Monthly Archives: August 2014


Establishing Credit


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How to Choose Your First Banking Account

NEW YORK (MainStreet) Whether youre graduating high school or college, chances are good that youre going to be getting your first real bank account. Sure, you might have had some bank accounts designed for teach kids about banking in the past. However, when you get your first adult banking services, youre starting to establish a history. Its important to find the right banking products, but also to use them the right way.

Why You Need a Bank Account

Everybody needs a banking relationship, says Michael Christian, assistant vice president of savings and checking with Navy Federal Credit Union. He believes that being banked is important for establishing credit, but also for paying your bills and keeping track of your finances. Youre not just opening a bank account, youre establishing a relationship with a financial institution, he says.


Repairing Credit


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Credit Repair Services in the US Industry Market Research Report from …

New York, NY (PRWEB) August 04, 2014

The Credit Repair Services industry largely moves countercyclical to the business cycle; therefore, the recession increased demand for credit repair services due to rising unemployment and falling disposable income. These factors, coupled with an increased debt load taken on by many consumers during the housing boom, caused many households to fall behind on payments and seek assistance from industry professionals who help identify errors in credit reporting and dispute the inaccurate information with credit reporting agencies. “In the years following the recession, however, unemployment and household debt declined,” according to IBISWorld Industry Analyst Sarah Kahn. Additionally, many debt-ridden consumers did not seek out industry services, preferring to avoid the fees, file for bankruptcy or take advantage of free online services similar to those offered by this industry. Consequently, industry revenue is expected to decline at an annualized rate of 3.8% to $6.0 billion over the five years to 2014, including an 8.6% drop in 2014 alone.

Although access to credit surpassed prerecessionary levels, aggregate household debt is on the rise, and banks and other lenders are once again lending to risky credit-card borrowers, industry revenue is expected to continue declining. “With the help of the Federal Trade Commissions do-it-yourself instructions, increasingly financially- and internet-savvy consumers are turning to credit reporting agencies on their own,” says Kahn. Additionally, the industrys negative reputation stemming from deceptive practices and charging advanced fees for services, both of which violate the Credit Repair Organizations Act, introduced skepticism in industry services; this further encouraged consumers to improve their credit scores through other means.

According to a 2013 Federal Trade Commission study of the US credit reporting industry, 5.0% of consumers have errors on one of their three major credit reports. Consumers are expected to continue seeking ways to repair their credit score, but industry operators are expected to offer complementary services in order to provide added value. As the percentage of services conducted online increases, however, potential consumers will turn to free options.

For more information, visit IBISWorld’s Credit Repair Services in the US industry report page.

Follow IBISWorld on Twitter:!/IBISWorld.

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IBISWorld Industry Report Key Topics

This industry identifies errors in credit reporting and disputes inaccurate information with the appropriate organizations to improve credit ratings. These services are typically undertaken on behalf of a client who has known credit problems, such as a recent bankruptcy. This industry does not include nonprofit firms that offer credit-counseling services.

Industry Performance

Executive Summary

Key External Drivers

Current Performance

Industry Outlook

Industry Life Cycle

Products amp; Markets

Supply Chain

Products amp; Services

Major Markets

Globalization amp; Trade

Business Locations

Competitive Landscape

Market Share Concentration

Key Success Factors

Cost Structure Benchmarks

Barriers to Entry

Major Companies

Operating Conditions

Capital Intensity

Key Statistics

Industry Data

Annual Change

Key Ratios

About IBISWorld Inc.

Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit or call 1-800-330-3772.


Establishing Credit


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College Freshmen, Financial Planning Go Hand in Hand to Prep for Future

College freshmen arrive on campus excited, eager and unfortunately already a target for financial institutions.

People are going to try to sell them checking accounts, savings accounts, credit cards and countless other products, said Nick Clements, Co-Founder of Magnify Money.

Which is why Nick Clements of Magnify Money says its important for parents to school their kids on some money lessons before they fly the coop. Take for instance, the ins and outs of checking. He suggests shopping around for an account that doesnt charge hefty overdraft fees since mistakes are bound to happen.

