Foreclosure Moratoriums Still in Effect

Many homeowners facing foreclosure have been in limbo now for several months - being assured by their mortgage companies that work-out options were in the offing and that they shouldn't worry.

Some, who had missed so many payments that their mortgage companies rejected payments they attempted to make, were told to keep putting that mortgage money in the bank. The idea was to have funds available when options for keeping their homes were announced.

Now, less than 3 weeks before the foreclosure moratoriums were set to end, those consumers still don't know what solutions might be available to them, or whether they will qualify for the programs. Right now the end date is set for March 13, but that could be extended if mortgage lenders are still unsure of the details of President Obama's home loan relief plan.

In fact, Bank of America announced recently that it will not engage in any foreclosure sales until the details of the Homeowner Affordability and Stability Plan are released.

Bank of America officials stressed their desire to use any and all tools available to help borrowers with sufficient income and the desire to keep their homes.

Wells Fargo, Countrywide, and subsidiaries of Merrill Lynch have also extended their moratoriums on foreclosure, pending details of the plan.

An announcement by Obama last week indicated that a large part of his plan is aimed at homeowners who are in default or at risk of default.

While he stressed that the measure is not intended to bail out borrowers who have acted irresponsibly, he said that those who meet eligibility requirements could see a drop in monthly payments. It is possible that through a home-loan modification, up to 4 million borrowers could qualify to have their monthly payments lowered to 31% of their pre-tax income.

This reduction will likely come via a reduction in interest rates, with the Federal Government making up the difference between the mortgage lender's stated rates and the rate the homeowner is able to pay.

In another part of the plan, homeowners whose mortgage loans are guaranteed by Fannie Mae or Freddie Mac may be able to refinance at a lower rate. Any loan up to 105% of the home's current value will be eligible - not as a cash-out refinance, but as a refinance of a home that has lost value in today's housing market.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Immediate Effects of Stimulus for Citizens

Everyone is wondering what effect the American Recovery and Reinvestment Act of 2009 - otherwise known as the stimulus package - will have on their own lives.

We've heard that some folks on social security and/or disability will receive checks for $250 each - but haven't heard when that will happen, or exactly who will be eligible.

We also heard that "everyone" will get a $400 tax credit - whether they owe any tax or not. Now we've found a few more details. "Everyone" only refers to those taxpayers earning under $75,000 per year - or couples earning under $150,000. Those earning more may get a small credit.

Most expected that this would show up as a tax credit at year end, but now the plan is to put it into paychecks throughout the year. New tax tables will be mailed to millions of employers in mid-March, resulting in about $13 per week more in eligible workers' take-home pay.

Self-employed individuals who pay quarterly estimates are reminded to take the credit into consideration when depositing their taxes.

Other breaks apply to those citizens who have good credit and some money in the bank.

For instance, $2.3 billion is earmarked for encouraging you to buy a new car. If you buy a new domestic or foreign car by December 31, and pay $49,500 or less for that car, you can deduct the sales tax you paid at the time of purchase.

That is, you can if your earnings are $125,000 or less ($250,000 for couples.)

This deduction will be "above the line," which means you can take it even if you don't itemize deductions. If you purchased a $40,000 vehicle and paid 6% sales tax, your deduction would be $2,400. But remember, this is a deduction, not a credit. It reduces your taxable income, so the actual savings will be dependent upon your tax bracket.

U.S. car sales were down 37% in January compared to January 2007, and lawmakers are hoping this extra incentive will push consumers to new car lots.

This deduction might not be enough to convince you to buy a new car in this troubled economy, but car manufacturers are doing their part to convince you as well. As long as your credit is good, you can get extremely low interest - especially if you choose one of their less popular models.

If this does get you dreaming of a new car, be sure to check your credit scores before you go out to shop. If they're a bit low, work on improving them before you buy. (You do have until the end of the year, remember.) Your credit scores can and will make the difference between paying a lot and paying a little when it comes to interest.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

The Credit Cardholders Bill of Rights

Representative Carolyn Maloney (D-N.Y.) has been fighting for credit card holders rights since she first introduced the Credit Cardholder's Bill of rights Act of 2008 to the House of Representatives.

In September, the bill passed the House with an overwhelming vote of 312 to 112, but then died in the Senate. She felt that while Senators recognized the need, other issues in the larger economy took attention from this legislation.

Then in December, regulators, including the Federal Reserve, passed rules to crack down on credit issuer abuses and strengthen consumer rights. As we've all heard, these new rules aren't set to go into effect until July 2010.

That's not good enough for Representative Maloney, so she introduced a revamped Bill to the House on January 15. Along with further strengthening consumers' rights, her bill would speed implementation of the rules. If passed, the Bill would go into effect 90 days later.

When asked why legislation was needed when regulators have already agreed to impose rules, Representative Maloney noted that regulation does not carry the force of law that legislation does. It is too easy to change regulation, whereas changing legislation is more difficult.

In addition, consumer groups are concerned that the time delay granted with the regulations will be harmful to consumers. It gives credit card issuers time to re-vamp their policies and impose both higher interest rates and higher fees, while they reduce credit limits on even their most reliable customers.

We've been reading about some of the new rules - the requirement that card issuers must notify cardholders 45 days in advance before raising interest rates, ending the practice of double-billing, preventing interest rate increases on current balances, and ensuring that cardholders receive credit card statements well in advance of due dates.

In addition, Representative Maloney's bill would prevent card issuers from granting cards to people under 18 years of age, and would allow consumers to set hard caps on their credit limits to prevent accidental over limit charges.

While credit card issuers defend their actions by pointing to the worsening economy and the high rate of credit card default, there are those who believe they are partially to blame for that high rate of default.

