FICO Credit Score Back Down To 688: Good Grief!

Some good news and some bad news today. First, the bad news: my FICO credit score has dropped down to 688. My FICO score had recently jumped from 686 to 706, but it's back down again, and I have to deal with the fact that I am once again a sub-700 borrower! The FICO system is just too cruel! I am placed in the near-elite class of 700-720 FICO borrowers, only to have my status taken away from me 2 months later. It's not right!

Actually, I'm not surprised about this recent change to my FICO score. My baby girl--who is growing at an incredible rate (she's off the height chart @ the doctor's office)--needed new clothes, so I charged some baby shopping. I also invested in a bunch of space heaters for my home, an investment that has already shaved plenty off my heating bill, so no regrets there. Lastly, I took advantage of a "3.99% APR until transferred balance is paid in full" balance transfer offer from Citibank, which, again, will save me plenty in the long term, but may have contributed to the latest (temporary!) decline in my credit score (sometimes transferring a credit card balance helps my credit score, but then sometimes transferring a similar balance with similar circumstances hurts it. Makes me wonder if some credit card companies/banks have more "weight" than others...Hmmm...)

Don't get me wrong: I know that 688 is still a good FICO score, a score that will still get me a favorable to excellent rate on just about any loan product, so I'm not really crushed. Furthermore, I know that within a few months, I'll be back here reporting that my score is back up above the 700 mark, as I plan on making some large payments to certain creditors in the near future, and I don't plan on missing any credit card or car payments! I am no way near ready for my own home, so I can wait.

The good news is that I have completely paid off 2 credit cards by taking advantage of the Citibank balance transfer offer I mentioned above. I managed to pay off 2 relatively high balances, and, even though those balances have been transferred to one of my Citibank credit cards, my Citibank card is still OK, as my balance on that card is still below the halfway point of my total credit line, and that's important.

And kudos to Citibank for offering a credit line increase in conjunction with the "3.99% APR until transferred balance is paid in full" balance transfer offer. That's what basically sold me on using Citibank, as opposed to a going with a competing bank or credit card company. By offering a credit line increase with the balance transfer deal, Citibank is basically communicating to me, "yes, we want your business, and we know that having a high credit card balance can hurt your credit rating and put you at risk of "maxing out" your account. So we'll give you a credit line increase with this deal, so that you don't have to worry about that stuff."

What am I going to do with the credit card accounts that I've managed to pay off? Well, I'm keeping them, as it's the right thing to do. Bottom line: Lord FICO, master of my credit destiny, likes to see accounts that are "old." The benefits of having long-standing relationships with creditors outweigh the benefits gained, if any, by canceling the accounts.

I'm hoping that banks will be offering some exceptional balance transfer offers in January; I predict that transferring credit card balances will be all-the-rage next month, as holiday shoppers try their best to avoid the interest charges related to all that shopping done for Xmas/Hanukkah/Kwanza 2005.

Peace and prosperity to all in 2006!

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Some Great Water Damage Prevention Tips for Homeowners from The Folks @ MetLife

Water / Flood Damage

The good folks @ MetLife Auto & Home have released some great tips about water damage prevention, tips that any homeowner can and will appreciate. Here's a clip from today's press release:

"This is the time of year when a winter chill settles upon much of the country, which means that it's a good time to think about water damage prevention. Fully 25 percent of homeowner insurance property damages involves water or freezing, and water causes an estimated $6.8 billion worth of property damage each year, according to the Institute for Business & Home Safety. As alarming as these figures are, however, they only tell part of the story, according to Tim Bowen, a claim manager at MetLife Auto & Home.

'While your insurer can replace a chair or a couch, you can't replace the lifetime of memories -- scrapbooks, pictures, family recipes, report cards, family bibles -- that often get permanently altered or damaged,' said Bowen. 'We see first-hand the effects of water damage every day. Many of these claims are easily avoided because they are often due to appliance failure such as when the hose in a washer, dishwasher, or icemaker ages and bursts.'

