in the workplace. In the workplace, less than half (48 percent) of Americans report they personally shred documents they no longer need and only 45 percent change their computer passwords often. However, research shows more than 88 percent of data breaches in 2008 involved insider negligence(2).

"You can never be too careful when it comes to protecting your confidential information - both at home and in the office," says Jay Foley, executive director of the Identity Theft Resource Center. "Already in 2009, more than 25 percent of data breaches involved paper documents, as identified in the 2009 ITRC Breach Report. Activities such as shredding go a long way to help ensure all confidential information is safe and out of harms way."

About Fellowes, Inc.

Headquartered in Itasca, Ill., Fellowes, Inc. offers an impressive range of products to equip the workspace, including paper shredders, binders and laminators, desktop accessories and record storage solutions. Fellowes, Inc. owns and operates subsidiaries in Canada, United Kingdom, Benelux, France, Germany, Italy, Poland, Spain, Russia, Singapore, Japan, Korea, China and Australia. The company employs more than 2,700 people throughout the world and expects global sales in excess of $700 million this year. For more information, visit www.fellowes.com.

About the ITRC

The Identity Theft Resource Center(R) (ITRC) is a non-profit organization established to support victims of identity theft in resolving their cases, and to broaden public education and awareness in the understanding of identity theft. It is the on-going mission of the ITRC to assist victims, educate consumers, research identity theft and increase public and corporate awareness about this problem. For more information, visit www.idtheftcenter.org or call toll-free (888) 400-5530.


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Would An Overhaul Hurt Health Care?

(CBS) Today the President again insisted that his health care reform won't force you to switch plans or doctors.

"What I'm saying is the government is not going to make you change your plans under health reform," said Mr. Obama.

That's technically correct - but what the president didn't say is that reform could lead your boss to change your health care plan, reports CBS News correspondent Sharyl Attkisson. Here's how: 160 million people are insured through work and their employer actually picks up most of the cost. Under the president's plan, Americans would be required to carry a certain level of coverage, which means many people would have to increase their insurance.

"Employer premiums will go up, and employers might respond by dropping coverage entirely," said Michael Cannon, with the Cato Institute. "So if you're one of those unfortunate workers then it will be a government policy that ousted you from your health plan."

And if you do choose a public plan, you may want to keep your favorite doctors but they may not want to keep you. Under government health care, they could be paid 20 to 30 percent less.

Today, Mr. Obama also scoffed at claims that a public plan would put private insurers out of business.

"If private insurers say that the marketplace provides the best quality of health care, if they tell us that they are offering a good deal, then why is that the government, which they say can't run anything, is suddenly going to drive them out of business?" Mr. Obama asked.

The answer, critics say, is that the government has many tools to get an unfair advantage and undercut private companies.

" The government can subsidize its plan with tax revenue from other taxpayers," said Cannon. "The government can enact regulations that favor its plan over other private insurers."

In the end, the president argues that it's riskier to do nothing because rising health care costs have put employers on the brink of raising premiums or dropping health insurance altogether.


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How to get the best bang for your buck

Are cars more expensive now than in the 1980s? No. While the sticker prices may have risen from an average of $10,668 in 1982 to $30,877 in 2008, they've rarely been this affordable for Canadians.

Over the last decade, car prices, in terms of how much work it takes for a Canadian to buy a new car, have steadily dropped — from a high of 24.1 weeks in 1997. Even in dollar terms, car prices are down over the last two years. According to the latest data from Statistics Canada, it took 18.2 weeks of average before-tax family income for a Canadian household to buy a new car in 2008.

We now spend less on cars because of lower MSRPs [manufacturer's suggested retail prices] on selected vehicles, more incentives, and a move to smaller, more economical cars.

In fact, our buying habits have changed drastically. The SUV and pickup boom of the 1990s saw Canadians moving into bigger, more expensive vehicles year after year. For the last decade, though, Canadian car buying habits have gone primarily in the other direction.

We Canadians also love to compare ourselves to Americans and, on that score, we're far better off when it comes to buying a new ride.

In terms of the average before-tax income calculated in terms of weeks, Canadians need more than three fewer weeks of labour to pay for a new vehicle. In 2008, the affordability of a new car in the United States, DesRosiers says, is estimated at 21.5 weeks of family income, versus 18.2 in Canada.