And unfortunately as college students learn their way into financial responsibility they tend to go overdraft and pay a disproportionate amount of the fees. So you want to have an account that doesnt charge you $35 for that $6 latte,” said Clements.

Credit cards are another tool that can prove helpful or hazardous depending on how they are used. On the one hand, college is the perfect time to start establishing credit.

Make one, at most two purchases per month, pay it off in full every month and at the end of your four years of college you could have a credit score in the mid-600s and that could set you up in wonderful stead for going forward,” said Clements.

On the other hand, its easy for a student to get overwhelmed with debt and start missing payments and that can have long term implications.

If you plan to send your child money, use it as a learning tool. Schedule deposits and force them to make that money last, a skill that will serve them well when they start earning a regular paycheck.

A lot of times parents might say, oh whenever you run out of money Ill just add money there. I think the randomness of it or the Im in trouble, give me money, sets up a bad scenario, not just for the parent but later on, that bail out is going to be the debit card, its going to be the credit card,” said Chris Dlugozima, Community Relations Coordinator, GreenPath Debt Solutions.

Which brings us to the most important financial lesson a student needs to learn — how to create and stick to a budget.

If you track your expenses, if you plan accordingly, its going to be that much easier to manage your checking account and manage the potential credit card or even the student loan that many of them take out as well,” said Dlugozima.

To that end, students, take advantage of technology and choose an app that will help you stay on top of your pizza money. Oh and since your phone is in your hand, dont forget to call your parents once in a while.


Establishing Credit


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The End of All Your Credit Card Confusion

A secured credit card has been referred to as a credit card on training wheels because you have to deposit a set amount into a savings account as collateral for the amount you borrow, so its like using your own money. If you have a poor credit score, a secured credit score could be your best option to rebuild your credit. The downsides of secured credit card are that they tend to have annual fees, application fees, late-payment penalties, high interest rates, and over-the-limit charges. I only recommend getting a secured credit card if you have a poor credit history and need a vehicle to rebuild it. These typically require a deposit as a way of guaranteeing that you will be able to pay off your balance.

If I apply for a credit card, what are some reasons Id be turned down? Is there anything I can do about that?
The biggest reason is that your credit history is either insufficient or poor. If you have little or no credit, ask your bank about the best starter card option. If you have a poor credit history, start to reverse the trend by making an effort to pay off your debt in full if you are able to. Also, check to make sure you have no outstanding medical bills or parking tickets, which are two of the biggest credit-score tankers outside of credit card debt.

Do I need a credit card to build good credit?

Not necessarily. There are a variety of ways that you can potentially prove to a lender that you are creditworthy: Pay your student loan monthly balance in full and on time, never miss payments on everyday bills, make a steady income, and open a checking account with the bank where you will apply for a credit card, loan, or mortgage.

Can you establish credit with a debit card?
No, but debit cards can help you establish a relationship with the bank where your account is. If you are in good standing and have been a banks client for some time, you may be more likely to be considered for a loan or credit card.

When I first open a card, what should my limit be? As I get older, how much should it increase to?

Your credit limit depends on a number of factors, but one of the most important ones is usually your credit history. Many providers have student credit card options designed specifically for students who have little to no credit. Generally, these cards will have a limit ranging from $300 to $1,000, depending on the card issuer. Once you have consistently proven to pay your bills on time, you can consider applying for a credit line increase.

How often should I look at my online account?
Every day! Its important to check your credit card activity to make sure all transactions are accurate and to keep an eye out for any fraud. If you use a tool like LearnVests Money Center, you can link all of your accounts and take a look at everything at once. I recommend taking a daily money minute time set aside everyday to get a snapshot of your money.

What happens if I dont pay my bill? Is it a huge problem if I miss one payment?
I recommend that you always pay your bills on time (and in full, if possible). If you miss a payment, it will show up on your credit report and likely dock your credit score significantly. Your credit card provider might also increase your cards interest rate. Bottom line: If possible, dont miss a payment.