When a card holder has been making payments regularly and carrying a cushion of unused credit, he wasn't likely to default. But when he suddenly opens a statement to find an overdraft charge because his interest rate has doubled and his credit limit lowered without his prior knowledge, his attitude and dedication to making those payments begins to change. If he's unable to meet the new minimum payment due to the high interest rate, it deteriorates even faster.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Unfair Use of Credit Data May End - in Florida

You know that one reason why you need to keep your credit scores high is to keep your insurance premiums low. Companies that issue insurance on your home and your car have been using low credit scores as an excuse to raise your premiums - or to completely deny you access to insurance.

Even long-term customers may find their rates skyrocketing as a result of financial difficulties that have affected their credit scores.

In Florida, at least, this practice may soon come to an end. Consumer advocates say a person's credit has nothing to do with his or her driving abilities, and that insurers should only be able to use a person's driving record in determining automobile insurance rates.

Insurers, including Allstate, Geico, Progressive, Nationwide, and State Farm, testified in hearings last week - saying that credit information does help them determine a customer's risk.

They compared use of credit data for car insurance to use of health data for medical or life insurance. If a person smokes, they're at a greater risk for ill health, so in their eyes, it seems to follow that if a person has poor credit, they're at a greater risk for an automobile accident. So their belief is that in spite of having no tickets and no accidents, a low credit score makes a person a higher risk for an accident claim.

Although not stated in the report, perhaps the real issue is that insurers feel that consumers with poor credit are a greater risk for insurance fraud. If that is the case, they should present the statistics to back the belief.

Some consumer advocates believe that there is yet another hidden agenda: Thinking that use of credit rating data enables insurance companies to discriminate against certain groups - by either charging them excessive rates or denying insurance altogether.

If Florida changes this law, it will be a step forward for consumers. But there's a long way to go before all states adopt similar rules. That means it is still in every consumer's best interests to keep their credit scores in the high ranges.

The first step is to check your own credit report, with scores, and see how you stand. Almost everyone can find some room for improvement, so begin making adjustments to your spending and bill-paying habits in an effort to raise the score.

Be sure to also check your report for errors - even credit bureau representatives say that 25% of all credit reports have at least one mistake. Fixing those could give your score an immediate boost.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Obama’s new Housing Plan, will it work ?

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Obama announced a rescue plan for homeowners that are in trouble with there current mortgage payments. This new mortgage policy is a multi-faucet of policies to help out struggling home owners. Some of the key components include refinancing mortgages that are upside down, restructuring delinquent loans, and delivering money to federal housing agencies to keep mortgage rates low.

With this new plan a estimated 4 to 5 million homeowners will be help in some for or fashion. Obama says this new policy will also provide a opportunity for sub-prime loans that are underwater or the amount owed is more than the house is worth to be part of the plan as well. Often the homeowners that are in loans like these are subject to a maze of rules and regulations as opposed to resolutions “says Obama.”

This type of policy will help out 12% of the crumbling real estate sector. This policy will subsidized some of the cost through the government so mortgage companies can help out homeowners in trouble.

The new rescue plan will not help out homeowners that were investors looking to flip homes for profit, nor will it help those who bought homes they cannot afford.

Refinancing for people that got in trouble with there mortgage because of ARM loans, declining value or job loss was almost impossible for them to obtain. Since all loans are based on risk this sounds like a possible solution for 4 to 5 Million Homeowners.

Being a lender this has been a mess, especially when you get a call from a past homeowner wanting help. There has not been a whole lot lenders could do since bad credit paper was not sellable on the secondary market.

Maybe with this new mortgage rescue bill lenders will in a sense allow the government to take on the high risk of bad paper loans, especially since the Federal Government is buying up Freddie and Fannie back loans.

In the end, we as tax payers will foot the bill. There also is no guarantee that this will work either.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Beware of credit score quick fixes.

During challenging times like now, it can feel very frustrating when your debts have gone to collection due to job loss, or even the company you are working for files for bankruptcy. What ever your situation is there is no quick resolution to repairing your credit report. Lots of credit repair companies will sell you on quick fixes, but depending on how bad your credit report is littered with collections and how much money you have to work with, will determine how long the process will take. Don’t get trapped into quick credit repair schemes. There is no such thing. I assure you of that. I wanted to discuss the process in this article about how to repair you credit and the FACTS about the process.

Here are the proper steps………..

Step 1: Credit Education
The first step is to be aware of what will destroy your credit while you are trying to repair your credit. Collections and late payments are the ultimate death of good credit scores. If you are in the process of trying to figure out how to fix your credit, that would be a good start. Make sure you don’t have any late payments ever, and definitely make sure nothing goes to collection. It does no good to work on your credit if you continue to have obligations go to collections and / or late payments on stuff. This is the first step before you start any type of credit repair.

Step 2: Pull your credit report
Don’t be scared; pull a recent copy of your credit report to determine what you need to work on. Pulling your own credit report does not hurt your credit scores.

Step 3: Review your credit report
Determine what is accurate and inaccurate. If you find stuff on your credit report that is not yours, dispute it with CreditScoreQuick.com’s on-line dispute process. These are links that take you to each credit bureau so you can dispute inaccurate information.

Step 4: Negotiate collection accounts
After you have determined what collection accounts you have acquired, you will need to figure out what your budget is to pay off these collections. Most collection companies will take pennies on the dollar for debts owed. Phone numbers for these creditors will be on your credit report somewhere. You will need to look for the collection company’s number. The number is usually on towards the back of your report.
For example: If your credit report says you owed $300.00 to so and so collection company, you will offer them $150.00 dollars to settle. You may offer less, depending on what your budget is. You need to start with the most recent collections and the smallest collections on your report. Once you come to a agreement with a collection company whether its payment arrangements or settlement, make sure you follow through on the agreement.