Consumers can avoid heartbreaking losses by taking a few precautionary measures. MetLife Auto & Home offers the following tips to help safeguard homes -- and memories:

• If you live in an area that's subject to freezing weather, be sure to winterize your exterior faucets.

• Check all the windows in your household and ensure that the seals are tight. Replace caulk as necessary, to avoid water seepage.

• Make certain that your tub and shower make the grade. Inspect your shower stall for leaks, and inspect and replace old or brittle caulking. Also, check your sink and toilet. Water stains around the toilet may be an indication of damage to the rim and tank seals.

• In the kitchen, regularly examine the icemaker, dishwasher, sinks, and garbage disposal for leaks. Also, replace their hoses every five years; it's a small investment that can prevent an expensive accident from occurring. 

• Inspect your washing machine hoses and check for signs of brittleness or corrosion. Experts recommend changing standard rubber hoses to stainless steel reinforced hoses, which will reduce the likelihood of leaks, and guarantee a longer life. Also, consider installing a water supply box to your washer -- this automatic shut-off valve can prevent your home from serious damage, if a pipe bursts while you're away on vacation. 

• Check your hot water heater for leaks and corrosion. Rust is a sign of imminent tank failure.

• For valuables, keepsakes, and other memorabilia that you do not regularly display, or keep in your cellar, consider plastic storage containers. These containers are relatively inexpensive and can stand up to water better than other types. One major source of water damage involves flooding. Flooding is nature's most commonly occurring natural disaster, and yet flood is not covered under most homeowners policies. This is true whether you live in a flood zone or not; and, in fact, almost 25 percent of all flood claims occur outside of flood zones. Purchasing flood insurance is relatively inexpensive and can easily be obtained to cover your building and contents, subject to limitations. 

• Also, for more information about water safety, MetLife Auto & Home offers a free brochure, 'Protect Your Home from Water Damage,' which can be obtained by calling 1-800-638-5433 (1-800-MET-LIFE), or 1-866-MET-VIDA (for Spanish-speaking callers). The brochure is available in either Spanish or English. Also available is a free Personal Property Inventory brochure, in Spanish or English, which enables owners or renters to keep careful track of their valuables.  It's an invaluable resource should a claim need to be filed. A downloadable version of the inventory is available by clicking 'Home Insurance' and then accessing 'Home Safety Tips' at www.metlife.com. 

• MetLife Auto & Home is one of the nation's leading personal lines property and casualty insurance companies, insuring over 3.8 million autos and homes. The company was named among the industry's leaders in customer service, according to JD Powers' 2005 Claims Customer Satisfaction survey for auto insurers. For more information about MetLife Auto & Home, visit www.metlife.com. MetLife Auto & Home is a brand of Metropolitan Property and Casualty Insurance Company and its affiliates, Warwick, RI."

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Get Replacement Cost Estimates In Less Than 2 Minutes

Replacement cost estimates in less than two minutes? Yup. Confluency Solutions offers this excellent service absolutely free. It's called the cFluent Personal Property Analyzer; details are below in the snippet from a press release issued today:

"Confluency Solutions announced today the availability of their cFluent Personal Property Analyzer to help consumers easily determine if replacement of personal property is at risk in the event of an insurance claim. The tool can be licensed by independent insurance agents and companies for consumers to access via the internet.

Typical homeowner policies have standardized limits of protection for personal property, or contents, that are a fixed percentage of the coverage limit for the home structure. That limit may be inadequate for 30% of homeowner insurance customers. In recent years, more people have acquired what once were considered luxury and near luxury possessions including expensive home entertainment or computer equipment and commercial quality home appliances. Standard homeowner policy limits don’t always contemplate the value of this type of property. Collections of art, antiques or various collectibles as well as individual items of high value like jewelry can all strain the limits of standard insurance protection.