Can I use my credit card to get cash from the ATM? Should I?
While you can use your credit card to get cash from the ATM, this cash advance is really just taking a loan from your credit card issuer and this tends to come with a very steep price. Any money you take out as a cash advance is charged a higher interest rate than the rest of your credit card balance, plus an additional transaction fee. Its typically much more affordable to get cash with your debit card, so you can help avoid fees and interest on the amount you withdraw.

Should I get a store credit card if theyre offering me a discount on my purchase?
I do not recommend store credit cards, as they tend to come with high interest rates and fees. Not to mention, they give you another card to track. Because you probably wont use a store credit card frequently, youre probably more likely to forget it exists and forget to pay it off.

What does APR mean?
Annual percentage rate, or the interest rate youll be charged on your credit card debt each year. This number only matters if you are carrying month-to-month debt, which you should avoid. APR is the rate that determines the interest you incur monthly, and it can change before the end of the year. Watch out for an APR switch-up a couple of months after you have a credit card. Many credit card issuers will offer a 0 percent APR for the first couple of months of use, and then raise it after that initial term.

What is actually a good rate for a credit card? What is a bad one?
The average low interest credit card will have an APR between 6.99 and 9.99 percent. Typically, this APR is offered to customers with excellent credit and a strong credit history. The average variable APR rate that is, one that changes rather than stays fixed at one rate is just over 15 percent, so be wary of anything higher than average.

Is there such a thing as a card that has 0 percent APR and stays that way?
Its not uncommon for credit cards to have a 0 percent introductory APR. Depending on the type of card and the provider, this intro amount can be available for up to 18 months. However, after the intro period is up, most credit cards will return to the regular APR likely between 10 and 20 percent. Be careful to not carry a balance over month-to-month if possible, otherwise you may be charged interest on it once your introductory period runs out.

Are there other hidden fees (late fees, periodic interest rate adjustments, taxes) that I should know about?
If your payment is over 30 days late, you will likely be charged a late fee, in addition to a raise in interest rate. If you travel abroad, expect to get hit with a foreign transaction fee every time you use a credit card or debit card, unless you specifically have a card that waives it.

Whats a periodic interest rate?
Your daily periodic interest rate is your APR divided by 365 or 360, depending on your credit card provider. Its important to remember that credit card debt accrues daily not monthly based on your periodic interest rate. What this means is that on day two of carrying a credit card balance, you will be charged interest on both the balance and the previous days interest. The daily periodic interest rate is important to know if youre trying to calculate how interest on your debt adds up each day, and how much you can save by paying off your credit card debt immediately. If you always pay off your balance in full and dont carry month-to-month debt, you wont have to pay any interest on purchases, regardless of your APR or periodic interest rate.

Some cards charge an annual fee. Are the benefits worth it?
This depends on what youre looking for. Generally, there are a lot of great no-fee cards out there, so you can certainly avoid paying an annual fee. However, if there are certain benefits youre looking for, weigh the potential value against the cost. For example, maybe the $100 fee on a card with good travel benefits will be insignificant to you if they always waive the $25 checked bag fee. How many trips will you take to make that worthwhile?

What kinds of benefits should I look for in a credit card miles, cash back, no fees, etc.?
This really depends on your lifestyle. If you love to travel or have to travel often for work, consider a credit card with miles. If you spend the bulk of your lifestyle budget on everyday purchases like groceries and gas, look out for cash-back benefits. Cant decide on which youd prefer? Some credit cards also offer a flat-rate cash back, giving you a certain percentage of cash back on all purchases, regardless of category.

Is it worth it to put everything on my credit card to earn the points, or does it look bad to have a huge balance even if I pay it off every month?
This depends on your credit utilization rate, which shows what percentage of your available credit youre using. You should aim to use less than 30 percent of your utilization to help show that youre a low-risk lender. So if your credit card has a limit of $3,000, aim to charge no more than $1,000 at any given time, even if you pay your bill in full each month. If you exceed 30 percent, it may ultimately ding your credit score potentially a much more expensive move in the long run.