Step 5: Get letters from Collection Company of agreement terms
Once you have paid a collection, the collection company is suppose to mail you a letter stating what you did, and report that to the credit bureaus. Make sure you get these letters from these collection companies. Put those letters in your file cabinet and remember where they are. You may need them if the credit bureaus don’t update properly. That is your proof to cover yourself.

Step 6: Re-Establish your credit
In order for your credit report to score you, your credit report needs credit reporting on that report. If all your obligations went to collection, you will need to re-establish credit. The quickest way to establish credit is to apply for a secured credit card. These types of cards usually require a deposit from you in the amount of $200.00 to $300.00 in an account of the banks choice. The terms and fees are usually not good, but it is what it will take to re-establish your credit. Make sure you are not late on any payments, and pay off the card as soon as possible, even though it was your money that secured the card. Ideally you need a couple of these cards, so get two. While you have this card, charge small purchases on these cards, and pay it in full every month. With good payment history these credit card companies will extend credit to you over time. You will need at least 3 lines of credit on your credit report. Get a couple of secured credit cards, and if you don’t have a third, apply for a small personal loan that reports to all 3 credit bureaus.

Step 7: Re-check your credit report
After you have paid off collections and/ or re-established your credit, pull a copy of your credit report to see the progress. This is not a quick process and can take up to a year or so. The timeline depends on how much negative information is on your credit report. Don’t get frustrated, this process that I have discussed will work. Eventually your credit report and credit scores will progress depending on how quick you pay off your obligations and re-establish new credit. If you see inaccuracies on your credit report, especially for those obligations you have paid, use our “Fix credit report errors” article.


Good luck.


CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Old Collections being Sold ? Q & A

Credit Questions & Answers:

Q:

I have been reviewing your site and I am interested in improving my credit. Your site is very informative and discredits the misconceptions of deleting debts. I have a better understanding and would like to repair what is inaccurate and old. I would like to do settlement offers for what is accurate. I do not know what to do when old debt continues to transfer from company to company. What can I do?

A:

Hi Tamika,

In regards to the collections being sold, I would recommend pulling a recent copy of your credit report, and call the recent collection that is being reported. It will show recent reported date, and that is the collection company you call to negotiate for pennies on the dollar.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

My credit is BAD because of STUFF.

You know, there is a reason that GOD said be content with what you have. Why is it that we cannot do so? You look at your neighbors new BMW or your best friends new set of golf clubs and in your mind you think that you need the same STUFF or maybe better.

I think Americans that are very materialistic need to go to other countries that are less fortunate for a period of time.

You look everywhere and your reputation is based on how much money you have, not how well you live your life. People all over America are drawn to the rich and envy what the rich have.

There is a verse in the bible that says "For what does it profit a man to gain the whole world, and forfeit his soul? I personally know there is a reason for these types of instructions, because GREED leads to sin.

If you look at the current situation of our country, you might wonder if anyone has read any of these little instructions for life. Surely we are not in the situation we are in because of GREED and people wanting more and more STUFF.

I have always preached that everything that goes on around YOU is a direct result of your actions. Hmmmmm…., “go figure.” When we as people make decisions we need to make good decisions, not impulsive decisions.

Its not the STUFF that makes our character, but the manner in which we live our lives. This is the lesson that needs to be taught to everyone. You cannot watch TV without TV trying to sell you on Glamour, and more STUFF.

When you find yourself in over your head because you charged and charged, because you thought you needed more and more. Are you really happy now that you have all this STUFF??

Maybe you lost your job, and you cannot pay for all this STUFF that you aquired on 0% interest credit, or whatever your case is. Maybe because of your choices due to trying to keep up with the Jones, your credit is shot now.

STUFF, STUFF, and more STUFF, its really not yours anyways. Nothing in this life is ours.

The moral to this article is STUFF will ruin you, and your credit. Be content with what you have.


CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Real Estate as a Wise Long-term Investment – if Your Credit Scores are High

Investors with high FICO scores and a little money in the bank are right now living in the land of opportunity.

With prices in many areas plummeting, good homes can be purchased for pennies on the dollar. Add the Fed's decision to keep interest rates at an all-time low, and investors willing to stay in for the long haul can expect high profits in years to come.

Not everyone has the personality to deal with investment real estate – it involves hard work and persistence, and a good dose of patience when dealing with tenants who don't always uphold their end of agreements.

But consider the rewards, as compared to an investment in the stock market.

With $50,000 you can buy $50,000 worth of stocks – or use the magic of leveraging to buy a $200,000 home. Assuming that both appreciate at 5% per year for the next 30 years, the stock will have grown to $197,000. That's not bad. But look what the house will have done...

Appreciation will have affected the entire $200,000 – not just your $50,000 investment, so your house is now valued at $784,000. In the meantime, your tenant has been furnishing the money for payments, and hopefully, a bit of cash flow on top of it.

AND - you've been able to depreciate the house, which has lowered your tax on other income.

Even more impressive – at the end of the 30 years the only way you'll see a cash return from your stocks is to sell them, but your now "paid for" house can keep right on giving you rental income every month. And, since rents are tied to value, those rental payments will be 3 or 4 times higher than they were when you first purchased the house.

On the other side of the coin, investors need to remember that real estate is not a liquid investment. While they could sell their stocks in a day if need be, a house may take many months to turn into cash.

Also, as we see in this housing crisis, real estate has its up and down cycles. That makes it an investment for the long haul, even though some ambitious entrepreneurs do have the ability to "fix and flip" houses when the market is right.

Experts say that money is made in real estate at the purchase – not the sale. That means finding the best bargains on the most problem-free homes and not buying a house just because you fell in love with it. Smart investors are extremely knowledgeable about construction issues and know the red flags that say "stay away" from some houses.

