Archive for June, 2010

Need Credit But Have a “Thin” Credit File?

Monday, June 14th, 2010

Since credit scores are based on the way a consumer uses his or her credit, being thrifty and not going into debt can be a hindrance when credit is needed.

If you’re facing this problem, you aren’t alone. FICO estimates that approximately 25% of the US adult population lacks enough credit data to generate a traditional credit score.

Credit accounts that are closed because they’ve been paid in full drop off your credit report 10 years from the date the account was closed. A closed account with negative information is deleted 7 years after the last delinquency. So if you haven’t used credit since 1999, you could find it difficult to get a new loan today. The credit bureaus simply don’t have anything to report about you.

Before underwriting became computer-driven, mortgage lenders could ask potential borrowers to bring in receipts for rent payments, utilities, insurance, etc. Underwriting was done manually, and the underwriter could take those payments into consideration.

Then manual underwriting went the way of the dinosaur and mortgage lenders advised would-be clients to get some credit from a source that reports to the credit bureaus and use it for a while before trying to buy a home.

That generally meant getting and using a credit card.

Lack of credit also hurts consumers buying cars – because without a credit score to offer  proof of good money management skills, consumers are charged high interest rates.

The Good News: You can still get credit for good money management.

What most consumers don’t realize is that it is still possible to get credit – and higher credit scores – when you haven’t been using credit. The catch is that you have to find a lender who uses the FICO Expansion Score. Right now there are only about 500 lenders using this expanded service from FICO.

FICO is advertising it, however. So perhaps more will sign on in the future.

The FICO Expansion Score calculates your credit score based on whatever credit you do use, plus nontraditional credit information such as rent payments, utilities, phone bills, etc.

Interestingly, the Expansion Score appears to be a throw-back to the early days of credit reporting. According to the FICO website, credit risk is based on additional financial information such as checking accounts, property, and public records.

Back when credit bureaus were local businesses, employees not only checked public records, they checked local newspapers and recorded any negative information in consumers’ credit files.

Author: Marte

Elite Credit Cards – Are They for Prestige or Perks?

Saturday, June 12th, 2010

Silk beautyIf you have enough money – such as a net worth in the billion dollar neighborhood – you can qualify to carry an elite credit card, like the American Express Centurion credit card.

This credit card, casually known as “The Black Card,” comes with a $5,000 initiation fee, a $2,500 annual fee, and a requirement to charge at least $250,000 each year. The card itself is constructed of genuine titanium.

Pulling this card out to pay for a major purchase tells everyone within view that you are “Somebody.”

The web ad for this card carries the tagline: “Rarely seen, always recognized.” And it goes on to state: “Available by invitation only, The Centurion Card is the world’s rarest American Express Card and confers a level of service that can be extended only to selected individuals worldwide.”

So, is it the prestige or the service that entices the ultra-rich to pay $2,500 per year to carry this card? Access to the details about special perks given to cardholders is for “members only,” so I can’t answer that.

American Express has another option for the “not quite as elite.” Their platinum card, which is made of standard plastic and comes in basic silver/gray, comes with a much lower price – only $450 per year – and apparently has no pre-set spending requirements.

According to the advertising, both the Centurion Card and the Platinum card come with access to sporting events, fine dining, and visual and performing arts events that are not available to the general public at any price.

Another option to choose if your spending level isn’t quite high enough to qualify you for the American Express Centurion is the Visa Black. It’s far less pricey than the Centurion, but costs more than the American Express Platinum. This one comes with a $495 annual fee. Perhaps because this card is made of flexible carbon graphite. The Visa Black is available to only 1% of all U.S. residents.

For an annual fee of only $395, you can carry the Sotheby’s World Elite Mastercard. But only if you’ve been invited, and only if your investable assets top $2 million. Another requirement is an annual income of more than r $250,000. Along with the travel perks that come with other elite cards, Sotheby’s offers free admission to top museums and discounted prices on Sotheby’s catalogs.