Confluency Solutions developed the tool with the assistance of Kemper Auto and Home Insurance Company. Kemper Auto and Home noted that policy limits were inadequate to completely replace home contents 20% to 30% of the time in total loss settlements. Kemper asked Confluency Solutions to come up with a simple way to help their customers evaluate if they were at risk. Customizing a homeowner policy so that protection is adequate is inexpensive and straightforward. What is more difficult is helping a consumer calculate the replacement cost of their possessions. Insurance companies and agencies have struggled for years trying to get customers to complete home inventories. But the time involved to complete an inventory usually discourages most from undertaking the process. The cFluent Personal Property Analyzer takes under two minutes to complete and will point out individual risk factors as well as calculate a baseline dollar amount for replacement cost of an individual’s home contents. The tool provides tips for quickly customizing the baseline estimate as well as suggestions for ways insurance protection can be customized.

The cFluent Personal Property Analyzer, which is hosted through Confluency Solutions, can be added to any insurance agency or company web site and requires no technical expertise, special hardware or software to install or use. The hosted solution allows an agency or company to address a significant insurance issue with consumers effectively, flexibly and at little cost.

The cFluent Personal Property Analyzer can be licensed and added to an insurance agent’s web site for $350. Through special arrangement with Kemper Auto and Home, the tool appears on the company website and is available, free of charge, for their agents. Confluency Solutions also provides complete web solutions, through their cFluent Agent Tool Set (cATS), for those agents and their customers who are not yet benefiting from the internet.

Insurance agents and companies can find more information about the cFluent Personal Property Analyzer and other web solutions for insurance by visiting http://www.confluencysolutions.com. Consumers and insurance professionals can evaluate the cFluent Personal Property Analyzer via the web at http://www.confluencysolutions.com/covgc. For more information contact Confluency Solutions at 877.351.2600."

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Supreme Court Decision: Social Security Benefits Are Fair Game

Years ago, when the government emptied my bank account in order to satisfy a portion of the student loan debt that I wasn’t repaying, I was floored. I could not believe that the government had the power to take away all my money in such a manner. It was a wakeup call that I won’t ever forget, and it was, quite frankly, one that I really needed.

From this day forward, many retired and disabled folks who receive Social Security (SS) benefits, and who’ve made the mistake of disregarding their student loan debts, may experience the same shock and horror that I went through when they get their next SS check.

Today, the Supreme Court ruled against Mr. James Lockhart, the 67-year-old retired postal worker who’s SS check had been cut by 15% in order to make payments towards his 20-year-old student loan debt.

Lockhart’s case was controversial in 3 dimensions:

1. Lockhart defaulted on his student loan debt 20 years ago, which means that his SS benefits should have been protected by the Debt Collection Act of 1982.
   
2. The Social Security Act stipulates that SS benefits should not be "subject to execution, levy, attachment, garnishment, or other legal process."
   
3. Lockhart claimed that he needed every penny of his monthly social security check ($874) to pay for food and the medicines he needs to treat his diabetes and heart disease. James Lockhart lives in public housing.

Today’s Supreme Court ruling sorts out 2 conflicting rulings made by 2 lower courts regarding Lockhart’s case and another similar case.

The 9^th US Circuit Court of Appeals had ruled against Mr. Lockhart because The Court felt that the Higher Education Act gives the government every right to take a cut of Lockhart's SS benefits.

However, the 8^th Circuit Court made a contradictory ruling in a case that was separate from, yet very similar to, the Lockhart case. The case involved Ms. Dee Ella, a Kansas City, Missouri woman who defaulted on her student loan debt 20 years ago; the 8^th Circuit Court decided that the Social Security Act and the Debt Collection Act should protect Ms. Ella from having her SS benefits offset by the government.

So, basically, the job of the Supreme Court was to decide which Act of Congress should trump the other: The Higher Education Act (or, to be more precise, the Higher Education Technical Amendments) won out.

So now it doesn’t matter how poor or disabled your are, it doesn’t matter if you need every penny of your SS check to pay for life-preserving medicines and food, and it doesn’t matter if you defaulted on your student loan debt 30 or even 50 years ago: the government can--and most likely will--offset your SS benefits if you default on your federally subsidized student loans.

Your comments are welcome and appreciated.

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