Investors who are persistent and patient in hunting for bargains can find properties that offer a large cash flow – and in those cases can escape the day-to-day management by hiring a rental manager. This is often the best choice for investors who own large portfolios of homes, especially when they are located over a large geographic area.

The first key to becoming a profitable real estate investor is to have the credit scores to qualify for low interest loans. Without that, all the real estate knowledge in the world won't get you a bargain. So check your credit scores today, and push them to the top before approaching a bank or mortgage lender for your first purchase of investment real estate.


CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Veterans Administration to Pay $20 million for Security Breach

The Veterans Administration security breach in 2006 is a graphic example of how your most personal data can easily get into the hands of identity thieves.

Although taking data home was against the rules, a data analyst did just that – and when his suburban home was burglarized in May 2006, the thieves took both his laptop and the external hard drive containing names, birth dates, and Social Security numbers of every Veteran who had been discharged after 1975 - up to 26.5 million veterans.

The laptop was eventually recovered and VA spokesman Phil Budahn was quoted as saying "...there is no evidence that the information involved in this incident was used to harm a single veteran."

No one knows if the thieves had any idea about what was on that computer or if they copied data while it was in their possession.

Veterans were informed of the security breach in late May - about 3 weeks after it occurred - and the following month five veterans groups filed a class action lawsuit on behalf of all veterans. The lawsuit asked for $1,000 in damages for every veteran whose information was compromised in the theft.

Now, after nearly 3 years, the parties have come to an agreement that leaves most veterans out of the settlement. Veterans who can show proof of actual harm, such as emotional distress leading to physical symptoms, or expenses for credit monitoring, will be eligible to receive payments up to $1,500.

Once the settlement is approved by a U.S. District Judge, the terms will become final. Then notices will be published in magazines and newspapers across the country, giving veterans a toll-free number for information on filing a claim. Any funds remaining from the $20 million after payment to those veterans will be donated to veterans' charities.

The VA, of course, is not the only entity to lose personal records. In a June 2006 news article, the Privacy Rights Clearinghouse estimated that in the previous 16 months, 170 data breaches had occurred – exposing more than 80 million Americans to potential identity theft.

The VA itself had a second security breach in 2006. Again, a missing computer was the cause. Unisys, a subcontractor providing software support to the Pittsburgh and Philadelphia VA Medical Centers, reported the loss on August 3. This time insurance data for 16,000 living veterans and about 2,000 deceased veterans was compromised.

Again, VA spokesmen stated that there was no evidence of the information being used to harm any veteran. All veterans affected were notified, however.

These occurrences are often the result of stolen laptop computers – computers which should be left at the office but are taken home instead.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Bank Bailout Hasn't Helped Consumers

When the government decided to hand $700 billion to the banks under the Troubled Asset Relief Program, the expectation was that banks would start lending again – and stimulate the economy.

But that hasn't happened, and since the money was handed over with "no strings attached" there isn't anything to say they must.

As private citizens and government officials debate over how much control the government should have over bank's operations – and whether there should have been strings attached - banks are cutting back on lending. Credit lines are being reduced or cancelled, credit card accounts are being closed, and the requirements for getting a loan are becoming tougher.

Of the top 13 largest banks who received a cash injection, 10 reported a drop in lending of 1.4% during the 4^th quarter of 2008. Reports are not yet in for the others.

Former Federal Reserve vice-chairman Alan S. Blinder told Bloomberg that financial institutions are "just sitting on the capital" as a way to appear strong to investors. He added that since the money came from the public purse, the public should get something in return – but we are not.

Some experts believe that banks are holding on to this money because they anticipate more defaults in the coming months – on everything from credit cards to home loans. Credit card charge-offs have already risen by 31% and experts predict as many as 8 million foreclosures over the next four years.

Thus, instead of making new loans, banks are using TARP funds to shore up their balance sheets and protect against future losses.

In a Wall Street Journal interview, Duke University finance professor Campbell Harvey summed up what many Americans are thinking with regard to TARP and the bank bailout: "It has failed. Basically we have dropped a huge amount of money... and we have nothing to show for what we actually wanted to happen."

The bottom line for consumers is this: If you plan to borrow money at any time in the near future, do all in your power to pay down current debt, put money in the bank, and raise your credit scores as high as they'll go.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Social Lending an Alternative to Credit Cards

For years, credit card issuers aggressively pursued new borrowers and urged old borrowers to charge more. Mailboxes across the country were filled with new offers, introductory rates, and rewards for getting those cards out of wallets and into use.

Each issuer tried to outdo the other with promises of low rates on balance transfers and ever higher credit limits. Then, the financial crisis reared its ugly head and those card issuers began to face larger and larger losses.

The past few months have seen major credit card issuers pull back on new credit cards, lower credit limits, raise interest rates, and close accounts – even for their most creditworthy borrowers.

Now a new breed of lender is offering to step in where credit card companies fear to tread. This new breed is called the Social Lender. This is peer-to-peer lending, where the lender often has a choice over who will use his or her money.

Lenders working through Kiva.org, for instance, might choose to lend $500 to a start up entrepreneur for the purchase of equipment. Since 2005, Kiva members have lent more than $58 million to more than 83,000 entrepreneurs. In years past, most were in developing countries, but now Kiva also lends in the U.S.

Pertuity Direct is the newest entrant in social lending. Investors place their funds in a mutual fund operated by National Retail bank. Borrowers seeking to use those funds apply through the website for a fixed-rate, fixed-payment loan – generally payable within 1 to 3 years. The minimum credit score required is 660 and interest rates are as low as 9.6%. Approval is almost instant, and money can be in the borrowers' hands within 1 or 2 days.