If black just isn’t your color, and if you happen to have at least $1 million deposited in the Royal Bank of Scotland, you can opt for a beautiful purple card: The Coutts World Card.

Interestingly, most of the ultra-elite cards offer many of the same benefits – complimentary companion tickets on certain domestic or international air flights, global airport lounge access, and 24-hour concierge service. They also offer access to products, services, and events that are difficult to obtain. This includes sporting events, concerts, and such social events as an invitation to a VIP reception at the Playboy mansion.

Author: Mike Clover

Self-employed Homebuyers Find Tough Mortgage Market

Thursday, June 3rd, 2010

iStock_000002944724XSmallYou could say that the banks “threw the baby out with the bath water” when they cracked down on lending practices in answer to the mortgage meltdown.

Self-employed business people suddenly found themselves unable to get home loans because they had no W-2’s to prove their income. And, since most business people do their best to lighten their tax burden, many didn’t have the tax forms to back up their income claims.

Now FHA is stepping in to bring back low down payment / low credit score loans to wage earners who may or may not be able to keep up with payments. But banks are still reluctant to offer loans to the self-employed.

If you’re self employed and know that you will want to buy a home or refinance a home in the future, you need to plan ahead. Here’s how:

First, pay more taxes. By that I mean stop taking every deduction possible, so that your taxable income will go up. And document every scrap of income. I know quick-stop operators who slip the “coffee money” into a can under the counter rather than the till. Other entrepreneurs “forget” to report cash payment for small jobs if the customer isn’t likely to file a 1090 form.

You already know that’s called tax evasion and it’s illegal. But it will also hurt your chances of a getting a mortgage. If you want a loan, you need to show all of your income.

Keep a close watch on your credit report and credit scores. Correct any errors and follow up on signs of identity theft immediately. Read the reports and pay attention to any notes about conditions affecting your scores. Then take steps to protect and raise those scores.

Next, be patient. Banks want to see stability, and they know that a huge percentage of small businesses fail in the first months. So if you’ve been in business for less than 18 months, the only real chance you stand is to have a strong co-signer. Running your business successfully for at least 2 years gives you the best odds of obtaining a loan.

Build your cash reserves. If the bank sees that you have 6 months worth of payments and operating expenses in the bank, they’ll feel much more secure in lending to you.

Beef up your record keeping. And before you go to an appointment, ask the mortgage lender what he or she will want to see – and take it with you.

Apply in person. First, make some calls and locate a mortgage broker who specializes in loans for the self-employed. Then sit down with them in person. Ask questions about different loan programs and help them help you by finding the right program to fit your specific situation. On-line lenders offer big things, but an automated application is not what you need when you’re self-employed.

Author: Mike Clover

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What Good is an Annual Credit Report?

Tuesday, June 1st, 2010

iStock_000012834854SmallIn my opinion, not much.

Writing in the Washington Post, Michelle Singletary argues that all consumers should have annual access to both their credit report and their credit scores. She feels that Senator Mark Udall (D-Colo.), who proposed the Fair Access to Credit Scores Act of 2010, did not go far enough in his request.

Under his proposal, those who have been denied credit based on their credit scores will have free access to their report and their scores – without even asking. This will create a financial burden on the creditors who turned them down. In addition, it is another “something for nothing” program that our entitlement-minded society is fast becoming addicted to.

We have to wonder who should be responsible for paying the cost of compiling those credit scores, and for sending them to the consumers, if the consumers are to have them for free. Should Equifax, Experian, and TransUnion bear the costs, or should they become yet another burden on the taxpayer?

Some might argue that the scores only cost $8 each. But according to a recent survey by the National Foundation for Credit Counseling, about 1/3 of the U.S. population asks for their free credit report each year. That’s over 100 million people.

I think each consumer should pay their own $8 – whether they’ve been turned down for credit or not. But I also believe that looking at your credit report only once per year is not sound financial management.