So what does this mean to the average consumer? Is it really a good time to buy or is that just the latest marketing pitch from struggling auto makers? What's the best car to get you through this recession? Jeremy Cato is here to help you make sense of it all.

Jeremy Cato, the Globe and Mail's senior writer for the Globe's weekly auto section, was online earlier to take questions on getting the best deals out there.

An award-winning print and broadcast journalist who has covered the auto industry for more than 20 years, Mr. Cato hosts the weekly television show Car/Business, which appears Fridays at 8 p.m. on Business News Network and Saturdays at 2 p.m. on CTV.

He is an expert on cars and trucks — the issues, the players and the products — from the inside out. He has won more than two dozen awards for journalistic excellence, including being named Automobile Journalist of the year in 1999 and again in 2003.


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Credit card zero per cent deals are drying up

Recession means zero per cent card deals are drying up




The days of transferring your credit card debts from one zero per cent deal to another look like they are coming to an end.

With the recession, customers are finding it more and more difficult to apply successfully for new cards, with many card providers now saving their top deals only for those with the best credit records.

Research by comparison website uSwitch.com has found that one in 10 people have had a credit card application refused in the last year, with 57 per cent of these failed applications - equivalent to nearly two million people - for balance transfers.

And with the average interest on credit cards now at a steep 17.3 per cent APR, customers coming to the end of special deals are finding their repayments shooting up.

The Government's "Better Deal for Consumers" White Paper on Thursday proposed a number of new regulations aimed at improving the credit card industry, but experts warned more regulation could lead to a reduction in the number of zero per cent balance transfer deals as it will cost providers.

There are still some zero per cent deals around, such as Virgin Money, Santander and Halifax Plus.

Louise Bond, personal finance expert at uSwitch.com, said: "We can't ignore the fact that the country is in economic turmoil.

"The knock-on effect for credit card customers is that those with a less than perfect credit history could find themselves being turned down for the next-best zero per cent deal, forcing them to pay interest. This is a huge problem for switchers as these people have accumulated debt based on the fact they do not have to pay interest on it."

Having to pay interest is not the only problem that having a credit card application rejected creates. If you make lots of failed applications then this can damage your credit score, so if you are rejected for your next credit card, do not keep applying for more cards before you have checked your record.

If your credit record isn't looking too good, there are ways in which you can improve it. Setting up direct debits on your card repayments makes sure you don't miss them.

And you should check any financial arrangements you may have with a friend or partner. If they have a bad credit rating it can have an impact on your own rating.

Finally, cut up any credit cards which you don't use and tell the provider you are closing the account down.

And don't despair if you are rejected by one provider. Card companies often have different criteria for who they will lend to, so try another one.

Case study: I got rid of overdraft

Rosy Ainbow managed to transfer her £2,000 overdraft with HSBC on to a Virgin Money card charging zero per cent interest for 16 months.

"I had an overdraft run up during my student days which I transferred so I wouldn't have to pay any interest on it," said the 28-year-old children's service worker.

"I've heard that borrowing is getting more difficult, but luckily my credit record is good because I have never defaulted on any repayments.

"I have direct debits set up to make sure that payments are made on time every month in case I forget."

Rosy, from Nottingham, is planning to clear the debt over the 16-month interest-free period so she doesn't have to transfer the balance again.

"I'm trying to pay back more than the minimum repayments each month so that I can get rid of the debt once and for all," she said.


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Buddy, can you spare100 FICO points?

MINNEAPOLIS - Americans’ credit scores, the three-digit number that determines whether you’ll get a loan and how much you’ll pay for it, keep taking a beating.

Millions of consumers’ scores have dropped, making it more expensive for them to borrow money - or even impossible if the score has sunk low enough.

‘‘You have to watch out for a vicious circle. Now you have a bad credit history, which makes it harder for you to recover," said Evan Hendricks, a Washington-based expert and author on credit reports and scores.

The falling credit scores are a reflection of the times: plummeting home values, record foreclosures and the overall recession. At the same time, lenders are applying stricter standards to borrowers, including requiring higher credit scores. ‘‘For better or worse, our economy is very dependent on consumer spending,’’ Hendricks said. ‘‘If tougher standards mean that people with good credit can’t get credit . . . that could choke off the recovery or slow it down.’’