Some social lending sites will accept lenders who wish to invest a mere $20 – giving almost anyone the opportunity to invest.

Some social lending is directly modeled after sites such as Facebook and eBay. Prosper, for example, lists loan requests ranging from debt consolidation to moving expenses. Lenders can then choose which loans they'd like to fund, and bid on those loans at interest rates and terms they’re willing to accept.

Lending Club gets even closer to the social networking model - allowing its borrowers to find potential lenders based on their location, their “network” or their “friend” status.

Social lending now also extends to student loans, which were at first excluded because of the short pay-back term. Lenders do recommend that students first apply for federal loans, and use private lenders as a fall-back option.

Several companies are participating, but the main contenders in the student loan arena are GreenNote, Zopa, and Fynanz.

GreenNote relies on the same kind of social networking as Facebook – and loans are transacted between people who are "friends."

Zopa follows a CD model and relies heavily on partnerships with credit unions.

While Fynaz does set a bare minimum FICO score for borrowers, it relies more heavily on the “Fynanz Academic Credit Score,” which rates a student's GPA, his or her course of study and the educational institution’s profile.

Online Banking Report has predicted that social lending will reach approximately $130 million this year.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and free credit repair advice.

Credit Usage is on the Decline

Revolving credit – which is almost entirely credit card debt – dropped 7.8% during the month of December after already dropping 8.5% in November. According to reports from the Fed, this was the steepest percentage drop since January 1978.

Many experts are citing the drop in consumer spending as a sign of belt-tightening and a desire to pay off debt and begin saving in the face of employment worries and/or outright job loss. Wise consumers are protecting their credit scores and their futures by cutting out unnecessary spending.

And worries over future job loss are not unfounded. The nation's unemployment rate climbed to 7.6% in January when the U.S. lost almost 600,000 jobs. Total job losses since December 2007 are more than 3 million.

This has to play a role, but two other factors naturally led to a decrease in credit card debt.

First, gasoline prices dropped. Consumers who were charging $800 per month for fuel were able to cut those charges to only $400-$500 by December.

The other reason should surprise credit card issuers the least of all. When these companies slashed credit limits and raised interest rates for millions of card holders, they could not spend more, even as they wanted to.

During the Christmas shopping season, retailers reported shoppers dividing their purchases between 2 and 3 different credit cards in order to avoid going over limit on any one card. That clearly indicates a desire to spend rather than a desire to save.

Some, of course, became angry and refused to create more debt when faced with interest rates approaching 30%.

Non-revolving debt also declined in December. That includes auto loans and student loans, along with loans for mobile homes, boats and trailers.

Auto loans seemed to lead the decline as auto lenders followed credit card issuers in a move to pull back on making loans. Average car loan interest rates were 6.4% in October and had risen to 8.4% by December. At the same time, the average length of loans fell below 60 months for the first time in years.

Some experts are predicting a spike in credit card use by March or April, due to the most recent job losses. Consumers may use savings for the first few months and then will turn to credit cards for basic living expenses such as food, utilities, and rent. However, since credit card issuers have cut spending limits, this prediction may not come true.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and free credit repair advice.

Credit card companies offering forbearance programs

What began as a housing crisis has morphed into a full-scale credit crisis – affecting every segment of society. And with about 3 million people losing their jobs over the past 13 months or so, credit card companies are realizing that they need to add "flexibility" to their list of services.

Thus, many credit card companies are offering some type of "forbearance" to cash-strapped card holders.

What is "forbearance?"

It isn't forgiveness – it is a temporary reprieve from your obligations, and it comes in different shapes. One is a postponement of six months, a year, or even longer. During this time your interest will continue to acrue, but perhaps not at the steep rate that you might be looking at when you open your credit card statement today.

Another form of forbearance offers a lower minimum payment, a reduced interest rate, and/or elimination of late fees.

What the credit card companies will offer depends upon your individual situation.

While card issuers such as Chase, Bank of America, Citi, and Discover are proactively reaching out to consumers when they first begin to fall behind, credit counselors advise consumers to contact their card issuers before the problem becomes that advanced.

Many are willing to work with card holders to arrange solutions that will allow card holders to maintain their good credit standing while assuring the card issuer of eventual repayment.

During the last quarter of 2008, Citi reports accepting about 350,000 accounts into its forbearance plan, while Bank of America modified nearly 850,000 credit card loans in 2008.

While these programs are socially responsible behavior on the part of card issuers, they are done in self-interest.

Credit card loans are unsecured, so if aggressive collection action on the part of card issuers forces a consumer into bankruptcy, the card issuer is the ultimate loser. They won't get paid at all. The debt will become a chargeoff.

According to reports, credit card chargeoffs, which stood at 5.5% during the final quarter of 2007, reached 8% during the 4th quarter of 2009 and are expected to rise to almost 9% by late 2009.

9% doesn't sound like a lot until you consider that right now, about $4.8 trillion in credit lines are open in the U.S.

No wonder credit card issuers are reaching out to card holders – trying to keep them on track with payments, even if those payments are strung out over a longer period of time.

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Identity Theft up by more than 20%

9.9 million Americans were the victim of identity theft last year. According to Javelin Strategy and Research, that's a 22% increase from the year before.

The good news is the average amount lost due to identity theft decreased even while the number of incidents increased. This is due to better detection and resolution both by businesses and consumers.

As consumers become aware of the need to check their credit reports regularly, and to enroll in programs that send alerts every time there's activity that affects those credit reports, fraudulent activity is being halted faster.

Those who don't become aware of identity theft for 6 months or more after the fraudulent activity begins end up paying far more than those who nip theft in the bud.

