Thursday, July 19, 2007

Start Freeing Yourself from Burdens of Debt

The Consumer Credit Counseling Service of Atlanta is encouraging people to declare their independence from credit-card debt. Make this month the start of your lifetime of economic freedom, says the nonprofit organization.

"Using credit cards for purchases can put you at risk, especially if you aren't disciplined," said Suzanne Boas, president of the CCCS office in Atlanta. "It may feel like you aren't really spending money and, before you even realize it, you have amassed a large debt that is difficult and very costly to repay."

This group's call for self-defense is useful considering the latest bankruptcy statistics. The number of consumer bankruptcies filed during the first three months of 2007 jumped to 187,361, a 66 percent increase over the first quarter of 2006, according to the Administrative Office of the U.S. Courts.

This sad news comes at the same time that the five federal regulatory agencies that oversee banks, savings institutions and credit unions (and related subsidiaries) issued a joint statement directed at certain lenders. The organizations implored the lenders to be more forthcoming about the eventual sting that borrowers may feel after signing up for teaser interest rates on subprime mortgage loans. The regulators are particularly concerned about adjustable-rate mortgage products that are contributing to the rise in bankruptcy filings.

The loans in question enabled people to get low initial payments based on a small introductory rate. Those teaser rates are expiring and many borrowers are finding they can't handle the larger mortgage payments, leading to increases in defaults and foreclosures.

About $467 billion of mortgage loans will reset for the first time in 2007 and another $383 billion will reset in 2008, according to Moody's Together the $850 billion is equivalent to about 9 percent of the mortgage debt that was outstanding in 2006, says Celia Chen, director of housing economics for Moody's.

The crux of the regulatory clarification to lenders is this: An institution's analysis of a borrower's ability to repay one of these hybrid loans should include an evaluation of the borrower's ability to repay the debt after the introductory rate expires.

"D'oh!" as Homer Simpson says.

The road to financial success means factoring in the best-case scenario and the worst-case scenario.

True financial independence is making financial decisions based on the resources you have today, not on what you might have tomorrow. That applies whether you're borrowing on a credit card or applying for a home loan.

For more info and to order your credit report with FREE credit score please visit

Thursday, July 12, 2007

What Type of Data is Used to Calculate My Credit Score?

Your credit score is based on credit-related information-both positive and negative-in your credit-bureau file, including:

  • Payment history
  • Outstanding debts
  • Credit history
  • Inquiries and new account openings
  • Types of credit in use
For more info and to order your credit report with FREE credit score please visit

Monday, July 9, 2007

Knowing credit report can help save money

Ryan Marshall, Carroll County Times Staff Writer

Anyone who’s ever bought a car, gotten a credit card or received a student loan likely has a credit report — and knowing what’s in it can save a lot of money.

The information in a credit report helps set an interest rate, which determines how much interest is paid on money borrowed.

Rod Griffin, manager of public education for Experian, said the information in a credit report is gathered from public records and previous applications for credit.

Experian, along with Equifax and TransUnion, are the main credit reporting agencies in the United States.

The information can include your name, address, Social Security number and information on any bankruptcies, tax liens or civil judgments against you.

Not included is information about savings or checking accounts, individual retirement accounts, investments or assets, Griffin said.

Along with the personal information, credit reports also track inquiries — a record of who has looked at your report.

Griffin said inquiries are divided into two categories: hard and soft.

Hard inquiries come when you initiate a credit transaction, such as opening a new charge card at a local department store.

Soft inquiries are produced when you don’t apply for credit but someone else checks your report, such as for pre-approved credit offers.

Soft inquiries only show up on copies of a credit report that you receive, while hard inquiries are visible to anyone who looks at the report.

Inquiries usually only affect credit if you already have credit issues such as missed payments, Griffin said. He said they are never the only reason someone’s request for credit would be declined.

Credit reports also keep records of whether you pay your bills on time.

Missing payments or having them arrive late can drive down your credit score, the numerical value assigned to your credit.

The scale for credit scores goes up to 850, with a good score usually considered to be anything above 720, said Neil Harrington, from M&T Bank’s consumer loans division.

The score is determined by factors such as the amount of credit someone has and how it’s being used and whether payments have been made on time, Harrington said.

Plenty of people don’t understand how important having good credit can be, said Elizabeth Schomburg, senior vice president at Family Credit Counseling Service, a nonprofit created to educate the public about debt and work with people who are struggling with it.

One of her company’s jobs is to help educate people on what the information in a credit report means and how they can use it to their advantage.

Many people only think about their credit report when they’re getting ready to make a major purchase, she said.

But Schomburg said the information in the report is affecting peoples’ lives more and more.

Potential employers and landlords can check credit reports, she said. They can even be used by insurers to check rates.

Having good credit is often looked as a sign of responsibility, she said.

Congress passed the Fair Credit Reporting Act in 1970 and amended the act in 1996.

Under the act, employers can’t access the report without your written permission.

Reports can be accessed by a court order, federal grand jury subpoena or sometimes to help determine child support payments.

“Not just anyone can get a copy of a person’s credit report,” Griffin said.

In order to get information, a company must subscribe to Experian’s services and meet the company’s security requirements.

Even if a company does qualify, it’s limited in how it can use the information, Griffin said.

Experian often deletes information such as account numbers, dates of birth or other data that aren’t related to the inquiry.

The information in the report can be a useful tool to help fix bad credit.
Griffin recommended getting a copy of your report from all three major credit reporting agencies. No one can do anything about credit problems until they know what’s in their report, he said.

The key to remember is that managing credit is a working process, Schomburg said. Most people’s credit didn’t go bad overnight, and it won’t be fixed overnight.

Reach staff writer Ryan Marshall at 410-857-7865 or

For more info and to order your credit report with FREE credit score please visit

Thursday, July 5, 2007

Difference between 620 and 760 credit score?

Mathematically, the difference between 620 and 760 is only 140, but in real life it can mean a difference of thousands of dollars per year to you.

140 doesn't sound like much. If you were shopping for a new TV, and you liked two of them, priced $140 apart, you might not worry too much about the price difference.

However, in the world of your credit score, the difference between those two is huge.

A 620 credit score means you can get a home loan, from a very few lenders, with bad terms, at a rate of around 7.5%, if you're lucky.

A 760 credit score means you can get a home loan from anywhere, with very good terms, at a rate closer to 5.5%.

A 2% difference. Again a small number. But let's look at the effect in real dollars.

The monthly difference in payment can easily be $200 - $400. Over one year this is $2400 - $4800. Look at this table, using a sample mortgage:

For more info and to order your credit report with FREE credit score please visit

Start Freeing Yourself from Burdens of DebtWhat Type of Data is Used to Calculate My Credit Score?Knowing credit report can help save moneyDifference between 620 and 760 credit score? ~ - How's Your Credit? - Blog