Is it a bad idea to use credit cards for small purchases like coffee? Should I be discerning about what I use my cards for?
Short answer: No. As long as you pay off your monthly balance in full and keep your credit utilization rate under 30 percent, using a credit card can be a smart way to spend. There are often lots of great cash-back rewards credit cards, which allow you to get a discount on everyday purchases, such as grocery bills and gas.

How do you actually check on and ultimately redeem your credit card points for rewards, miles, etc.?

More than 41 percent of reward cardholders fail to even cash in on their rewards essentially leaving freebies on the table. To check on and redeem your rewards, log on to your credit card providers site and head to the landing page with your credit cards balance. There will likely be additional information about your rewards and how you can redeem them. This is site-specific though, so if youre still unclear how to redeem rewards after exploring the site, contact your credit card providers customer service department.

Is it easiest to call the company directly or do it online?
First, do it online. Most companies will have a live chat help feature, so even if you get stuck, you can talk to a customer service representative via instant messaging. If youre still frustrated, call the company.

Is setting up auto payments on your credit card a bad idea? (It seems convenient, but is there a risk of fraudulent charges?)
If you want to make sure to never miss a payment, auto payments can definitely help. That said, it is still critical that you verify all the charges. This is especially important given recent large-scale security breaches at major retailers, but even your everyday transactions could be incorrectly charged. This is why I recommend checking on your money daily not just when it comes time to pay your credit card bill.

How do I know if there are fraudulent charges? Will the credit card company notify me if something looks off?

Although your credit card issuer may contact you if there was either a recent security breach or if there are suspicious charges on your card, it is ultimately up to you to recognize if there are fraudulent charges. Youre probably much more likely to notice incorrect transactions say, if a restaurant changed your tip from $5 to $50, causing your bill to increase without you knowing if you check your money daily.

What do I do if there are fraudulent charges? How do I get them removed?
Contact your credit card company immediately to report the potential fraud. They will likely cancel the card and issue you a new one within a couple of days. Most credit card issuers will waive fraudulent charges, so long as they are reported within a specified period of time.

What should I do if my credit card is lost or stolen?
Immediately call your credit card issuer. Some companies will also allow you to report your card as lost or stolen online. They will typically cancel the card and waive any charges that occur after the card is reported. Under federal law, even if a credit card theft used your card prior to when it was reported, you will only be liable for up to $50 because the charges were unauthorized.

I use the iPhone app for my credit card and basically pay off whatever balance I have whenever Im bored, so more than once a month. I imagine this is good because I never carry a balance, but can you make payments too frequently?
Theres no harm in paying your bill early, but I do recommend making payments on a schedule to ensure that you remember to pay off your balances in full each month. But if you have credit card debt, work on paying off that debt as quickly as possible, since interest compounds daily, not just when your monthly bill shows up.

Is it OK to just pay the minimum monthly payment?
I always recommend that whenever possible, you pay off your balances in full. Just paying the minimum means youre racking up significant credit card debt, which is designed to snowball. I always joke that there are two things in life that are easy to gain but incredibly tough to lose weight and credit card debt. If youve been carrying a month-to-month balance, dont feel bad: A whopping 39 percent of Americans carry credit card debt month-to-month. That said, start taking action now, and pay down that debt as quickly as you can afford to.

Does asking to extend my credit limit hurt my credit score?
Although a credit limit extension may temporarily put a small dent in your credit score, in the long run, increasing your credit limit will likely improve your credit score. Nearly one-third of your credit score is based on your credit utilization rate, and if that rate drops, your credit score should increase.

Why did the credit card company set my limit? How can I change that?
Credit card issuers set your limit based on your credit score, past loan repayment history, income, and debt levels. If you had little or no credit, its likely that your credit limit will be low. Once you develop a strong credit history, you can ask to extend your credit limit.

What if the credit card company increases my limit but Im worried about spending too much? Can I ask them to decrease it? Is it a good idea?
Generally, its not a good idea to decrease your limit because it can increase your credit utilization rate. If you are worried you will spend too much, set a specific budget for yourself for each spending category.