While many fear using internet shopping sites because of the threat of theft, it turns out that only about 11% of victims had been victimized by on-line thieves. Lost or stolen wallets, credit and debit cards, and checkbooks were the source of 43% of the incidents.

No figures were given to indicate the number of people affected due to lost data on the part of major institutions. The Veterans Administration and at least two major banking institutions have had security breaches in the past few years, with thieves gaining access to data on millions of individuals.

A growing threat to consumers is the practice of phishing. This does happen on line – with emails directing you to visit a site and verify account information. But it also happens via the telephone.

A current scam has consumers receiving phone calls informing them that they have missed jury duty – and giving them a way to get off the hook. The caller asks for personal information such as birthdate and social security number. If they already have your credit card or bank account information, this extra data ensures that they'll have clear sailing in using your identity.

To protect yourself from identity theft, first keep your wallet, purse, and checkbook secure. Don't leave these items in the car or let them out of your sight when in stores, restaurants, health clubs, etc. When you pay by credit card, don't hand it to a server to process and bring back – wait to pay until you can keep your eye on the card.

Second, don't give out any personal information over the telephone unless you called them. If your caller is legitimate, you'll be able to look up the business telephone and return the call. Don't call a number given to you over the phone, because it could also be phony.

If you get an "urgent" email telling you to visit a site and update information, don't click the link. Go to what you know to be the true website and check to see if you do have missing or outdated information.

Check your credit card agreement to ensure that you have zero liability in the event your card number is used by an unauthorized person. If not, consider getting a different credit card.

And be sure to check your credit report regularly. Then sign up for alerts that will give you instant notification of suspicious activity on your credit report.

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The $7,500 First Time Homebuyer Tax Credit – and Other Stimulus Proposals

Is the $7,500 first time homebuyer credit a good deal?

You decide. When you buy you first home between April 9, 2008 and July 1, 2009, you'll be entitled to a $7,500 tax credit on your 1040 Federal income tax form. That could help you save tax dollars this year – or next year if you're buying in the first half of '09.

Whether it's a good deal will depend upon your income now and your income as it will stand over the next few years. Because, you see, the credit has to be repaid. You'll have 15 years to do it, adding $500 to your tax bill each year.

As it stands, the credit is nothing more than an interest-free loan of 10% of your home's purchase price, up to a maximum of $7,500. Single taxpayers with incomes up to $75,000 and couples with incomes up to $150,000 are eligible. When your income rises above $95,000 ($190,000 jointly) you're no longer eligible. Those who fall between the two limits will get a reduced credit.

The advisability of taking this credit will depend upon what you're going to do with that $7,500. Using it to improve the house, spending it on an education that will result in a higher-paying job, or investing in tools, equipment, and supplies for your small business might make taking the loan a smart move.

If, however, you'll do what the government hopes you'll do to "stimulate the economy," it's not very smart. Paying for a new flat screen TV and stereo system over the next 15 years really isn't a sound investment. Neither is making a down payment on a new car, unless your old car is really on its last legs.

If you were to use it to create another job, that could stimulate the economy and be a smart move, if the job benefited your business. But, you can't hire someone for long with $7,500 – especially not after you deduct payroll taxes.

Don't make any decisions based on this quite yet, because this program is still open to change. Congress is debating twists and turns that could alter it dramatically.

For instance, they're considering doubling this credit to $15,000. Also, the new stimulus package includes a one-time credit for new buyers that won't have to be paid back as long as they keep their homes for at least 3 years.

In response to current home owners who have cried "no fair!" Congress is also considering making the credit available to all homebuyers – not just first-time buyers.

Other proposals include promotion of a 30-year 4% fixed-rate loan for both new buyers and current owners who wish to refinance - with the government picking up the tab for the difference between 4% and the loan rate offered by the lender.

While all these programs are designed to stimulate buying, they're causing some confused would-be buyers to wait.

Should they pay the rates offered now, or will they be able to get in at 4% next month? Should they go for the $7,500 tax credit now, or will there soon be a tax credit that doesn't have to be repaid – and if they buy before that's passed, will they miss out?

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Will you Owe Income Tax on Forgiven Debt?

Early last year we learned that the IRS had decided not to impose income tax on homeowners who sold their houses via a short sale.

This is a sale in which the buyer pays less than the current balance due on the house and the mortgage company "forgives" the remaining balance. In order to qualify for a short sale, homeowners must show proof that their home did not or would not sell for an amount equal to or greater than the balance due on the mortgage. Additionally, they must submit proof that they do not have enough assets to make up the shortfall.

Until recently, homeowners were required to pay income tax on the forgiven balance because the IRS treated it as income. That policy was reversed under the Mortgage Debt Relief Forgiveness Act of 2007, and applies to the sale of qualified principal residences after 2006 and before 2010.

The decision was, assumedly, in response to falling home values across the country. While short sales used to be a once-in-a-while occurrence in any given market, they are now very common. In fact some Realtors are specializing in handling nothing but short sales.

Removal of the tax imposition lifted a huge burden for homeowners who were already in financial trouble.

Now we're warned that consumers who were unable to pay their other debts in 2008 may face income tax on the amounts that were forgiven or cancelled. The tax liability may also extend to the forgiven interest and penalties as well as the forgiven principal.

As was formerly the case with forgiven mortgage debt, the IRS treats these amounts as income.

If the amount exceeds $600, the creditor is required to report the amount to the IRS and the taxpayer on a form 1099-C. This does not apply to debts wiped out in bankruptcy.

The loophole in this tax law is insolvency. If you receive a 1099-C, contact a tax professional or the IRS for instructions on how to demonstrate that insolvency. This may remove your obligation to pay tax on the forgiven balances.

If you are currently negotiating to settle a debt, or if you may do so in 2009, get tax advice before you settle. Then you can be prepared with the proper paperwork to show insolvency and avoid this tax.