Not in an age when even those who supply credit reports admit that 70% of all reports contain errors. Not in an age when identity theft has become big business.

A consumer could access his or her report in January and feel that everything was on track – their scores were high and they were doing fine. By February that could all change, due to a data entry error or due to a thief using their credit information. By the time they apply for a loan in September, they could have scores that are in the basement.

That’s why I believe in services such as Identity Guard. It’s true that while the first report, with scores, is free, consumers do have to pay a monthly fee for monthly reports and monitoring. But that monitoring could save them from months of grief.

Monitoring alerts the consumer to any change in their credit report – such as the addition of a credit line or a change of address. These are both events that if not true, signal an incidence of identity theft. And if you’ve ever gone through reclaiming and repairing your credit after an identity thief has been using it, you know that the sooner the use is halted and repairs are begun, the better.

It’s also true that the score you receive is not the official FICO score. But it is very close, so a consumer can tell if he or she needs to make some changes in credit usage.


Marteshort (2)

13 Year-old Kids Carrying Credit Cards?

Tuesday, June 1st, 2010

iStock_000011266399XSmallUnder the CARD Act of 2009, credit card issuers are prevented from advertising credit cards to students, and even 18 year-old students cannot get credit cards unless they have either an income or a co-signer.

But two prepaid credit cards are now available to youths aged 13 and up.

Parents are finding these cards to be both a convenience and a safety measure. For kids who lose things (like cash), they provide the security of being able to call and have the card number cancelled. For kids who are traveling away from home they provide peace of mind – because they can have quick access to emergency funds via a transfer from a parent’s account.

Parents who are trying to teach sound money management are using these pre-paid cards to distribute allowances, and urging their teens to make budgets, and track their own spending habits via on-line statements.

The two cards are the Facecard Prepaid MasterCard® and the UPSIDE VISA® debt free prepaid card.

The Facecard Prepaid MasterCard® carries a $3 monthly fee – unless you load $100 per month of new funds or spend $100 using the card.

As an incentive to spend (is this good?), the Facecard offers “Prewards” – which are digital incentives similar to coupons that are automatically added to the Facecard when a user clicks on “accept” after receiving an e-mail notice. These are incentives that card users can cash at restaurants and stores during a pre-set time frame. They could be anything from a “buy one get one free” offer for tacos to a discount on a music CD.

The Teen Facecard cannot be used to purchase alcohol, tobacco, adult entertainment, firearms, or ammunition.

But the Facecard isn’t just for teens. This card offers both direct deposit from paychecks and automated bill pay – so consumers who have trouble remembering to pay bills on time can avoid late charges on their monthly bills.

The UPSIDE VISA® debt free prepaid card offers three different plans, the first of which is free.

The basic plan allows for a maximum balance of $1,000 and comes with no activation fee, no monthly fee, and no fee for loading from a parents checking account.  It doesn’t allow ATM withdrawals.

The Upside Access plan carries a monthly fee of $2.95, and allows ATM withdrawals and a maximum balance of $2,000.

Upside Edge allows a balance of $5,000 and an annual fee of $29.95 which will be waived if cumulative loads reach $2,900. It also provides free direct deposit from the child’s employer and online check writing for students aged 18 to 25.

The UPSIDE VISA® card is only available for consumers aged 13 to 25.

All three of these plans give parents real-time Internet access to their child’s transactions, so both parents and their children always know the current balances on the card, as well as where and how money is being spent.

Author: Marte your resource for credit cards, credit reports and credit news.

Creditor Address Q & A

Tuesday, June 1st, 2010



How do I locate the business reporting past due accounts? Can Experian provide me their address and telephone numbers?

Michele Davis


Hi Michele,

the address of the creditor will be on your credit report that you pulled. Typically depending on the type of credit report you pulled; all creditor and collection companys numbers are after the last page of activity. If you find there are no number or address for the creditor, I would call information to get that late payment fixed. Late payments will ruin your credit score.

Mike Clover

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.