If my identity gets stolen, what steps should I take? How does this affect my credit?
First, contact every financial institution that you have a relationship with, including the major credit reporting companies. This will put a fraud alert on both your accounts and your credit report. Next, order your credit reports from all three reporting companies to check for errors (you can do so at Because you placed a fraud alert, you are legally entitled to a free credit report from each bureau. Lastly, create an identity theft report and submit it to the Federal Trade Commission. Make sure to keep thorough records of all of your communication and reporting.

Does checking your credit rating repeatedly hurt your credit? How often should I be checking my credit rating, and how do I do that?
No, this is one of the biggest myths surrounding credit scores. It can hurt your credit score if there are hard inquiries external inquires into your credit score, since it may look like youre desperate for credit. But you can personally check your score as much as youd like at sites like We also recommend checking your credit report annually. Youre entitled to one free credit report every year from each of the three major credit bureaus, so aim to check your credit report once every four months by going to a site such as Since this is easy to forget, set calendar alerts to remember.

What are the consequences of having a credit rating that isnt excellent? For example, how good does my credit rating need to be if I want to rent an apartment? If I want to buy a car? A house? Take out an educational loan?
While there is no standard credit score minimum to qualify for a loan or credit card, having a poor credit score can have brutal long-term costs. Because credit scores can influence interest rates, extra interest will cost you as you take on numerous credit cards, car loans, and mortgages over the course of your lifetime.

Is it a good idea or bad idea to have a joint account, like with my spouse or my parents?
This is up to you and your situation. If you have a joint credit card account, both you and the other party are equally liable to repay the debt. Your credit histories will also be affected in the same way. As a rule of thumb, you should only apply for a joint credit card account if both you and the other party are reliable lenders. If you havent built credit but your parents have a great credit history, consider becoming an authorized user. You will be able to start establishing credit without the responsibility of debt.

Follow Heather on Twitter.


Repairing Credit


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3 Ways to Improve Your Credit Score in Less Than 5 Minutes

If you are looking to buy a car, rent an apartment or take out a loan, you need to make sure that your credit score is at its best. While it takes seven years for most derogatory items on your credit report to be removed, there are a few things you can do to raise your credit score sooner.

Pay off your credit card balance

This is the easiest way to improve your credit score quickly. One of the major factors of your credit score is how you are using your credit. A big factor of that is your credit utilization ratio. This ratio compares your overall credit limit with the amount of credit you are currently using. Say you have an overall $10,000 credit limit and are carrying a balance of $5,000 total across your credit cards, then your credit utilization ratio would be 50 percent. Most credit experts advice to keep your credit utilization ratio below 30 percent, but if you can get it to zero, it will help dramatically raise your credit score.

If you cant pay off your entire balance, even paying off a little can help. The lower your credit utilization ratio, the more available credit you have and the better you look to outside lenders. Even paying of 10 or 20 percent of your overall balance can help.

Get a new credit card

Taking out more credit may seem counter-intuitive, but adding to your overall credit limit will raise your credit utilization ratio. Here are the two ways that getting a new credit card can help raise your credit score:

Increase your credit limit: A new credit card will increase your overall credit limit, which in turn lowers your credit utilization ratio. The more credit that lenders approve you for, the more trustworthy you seem to other lenders. As a bonus, look for a credit card that has some great perks like cash back incentives, so you can earn money while you use it. Here is a good list of the best cards with great perks.

Transfer your balance: If you are carrying a balance on your credit cards, you can kill two birds with one stone. If you transfer your balance to a new balance transfer credit card, you can increase your overall credit limit while also being able to pay down your credit card balance. Even better, find a credit card that offers a 0% intro APR for up to 14 months so you will have time to pay down your balance without being charged extra interest on it. These are some good all-around credit cards with a 0% intro APR for balance transfers.

Fix errors on your credit report

If you have errors on your credit report, fixing them is an easy way to raise your credit score. Errors can include a credit lender reporting false late payments, accounts that reportedly went to collections even though you paid, or even accounts opened in your name without your knowledge.

First, you need to pull your credit report see if you have any errors. The government allows each person one free credit report each year from each of the three credit bureaus (Equifax, TransUnion and Experian). You can get these reports from Look over each credit report for any errors. Each credit bureaus website includes instructions on how to file the paperwork to get an error fixed.