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Get all 3 Credit Scores Before the February 14 Deadline!

Unless an agreement is reached between Fair Isaac and Experian before February 14, you as a consumer will no longer be able to access your Experian FICO credit score.

On January 15, Experian notified Fair Isaac of the intention to end their 6-year partnership with myFICO.com. They will continue to sell FICO scores to lenders and other businesses, but consumers will not be able to access the Experian score through myFICO.com or any other source.

Experian credit reports will still be available to consumers, but without the FICO scores.

Equifax and TransUnion will continue to make FICO scores available to consumers through myFICO.com and various on line websites, including (http://www.creditscorequick.com/ and http://www.freecreditscorequick.com/).

Given the animosity generated by an October 2006 lawsuit filed by Fair Isaac against the three credit reporting bureaus, this move is not entirely unexpected. In that lawsuit, Fair Isaac alleged that Equifax Inc., Experian Information Solutions Inc., TransUnion LLC and VantageScore Solutions, LLC had violated anti-trust laws and engaged in unfair competitive practices when they launched the VantageScore credit scoring model in March 2006.

In mid-2008 Fair Isaac Corp. agreed to dismiss Equifax Inc. as a defendant in that lawsuit, stating that Equifax Inc. had stopped the unfair practices and that the two companies were working together to release the new FICO 08 model for Equifax customers.

The new model is similar to the current model, but with enough significant differences that consumers will not be comparing "apples to apples" when looking at their FICO scores from both Equifax and TransUnion.

The outlook for consumers is not good. With America experiencing the worst economic climate since the Great Depression, consumers need more access to their credit information, not less. But unless Experian and Fair Isaac come to an agreement before February 14, consumers will be left in a state of confusion.

TransUnion will be offering FICO scores under the old model; Equifax will be providing scores using the new model; and Experian scores will be available only to lenders and other business entities.

This is the second time that Experian has threatened to terminate the partnership, so hopefully the two companies will once again be able to reach agreement and continue working together.

The problems may work out to everyone's satisfaction. But meanwhile, the best course of action is to get your 3 free credit reports - with all 3 scores - today.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and free credit repair advice.

If You Apply for one Credit Card and Get Another...

While most credit card issuers are cutting back on offers, a few are still mailing, hoping to find a few more reliable customers. And some of their offers sound too good to resist!

You might be offered introductory rates at Zero percent for a limited time – no balance transfer fee – no annual fee for a rewards card – a low rate for the life of a transferred balance.

If you use your card a lot, or if you currently have a balance on a card with high interest, you may be tempted to take them up on the offer. But first read the fine print.

It may SAY you're pre-approved in the large print, but the small print may say you'll get the offer only if you meet their requirements. This could include your income, your debt to income ratios, and your credit scores.

Be careful here. If you tell the truth on the application and they don't like your annual income, you may not only be turned down for this card, your revelation could trigger a reduction in credit lines with affiliate cards.

Chase Bank, for instance, offers a wide variety of cards – you may already have one or more. But if you fill out a new application and enter an income that's "too low" they will share the information with other Chase cards and you could pay the consequences.

Next, after you've filled out the application and asked to have a balance transferred, don't assume it's a "done deal." They could deny the transfer altogether, or transfer just a portion of the balance. And that could turn into a mess, because they might also give you a higher interest rate than the teaser letter promised. You might be going backwards!

What can you do? If they've done a transfer at an unattractive rate, call and negotiate. Try to get it back to at least the rate you were paying on the previous card.

If they denied the transfer, or if you hadn't asked for one, simply call and cancel immediately. If you do it right away, it won't reflect poorly on your credit score because neither the account nor the cancellation will have been reported.

A better plan is not to ask for the balance transfer until you have the new account. Getting a partial transfer, or getting a transfer at the wrong terms will only serve to complicate your life.
Instead of responding to an offer in the mail...

If you need or want a new card, do your research and apply for exactly the card you want. Find out what is available for a person with your credit score and your debt to income ratios. Then choose the card that's most favorable to you and make application.

Don't include a balance transfer in your application – you can do that later if you've gotten the rate and terms you wanted.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and free credit repair advice.

Deceptive Credit Card Practices May End Sooner

Credit card users were overjoyed and then deflated when, in December, Federal Regulators announced restrictions on deceptive and unfair practices used by the credit card industry.

While the new regulations addressed most of the worst practices used by card issuers, they weren't set to go into effect until July 2010. That left plenty of time for card issuers to lower the boom on current credit card users.

When the regulations were passed, credit card companies asked for time to implement the new rules, and congress complied. Now, perhaps as a result of public outcry, a bill has been introduced to congress to speed up the process. If passed by both the Senate and the House, the bill will then go to the President. New regulations would take effect 90 days after receiving the President's signature.

Among the measures covered by this legislation the bill will obligate credit providers to give customers 45 days' notice for rate increases and would prohibit them from raising rates on current balances, unless the card holder payments are more than 30 days late.

It will also end the practice known as double-billing, which has been costly for consumers who carry a balance on their cards.

Card issuers will also be required to mail statements in a timely manner – so that card holders have time to receive the bill, pay it, and mail it back by the due date. Presently, the bill may be due the day after receipt – forcing card holders into a late-payment situation.

Representative Carole Maloney, who authored the bill, said "Congress should act immediately to stop them, not force consumers to wait another year and a half before they get relief."

Meanwhile, credit card holders should watch their statements carefully – and open them the day they arrive. Check for due dates, interest rates, credit lines, and minimum payments. Don't assume that things are the same as they were on the previous statement, because until this legislation becomes law, card issuers don't have to give you fair warning.

