Archive for August, 2014

Traveling Soon? Take these credit card precautions

Tuesday, August 19th, 2014

Can you imagine the panic and embarrassment of being hundreds or thousands of miles from home, trying to pay for your hotel room – or even your dinner – and having your credit card rejected?

It could happen, even if you have a huge credit line and your account is paid in full.

Because credit card issuers are trying to crack down on fraudulent use, making a purchase far from your usual stomping ground could send up a red flag – one that gets your purchase rejected. So before you leave home, call your card issuers. Tell them where you’re going and how long you expect to be away.

While you’re on the phone, ask if you have a daily ATM withdrawal limit or a daily spending limit. Some cards do and some don’t. Trying to exceed the daily limit could also lead to embarrassment.

You could also have your wallet stolen – or you could simply lose it. So make a list of all the cards you’re taking along, and include the customer service number and other information you’ll need to report a theft. Make copies and put them in separate places, so the list doesn’t get stolen along with the cards.

As a further precaution, keep those cards separated. Put one in your own wallet, another in your traveling companion’s wallet, and perhaps a third in the hotel safe. You don’t want to be left high and dry with no access to funds in case of a loss or theft.

If you generally use a debit card for all expenses, switch to a credit card while you’re traveling. Credit cards are more secure, and if there’s a problem you’ll be disputing a credit line, not looking at an empty bank account.

Keep in mind that skimmers all over the world are hard at work trying to retrieve your credit card data for their own use, so be very careful when using automated machines. If you need to withdraw funds from an ATM, try to choose a machine that’s inside of a bank.

If you need to check your account balances, use your phone, not a public WiFi connection or a public use computer. Also refrain from making credit card purchases over these insecure connections. Revealing your financial information through these connections is like issuing an engraved invitation to credit data harvesters.

As for your phone – think of it as the mini-computer that it really is. It could contain all of your banking and shopping information. So when you’re not using it, lock it. Phones are easily lost or stolen, and yours could be a gold mine for an opportunistic crook.

One last thing – every time you use that credit card, think of it as money coming out of your bank account, because it does have to be repaid. It’s easy to get carried away while on vacation, so instead of happy memories of a good time, you’ll be plagued with high credit card balances for months to come.

An easy way to avoid that problem while keeping your bank account and your credit cards secure is to opt for a travel card. Decide in advance how much you’ll spend on meals, tours, and souvenirs, then purchase a pre-loaded card and keep track of your expenses. Only take your credit cards along for emergencies or unexpected expenses.

Have fun on your vacation – and keep your credit safe.

Rebuilding Your Credit? Here’s Good News

Sunday, August 17th, 2014

Fair Issac Corporation just announced a change in their credit scoring that’s good news for everyone working hard to rebuild credit scores after a financial disaster.
The good news comes in two parts:
First – Medical collections will be given far less weight.
The credit scoring giant has realized that medical collections are not always the fault of the consumer. Instead, they’re often the fault of the insurance companies.
It turns out that insurance companies don’t always let consumers know right away when they’re not going to cover a certain procedure – or when they’re not going to fully cover it. Worse – even “covered” charges aren’t being paid.
Thus, consumers are forwarding those medical bills on to insurers thinking they’ll be paid. Instead, they find that they have collections on their credit record. It’s a growing problem, with more than half of all debt-collection activity on credit reports being directly attributed to medical bills.
In spite of insurance, in 2012 42% of U.S. adults (75 million people) reported having trouble paying medical bills. This is a 295 increase from 2005, when 58 million were struggling.
Second – a Reward for getting those collections and past due accounts paid off…
Under the new FICO credit scoring model, bills that were past due will not be included on consumer credit reports once they’ve been paid off. Collections that have been discharged will no longer be shown.
Previously, those collections remained on a consumers report for up to 7 years – dragging down their credit scores by as much as 100 points.
FICO scores fall between a low of 300 and a high of 800, with rigid “breaking points” along the way. Just a 1 point difference can make a huge difference in the interest rate charged – or whether credit is granted at all.
The line between good and not good is at 620, and those with scores below 620 are considered high risk. From 620 to 649 is an intermediate area – “Pretty OK” – while 650 and up is considered very good and 720 is excellent.
Even then, there are differences. For example, a score of 760 could get you a rate of 3.823% on a 30 year mortgage, while a score of 759 would raise that rate to 4.045%. That doesn’t sound like much, but over the life of a 30 year mortgage it amounts to a difference of $4,588 per $100,000 of the loan. And that’s for a difference of just one point.
A difference of 100 points could raise you from “not at all good” to “very good.” And of course, the interest rates you’ll be offered will be so different that they could make the difference between being able to afford the purchase and having to walk away.
Fair Issac Corporation expects credit card issuers and automotive lenders to begin using the new system first, with mortgage lenders to follow at some time in the future.

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.