If you dont want to go through the effort of fixing errors yourself, you can also hire a credit repair company to send fix requests on your behalf. Keep in mind that credit repair companies might try to convince you to try other ways to fix your credit, but you are paying by the month, so make sure they are focusing on your errors. Here are the two best credit repair companies compared side by side.


Repairing Credit


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Man guilty in credit repair scam to be sentenced

SAN DIEGO – A man accused of running an elaborate credit repair scam will be sentenced Thursday in a San Diego courtroom.

Prosecutors charged Khaled Helmy with 45 felony counts related to his business, United Credit Partners. The charges range from grand theft to forgery.

The deputy district attorney on the case said when he was out on bail, Helmy committed more crimes, including charging clients#39; credit cards without their permission.

Helmy eventually pleaded guilty to all charges, but none of that brings closure to one of his victims.

I have no interest in him serving jail time. I don#39;t care what he does. I just want my money back, the victim told Team 10.

He did not want to be named, but the man said he signed a contract with Helmy and gave him $2,500.

He seemed very knowledgeable about what he was doing, the man said. He talked a good game.

The victim said Helmy provided him with settlement letters that looked legit.

Turns out, he said all of it was forged. He hired an attorney, hoping to get his money back.

When I first approached Khaled, I let him know that I knew what he was doing. I gave him the opportunity to settle this matter outside of court and he essentially laughed at me. I don#39;t know if he thought he was smarter than he was, said attorney Jason Carr.

Helmy#39;s attorney, Brian Watkins, said Helmy was overzealous in trying to represent his clients, but hopes the judge will make the right decision during his sentencing hearing.

Helmy#39;s criminal case names six victims, but the prosecutor said there are potentially hundreds of victims because of all the forged documents.

He faces up to three years and four months in prison.


Establishing Credit


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Being Thrifty Hurt My Credit Score (and Could Hurt Yours)

Derek Askill/Alamy

In the last year, my credit score dropped by more than 30 points. And somehow, it happened because I left my credit cards at home.

Most tales of ruined credit ratings are ones of excess and irresponsible spending — spending up to your limit, making only the minimum payment, opening new accounts to handle all the excess spending, and so on. Before you know it, youre buried in debt, and your score is in the toilet.

But I hadnt done any of that. Id always considered myself the model of responsible credit usage, paying my bills on time and using less than 10 percent of my available credit. So I was shocked when I logged into CreditKarma (which offers free credit scores and reports from TransUnion) and found that my score had fallen.

Unused Accounts Had Been Closed

It didnt take long to find the culprit. Two store credit cards had been closed in the last few months. It had been years since Id used either, and the issuing banks apparently realized I wasnt planning on using the cards again anytime soon.

[Card issuers] have models that predict who has any sort of chance of coming back, explains CreditKarma CEO Ken Lin. You usually have at least a year, and if youre inactive one to three years, you run the risk of being deactivated.

For the issuing bank, its a simple cost/benefit analysis. If you never use your card, theres no chance of the bank getting its primary revenue streams of swipe fees and interest on balances. And there are liabilities involved in keeping your account open: In addition to the cost of sending you new cards and statements, theres also the risk that your card will be lost or stolen, leaving the bank liable for fraudulent charges

Credit card issuers are more focused and cognizant of the risk and revenue generated by their borrowers, explains John Ulzheimer, president of consumer education for The days of forgetting about you and hoping you use your card sometime down the road are gone. … If your card collects dust for more than 12 months, youre almost forcing a card issuer to do something.

Utilization Is a Key Factor

Unfortunately for me, closing those two accounts had a serious negative effect on my credit score. As weve noted in the past, closing a credit card account is almost never a good idea. Much of your credit score is determined by your utilization — the percentage of your total available credit you actually use in a given month. Close an account, and you suddenly have less credit available; unless you adjust your spending downward, your utilization goes up, and the bank considers you more of a credit risk.

It also didnt help that one of the accounts had been opened in 2009, making it one of the older credit accounts in my relatively young credit history. And since the age of your credit history and the average age of your credit accounts are key factors in determining your score, closing it was a double whammy.