In addition, be sure to read every correspondence from your card issuer, and if you plan to make a large purchase with your credit card, go to the website and check your available balance before leaving home. Just because you had $5,000 available on your most recent statement doesn't mean it is still available.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and free credit repair advice.

Consumers Now Making Wise Credit Decisions

While Washington is pinning its hopes for a revitalized economy on the spending habits of consumers, financial experts are advising a halt to discretionary spending, and Americans are heeding the advice.

New reports show borrowing is down and savings are up – indicating the average American's concern with being able to pay bills and maintain a good credit rating.

Many consumers are also taking advantage of free credit reports to keep a close watch on their FICO scores and to be immediately alerted to mistakes and signs of identity theft.

But there's one decision conservative borrowers are making that could hurt even while it helps. That is the decision to move outstanding credit card balances from high interest cards to lower interest cards.

Consolidating balances in that way is smart in that it puts more dollars toward paying down debt and fewer dollars toward paying interest, but it could hurt FICO scores, and that could hurt in the long run.

Under the current FICO credit scoring system, your score will be better if your debt is spread out among all your available credit – so that you use no more than 30% of the credit available on any one card. In fact, some experts say you shouldn't use more than 10%.

Even when your total debt remains the same, if it is concentrated in one card and that concentration brings your use of that card over 30%, your score will begin to fall. If you get up close to "maxing out" the card, your score will suffer even more – even if you have a zero balance on several other cards.

FICO is instituting a new scoring system this year, and this problem could be addressed, but we have read nothing to indicate that it will. So in the meantime, consider this move carefully, and take another step before you decide.

Before making any decision, contact your card issuers. Ask to have your interest and credit limits restored to their previous levels. If the first representative refuses to discuss it, hang up and call again. If you don't get results, ask to speak with a supervisor.

If you've been a good customer – always paying on time – they should be willing to work with you. If they hesitate, let them know that you'll be transferring your balance.

Your decision to consolidate will help you get out of debt faster, but it will lower your scores. So consider your plans for the coming months and decide if a temporary drop in credit scores will affect your life negatively. If not, then go for consolidation and get out of debt as fast as you can.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and free credit repair advice.

Student Credit Cards – an Odd Contradiction

While credit card companies are taking steps to reduce lending and are cutting credit limits on some of their best customers, it appears that they are still wooing students and encouraging them to create new credit card accounts.

Some states have become so alarmed over the growing debt incurred by students that they are pushing legislation to crack down on card issuers targeting students.

Texas, California, New York and Oklahoma have already passed laws restricting or regulating the marketing of credit cards on college campuses.

In Illinois, pending legislation would ban free gifts with credit card offers on college campuses and prohibit the selling of student information from colleges to credit card lenders. It would also require financial literacy education for freshmen students at schools that allow credit card marketing.

Lawmakers are concerned that aggressive and often predatory practices by credit card companies are targeting students with little financial sophistication – and plunge them into debt that will be difficult to repay.

In 2008 the U.S. Public Interest research Group completed a study at 40 college campuses. They learned that 25% of students had paid a credit card late fee, 15% had paid an over-limit fee, and 6% had already had one or more credit cards cancelled for nonpayment. This event, of course, puts a 7-year black mark on the student's credit report, making it difficult for them to obtain needed credit after graduation.

Along with offering free gifts for making application, some credit card issuers are promoting rewards cards geared specifically to youth. The rewards include travel, cash back on bookstore purchases, and merchandise rewards such as CD's, videos, and movie tickets.

While this attempt at a crackdown is taking place, lawmakers are also taking notice of the need for financial literacy among younger students. Legislation is pending in various states to require financial education in high schools. In Virginia, it has been law since 2006.

The President's Advisory council on Financial Literacy was created by President Bush in January 2008. As a result of testing conducted last year, it recommends requiring schools to teach financial education in grades K-12, and requiring college students to take a financial literacy course in order to receive federal student loans.

The Council also recommended tax incentives for employers who teach workers about money management, creation of a federal financial literacy website, and making a debit-card-accessible bank account available to every adult American.

The goal of these recommendations is a future generation and a current population armed with sound money management skills to make good decisions for themselves and their families.

Author:Marte Cliffe

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Bailout Regulation and Executive Woes.

It’s about time that our government got involved with the excessive spending of Executives, after the US treasury bailed them out. In my opinion it is very distasteful that these executives are still living the lives they are after all the turmoil in our financial market. I still blame government for the deregulation, which is primarily the Republicans parties fault. They are the ones that pushed for deregulation, and guess what that did to our banking system? Well, by now you can figure that out just by watching TV or reading the local news paper.

Greed is mainly the problem, I don’t care where you graduated from and what your GPA was, no one is worth what these CEO’s and executives are getting paid. I am sure you have heard these big investment bankers saying they are concerned about scouting talent with the “new cap” on income for companies that the government bailed out. The cap will be $500,000 a year. Hmmmmmm I guess I could live on that, if I did not have a yaught, 3 mansions and a Ferrari.

I think our country needs a real wake up call; we are extremely spoiled and blessed at the same time. Being in lending I have learned that money brings out the worst in people. Where there is lots of money, there is lots of GREED.

Even though I did not vote for Obama, I am impressed with what he is doing. I believe he is in the right direction on some matters, especially when it comes to politics in Washington.

Credit has never been more important these days, and hopefully the American people will just be happy with what they have. You never know, “when what you currently have” “might end up being what you had.”

So with all of this being said, make sure you are saving your money, staying on top of your credit. This might even be a great opportunity to learn a new trade through your local college. As markets that are hot change over time, there will always be new hot ones. I would have to say the next hot market will be the web.

Just make sure once you make it to the top that you are not like the rest of greedy America, be very thankful for what you have.

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