Most Americans may not know their actual credit score, but they’ve seen enough marketing by the credit-score companies, including Minneapolis-based Fair Isaac Corp., known as FICO, to know that the number, which can range from 300 to a perfect 850, has become a de facto national ID. Lenders rely on Fair Isaac’s FICO score, but so do employers when screening job candidates, insurers when issuing policies for homes and autos, and landlords when renting an apartment.

And exactly what many people are experiencing now - foreclosures, late credit-card payments - will bring down their credit scores.

Americans carry $2.56 trillion in consumer debt, up 22 percent just since 2000, according to the Federal Reserve. The average household’s credit-card debt is $8,565, up almost 15 percent from 2000. And a report out last month said borrowers with good credit now make up the largest share of foreclosures.

‘‘There’s no question a foreclosure can really slam your score,’’ Hendricks said. ‘‘It will easily send you into subprime territory.’’

Overall, he said, two major factors are bringing down credit scores: late payments because of the economy and credit-card companies reducing credit limits, meaning people are using a greater percentage of their available credit.

Walking away from a house takes a toll on a foreclosed homeowner’s credit. But so do late payments - in particular those that are more than 90 days overdue. According to Fair Isaac, which created automatic credit scoring, bankruptcy, credit card defaults and foreclosures stay on a person’s credit report for seven years. That said, a single bad account such as a foreclosure would be better than a bankruptcy, which usually involves many defaulted accounts. But if all other bills remain current, Fair Isaac says a foreclosed homeowner’s score could begin to rebound in as little as two years.

Fair Isaac shies away from devising a rating system of what ranges are ‘‘good’’ and which are ‘‘bad,’’ saying each lender has its own standard. In general, a score of 700 or better is a sign the consumer handles credit well. Most lenders say a score of 650 or below indicates a high credit risk that could mean higher interest rates or a tougher time getting credit. Information for the score is based on that person’s credit report.

The top 25 auto lenders and credit-card issuers use some version of the FICO score to make lending decisions, as do 90 of the top 100 U.S. financial institutions. It’s common for mortgage originators to pull credit scores from all three major credit bureaus and average them to help determine a consumer’s interest rate. For consumers, getting your credit report is easy - and free if you go to the right spot - but getting your score can be more complicated.

The three credit bureaus, Experian, Equifax and TransUnion, sell reports and scores to lenders and consumers. Also, Fair Isaac sells the bureaus’ FICO scores directly to consumers via myfico.com.

Fair Isaac spokesman Craig Watts estimated that the three credit bureaus sell ‘‘well over 10 billion’’ FICO scores each year to businesses.

Asked whether Equifax has seen an increase in consumers seeking credit information, company spokeswoman Wilson said, ‘‘Definitely, especially right now. People are very concerned about their scores. It’s the economic environment, the tightening credit market. People are very concerned about how their credit behavior impacts their financial well-being.’’

Under the Fair and Accurate Credit Transactions Act (FACT), consumers can get one free credit report a year from each of the three big credit bureaus. Consumer advocates warn of the many companies that have sprung up that charge consumers for information they can get for free.

Consumers who want their credit score will need to pay a small fee - generally about $15.

Consumer advocates recommend checking your report periodically. If you see inaccurate information on your report, inform the credit reporting company. Those companies must investigate and will generally do so within 30 days.

While Watts said millions have seen their scores drop, a ‘‘like’’ number of savvy consumers have seen their scores go up because they paid off balances and put off big purchases when the economy started to spiral down.

In good times, he said, the distribution is shaped like a bell curve. During a recession, it retains that shape but flattens out. ‘‘You have fewer people in the middle . . . and more people at both ends,’’ he said.

Watts said the best advice he can offer to consumers is this: ‘‘Don’t get too excited about the nuances in credit scores.’’

There are no ‘‘quick fixes’’ to repair a bad score.

‘‘The same general rules apply today that have applied for the last 20 years,’’ Watts said. ‘‘Pay your bills on time, keep balances low relative to the limit and take on new credit only . . . when needed. Those consumer habits are going to steer you in the right direction.’’


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