Build a Strong Credit History

People love to obsess about [credit] inquiries, but history is worth 50 percent more, notes Ulzheimer.

Given that, its important to start establishing credit early. Lin recommends getting your first credit card as young as possible, and going with one you can see yourself using regularly for years to come — ideally a general usage card with low or no annual fees. And even if you wind up adding better credit cards to your wallet, make sure you dont let the old standbys go unused for too long.

If your card collects dust for more than 12 months, youre almost forcing a card issuer to do something, says Ulzheimer. Buy a pair of socks.

Matt Brownell covers retail and personal finance for DailyFinance. You can follow him on Twitter at @Brownellorama.


Repairing Credit


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Feds call for shutdown of bogus debt relief and credit repair scheme

copy; John Takai –

The Federal Trade Commission (FTC) wants a federal court to drop the hammer on a debt relief scam that claims to have the endorsement of President Obama .

According to the FTC, two websites promoting what is called the Bill Payment Government Assistance Program, are full of misrepresentations about the fake program.

The sites claim the program was governed by the Recovery Accountability and Transparency Board, a government agency formed to oversee projects funded by the American Recovery and Reinvestment Act of 2009.

In addition, YouTube videos created by the scams operators included a purported personal endorsement from the president with an audio recording of him saying, I approve this message.

Via YouTube

Cleaning up your credit

The FTCs complaint alleges that the defendants purported to offer up to $75,000 in debt relief to consumers, along with promises that consumers credit scores would increase within 30 days.

Consumers contacting the scammers, according to the complaint, were told that in exchange for an advance service charge of $900 to $1,100, the defendants would pay off the consumers debts.

According to the complaint, scammers would ask consumers for details of their outstanding debt, including account numbers, and then arrange bogus electronic payments that gave consumers the impression their debts were in fact being paid.

The scammers would then tell consumers to pay the service charge, typically through money transfer services such as Western Union or MoneyGram. Once consumers paid the charge, the scammers would then reverse the payments made to consumers bills, leaving consumers without the promised debt relief or improvements to their credit scores or limits.

The unnamed defendants are charged with two counts of violating the FTC Acts prohibition on deceptive acts or practices, as well as two counts of violating the Credit Repair Organizations Acts prohibitions on collecting advance fees before providing credit repair services and making untrue or misleading representations about their services.

The complaint asks the court to take steps to halt the scam immediately, as well as for a permanent order stopping the defendants activities and requiring them to give up their ill-gotten gains.


Credit Ratings


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Why credit ratings agencies don’t make the grade

Lowy Interpreter

Foreign investors learn about the Australian economy from a variety of sources, but the credit rating agencies have a special place, as many investment managers are committed to following the rating agencies assessments. Credit agency ratings are also used in prudential supervision. This gives special importance to Standard and Poors latest pronouncements, reaffirming Australias AAA rating.

The Samp;P press release begins by noting the countrys strong public policy settings, economic resilience, and significant fiscal and monetary policy flexibility as well as its strong ability to absorb large economic and financial shocks, as was demonstrated during the global recession in 2009.

So far, so good. Then come the caveats:

Australias high external imbalances, dependence on commodity exports, and high household debt moderate these strengths…In our opinion, while Australia benefits from many fundamental strengths, its key credit weakness is the economys high level of external liabilities. The banking system in particular has a high degree of external indebtedness and remains highly reliant on the ongoing backing of foreign investors…Meanwhile, Australia continues to run significant current account deficits…

Pressing the panic button? Not really. This is just having two bob each way, as Samp;P goes on to say:

In our opinion, however, the risks associated with Australias highprivate-sector external debt are manageable because of the strength of the countrys financial system, the high degree of foreign currency debt hedging, and an actively traded currency that historically has allowed external imbalances to adjust. Additionally, Australias highly credible monetary policy framework remains able to help counter the impact of any economic shocks.

So were OK after all? Not so fast.

Just in case youre getting lulled into complacency, Samp;P concludes with some warnings and a line-in-the-sand threat:

We could lower the ratings if external imbalances were to grow significantly more than we currently expect, either because the terms of trade deteriorates quickly and markedly, or the banking sectors cost of external funding increases sharply. Such an external shock could lead to a protracted deterioration in the fiscal balance and the public debt burden. It could also lead us to reassess Australias contingent fiscal risks from its financial sector. We could also lower the ratings if significantly weaker than expected budget performance leads to net general government debt rising above 30 per cent of GDP.

What would a country have to do to get a clean bill of health? Australias banks are no longer obtaining new funding flows from overseas, andtheir outstanding balances are smaller than in 2008(see graph below). Sure, the AAA government guarantee helped them to come through the crisis smoothly but the same thing could be provided again, if needed. The financial system was given the ultimate stress test in 2008 and came though well, unlike many countries. As for the warning on external imbalances, since 2008 the current account deficit is significantly smaller, as is theexternal income deficit.

Source:Reserve Bank of Australia.

What about the line in the sand on net government debt?

With the current level at just over 20 per cent of GDP, it would indeed be a major slippage if we were to find ourselves over 30 per cent, so for Samp;P to finish its press release with this hypothetical outlier is drawing a long bow. Its drama-queen stuff, but it has been picked upby the press, always happy to spotlight an impending disaster, no matter how unlikely.

Lets also put the current level (and even the 30 per cent line in the sand) in perspective. Here are the equivalent IMF figures for the G7 countries:

Source:IMF Global Stability Report, Table

Remarkably, some of the key actors responsible for the 2008 financial debacle have managed to restore their reputations, and no rehabilitation is more remarkable than that of the Teflon-coated credit rating agencies. Leading up to 2008, they handed out AAA ratings toworthless mortgage securitisations(but of course these were a different sort of AAA rating: the debt issuers simply paid for it).

Nor were the country ratings much better: Samp;Ps investment-grade endorsements of bankrupt Greecesurvived well into 2010. The role of the credit rating agencies was undercritical reviewwell before the 2008 crisis but no satisfactory answer has yet been found for theirundue influenceand they arestill accorded a rolein the Basel prudential supervision arrangements.

Could it be that Samp;P is peeved because it recentlylost its reputation-damningcourt case in Australia? Its little wonder that analysis of the sort produced by Samp;P for Australiaevokes a derisive response. Cant they do better?

This piece was originally published at the Lowy Interpreter. Reproduced with permission.


Debt Settlement


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6 On Your Side Answers: Are debt settlement services a good choi

6 On Your Side Consumer Investigator

KNOXVILLE (WATE) – Since most people carry several different credit cards with them, its easy to overspend when you are not handing over cash. As a result, many people find themselves in debt.

Yolanda in Knoxville writes: Tell me about these debt settlement services I see advertised. Are they a good choice?

You hear and see commercials on radio and TV from debt settlement companies wanting to help you dig out of debt.

While they may sound appealing, some for-profit companies may leave you worse off than when you started down your path toward being debt free.

New research from the center for responsible lending finds that people who sign up with for-profit settlement companies find their debt grows about 20 percent on average with no guarantee that a settlement will be reached.

Remember those credit card data breaches late last year? You would think with the number of cards exposed, people would want to throw away their cards. That is not so.

So far this year, those of us in America continue to move to electronic payments.

A debt issuer study shows there are now an average of 20.1 electronic transactions per month, up from 19.4 transactions per month at this time last year.

If you are tired of carrying a bunch of credit cards with you, Loop Pay enables you to use your iPhone to make mobile payments without carrying your credit cards.

The Loop charge case, which fits the iPhone 5 and 5S, lets you make mobile payments at any point of sale terminal that you would ordinarily swipe a card.

No magnetic strip is involved. Instead, the loop case transmits a magnetic field that emulates the data embedded in your cards magnetic strip.

All you do is hold the phone close to the strip reader and activate the transaction.

You can see Don Dares 6 On Your Side Answers every Tuesday and Thursday on 6 News at 4:00.

If you have a question you can send Don an email at or call his 6 On Your Side hotline at (865) 633-5974.